Updated: House and Senate Pass Tax Overhaul

The US House of Representatives and the Senate on Wednesday passed the GOP tax overhaul bill. President Donald Trump indicated he will sign the bill into a law.

Bill Details

Members of the House-Senate Conference Committee on Friday released the final text of the bill, which would reduce the rare disease research tax credits biopharma companies can claim by half. The cut would reduce the credits claimed by companies by $32.5 billion from 2018 to 2027, according to the Joint Committee on Taxation.

According to a new GAO report, inflation-adjusted claims by all industries for the orphan drug credit increased five-fold between 2005 and 2014, from about $280 million to about $1.5 billion. 

The nonprofit National Organization for Rare Disorders said in a statement that the cutting of the credit "represents one of the most substantial rollbacks in incentives to develop orphan therapies," though it was appreciative that the credit was not repealed.

Other than the credit reduction, biopharma companies will likely be pleased by the bill's lowering of the corporate tax rate to 21%, beginning 1 January 2018, from 35%, which the conference committee says is the "largest reduction in the US corporate tax rate in our nation's history."

The bill also lowers the cost of bringing overseas cash back to the US, which is considered a major victory for the US biopharma industry. Companies such as Johnson & Johnson, Amgen, Gilead, Pfizer and Merck all keep more than 80% of their cash overseas.

Perhaps in anticipation of the tax overhaul bill's passage, Pfizer on Monday afternoon announced that its board of directors authorized a new $10 billion share repurchase program.

Article updated 12/20 to reflect the passage of the bill by the House and Senate.