Federal Update: Tax Reform & Impact on the Life Sciences Sector

Nov. 28, 2017

Congress is currently advancing legislation in both chambers to significantly overhaul the U.S. tax code. Historically, CLSA (through our legacy organizations BayBio and CHI) has focused our tax-related advocacy efforts around: (1) calling for an update and making permanent of the R&D Tax Credit, (2) protecting the Orphan Drug Tax Credit (ODTC), and (3) opposing the creation of and later calling for a repeal of the medical device tax. To this end, below is a summary of activity in each chamber as of the publication of these materials:

  • House: On Nov. 16, the full House approved H.R. 1, the Tax Cuts and Jobs Act, by a vote of 227-205. All House Democrats voted against the bill, and were joined by 13 dissenting Republicans (including 3 California Republicans: Reps. Darrell Issa of San Diego, Tom McClintock of Roseville, and Dana Rohrabacher of Huntington Beach all voted no). With respect to the areas of priority advocacy for CLSA, the House bill protects the R&D tax credit, fully repeals the Orphan Drug Tax Credit, and does not address the medical device tax.
  • Senate: Also on Nov. 16, the Senate Finance Committee approved its version of tax reform by a party line vote of 14-12. The committee-passed bill similarly protects the R&D tax credit, and does not address the medical device tax. With respect to the Orphan Drug Tax Credit, however, the committee-passed bill includes a modified version of the Orphan Drug Tax Credit, which would allow a credit rate of 27.5% (reduced from 50%) and new reporting requirements.

Last month, CLSA cosigned a multi-state life sciences association letter in support of the ODTC, coordinated in collaboration with BIO’s Council for State Bioscience Associations (CSBA). Including CLSA, the letter was cosigned by 42 state and regional life sciences organizations. A copy of the CSBA letter is posted on our website here.

We continue to work with our broad membership, our national trade association partners, and other rare disease stakeholders to ensure that the Orphan Drug Tax Credit is protected in the final version of legislation passed by Congress.

CLSA also continues to urge that the final bill protect the R&D Tax Credit. CLSA also continues to urge Congress to act to repeal the medical device excise tax before the current reprieve expires at the end of this year. At the time these materials were prepared, the Senate Budget Committee is expected to mark up the Senate bill the week of Nov. 27, and then it will proceed to the Senate floor.

Questions? Please contact Adam Lotspike, CLSA’s Associate Director of Federal Government Relations (