About 30 million people in the United States have a rare disease, according to the National Institutes of Health, which equates to about one in every 10 individuals. Approximately 95% of these rare diseases have no treatment at all—and Ultragenyx, a biopharmaceutical company focused on new and effective therapies for patients with rare and ultra-rare diseases, is working to change that.
- “In the aggregate, rare is not that rare,” said Ultragenyx Executive Director of Public Policy and Public Affairs Lisa Kahlman. “Half of those 30 million people are children. It’s a huge unmet medical need.”
Founded in 2010, Ultragenyx has four commercial products, with about 20 more in pre-clinical and clinical development. But a new change in tax policy poses a very real threat to Ultragenyx’s ability to develop as many treatments for rare diseases as possible.
The issue: Until a year ago, businesses could deduct 100% of their R&D expenses in the same year they incurred the expenses. Starting in 2022, however, a tax policy change requires businesses to spread their R&D deductions out over a period of five years, making it more expensive to invest in growth and innovation. For research-heavy companies like Ultragenyx, that change could divert funds intended for the development of therapies toward tax obligations.
- “Ultragenyx is different,” said Kahlman. “There are a lot of companies that do some work in rare diseases, but usually that’s only a fraction of what they do. We’re exclusively built to focus on rare and ultra-rare diseases, and that requires research.”
The impact: As a small, largely precommercial start-up company that focuses on research, Ultragenyx spends about 70% of its total operating expenses on R&D. In 2021, Ultragenyx spent approximately $497 million on R&D—nearly $150 million more than it earned in revenue.
- If the tax change stands, the company’s financial statement losses, which approximate decreases in the company’s cash reserves, will be adjusted for tax purposes to reflect significant taxable income, resulting in very large tax liabilities over a short period of years.
- This will occur during late stages of the company’s development programs just when costs escalate quickly. Altogether, money will be diverted to taxes and away from critical development programs at precisely the wrong time.
The human cost: If Ultragenyx and other research-heavy biotech companies that are focused on developing treatments for rare diseases must divert funds away from development and toward covering tax obligations, patients living with rare diseases will have even more limited options.
The bottom line: “The therapies we’re developing are really transformational, but in some cases, there might be only about 200 patients in the developed world with one of these diseases—so if we don’t have the money for R&D, there won’t be any incentive for anyone else to develop treatments,” said Kahlman. “For these patients, there is no alternative.”
Our move: At the NAM, we’re pushing Congress to reverse this change and allow manufacturers to invest in jobs, communities and innovation. Learn more and take action at www.nam.org/protect-innovation.
Washington, D.C. – Ahead of the midterm elections, the National Association of Manufacturers released its policy roadmap, “Competing to Win,” a comprehensive blueprint featuring immediate solutions for bolstering manufacturers’ competitiveness. It is also a roadmap for policymakers on the laws and regulations needed to strengthen the manufacturing industry in the months and years ahead.
With the country facing rising prices, snarled supply chains and geopolitical turmoil, manufacturers are outlining an actionable competitiveness agenda that Americans across the political spectrum can support. “Competing to Win” includes the policies manufacturers in America will need in place to continue driving the country forward.
“‘Competing to Win’ offers a path for bringing our country together around policies, shared values and a unified purpose,” said NAM President and CEO Jay Timmons. “The NAM is putting forward a plan filled with ideas that policymakers could pursue immediately, including solutions to urgent problems, such as energy security, immigration reform, supply chain disruptions, the ongoing workforce shortage and more. Manufacturers have shown incredible resilience through difficult times, employing more workers now than before the pandemic, but continued resilience is not guaranteed without the policies that are critical to the state of manufacturing in America.”
The NAM and its members will leverage “Competing to Win” to shape policy debates ahead of the midterm elections, in the remainder of the 117th Congress and at the start of the 118th Congress—including in direct engagement with lawmakers, for grassroots activity, across traditional and digital media and through events in key states and districts as we did following the initial rollout of the roadmap in 2016.
The document focuses on 12 areas of action, and all policies are rooted in the values that have made America exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity.
Learn more about how manufacturers are leading and about the industry’s competitiveness agenda at nam.org/competing-to-win.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.8 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org