The Orphan Drug Tax Credit

Unlock rare disease innovation! Recoup 25% of money spent from Clinical Trials with The Orphan Drug Tax Credit

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    What is the Orphan Drug Tax Credit?

    Enacted in 1983 under the Orphan Drug Act, the Orphan Drug Tax Credit was designed to incentivize investment in new treatments for rare diseases. Multiple incentives were created to make development more financially possible. This tax credit was made permanent in 1997 and modified in 2017 under the Tax Cuts and Jobs Act. During this modification, it was reduced to capture costs from 50% of clinical expenses incurred to 25%.

    Benefits of Orphan Drug Designation

    All you need to know about ODTC

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    25% Federal Tax Credit

    Credit for expenses incurred in clinical testing for orphan drugs.

    Marketing Exclusivity

    7 years under which no new drug are approved for the same active ingredient.

    Waiver of Prescription Drugs User Fee Act Expenses

    Waives roughly $2.9M in fees related to FDA approval.

    Research Grants from the Office of Orphan Products Development

    Waives roughly $2.9M in fees related to FDA approval.

    Regulatory Assistance

    Guidance from the FDA on drug development plans.

    Eligible Expenses

    To be eligible for this tax credit, you must have received an Orphan Drug Designation through the Office of Orphan Products Development. Credit is equal to 25% of total qualified clinical testing expenses in relation to Orphan Drug development. Foreign expenses can be included if the United States has an insufficient testing population. There is no base period calculation. Expenses cannot be used for both the RDTC and the ODTC, even if work qualifies for both.

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      Contractors can be qualified at 100% instead of 65%


    Reclaim Funds From Clinical Trials: The Orphan Drug Tax Credit


    In this webinar, our experts, Savannah Durham and Benjamin Brissette, walk you through everything you need to know about the Orphan Drug Tax Credit. Discover how the experts at Leyton can help you recoup 25% of money spent from Clinical Trials.

    Orphan Drug Credit Tax Scenario

    • Wages $101,500,000
    • Supplies $45,500,000
    • Contractors $203,000,000
    • Total $350,000,000

    25% of Total QCTE = $87,500,000

    $87,500,000 Talk with our experts! arrow_outward arrow_outward

    Orphan Drug Credit Tax Scenario

    • Wages $194,400,000
    • Supplies $84,240,000
    • Contractors $369,360,000
    • Total $648,000,000

    25% of Total QCTE = $162,600,000

    $162,600,000 Talk with our experts! arrow_outward arrow_outward

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    Contact us to schedule an initial consultation

    Our in-house team of highly experienced scientists, engineers, tax consultants and attorneys would love to answer all your questions and help you make the most out of your ODTC efforts.

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