California Life Sciences Thanks Congress for Passing Legislation to Protect Research Incentives for the Development of Innovative New Treatments and Products
FOR IMMEDIATE RELEASE: Jul 9, 2025
Washington, DC – California institutions play an outsized role in supporting innovation and the development of new products and therapies that benefit human health. However, in recent years, incentives for research and development have been hindered due to short-sighted policies. We are at a time where we need strong science-based policies that encourage investment and research in the life sciences. That is why California Life Sciences (CLS) applauds Congress for passing the ORPHAN Cures Act and restoring the immediate deduction of R&D expenses as part of H.R.1, the One Big Beautiful Bill Act, which was signed into law on July 04, 2025.
The original design of the Orphan Drug Exclusion in the Medicare Drug Price Negotiation Program (MDPNP) was overly narrow, limiting protections only to drugs treating a singular rare disease and threatening decades of bipartisan incentives that drove research into secondary rare disease indications. Given that 95% of rare diseases have no known FDA-approved treatment, the legislation included the ORPHAN Cures Act, which would correct these unintended consequences. This provision protects products exclusively approved for rare diseases from negotiation and clarifies that the timeline used to determine when an orphan drug may become eligible for negotiation begins at the product’s first non-rare disease approval.
The passage of the ORPHAN Cures Act will ensure that the iterative nature of scientific progress isn’t hindered, allowing for the development of rare disease treatments for patients suffering from conditions that have no available treatments. Promoting continued research will allow the life sciences sector to protect the pipeline of treatments for the millions of Americans living with rare diseases.
Additionally, the legislation restores a longstanding incentive for investments in R&D. For 70 years, the U.S. tax code had incentivized long-term investments in innovation and technological breakthroughs by allowing businesses to deduct “research and experimentation” expenses in the same taxable year in which they were incurred. In 2017, the Tax Cuts and Jobs Act (TCJA) modified Section 174 of the Internal Revenue Code so that, starting in 2022, businesses must amortize such expenses over five years for domestic expenditures or over 15 years for foreign expenditures.
This fix not only helps to ensure that America remains a leader in life sciences innovation but ensures that the patients our companies work to treat have access to the best, most innovative therapies and treatments. By reinstating this immediate deduction, Congress is signaling its strong bipartisan support for ensuring that the tax code continues to support innovation.
CLS is grateful for Congress’ action in enacting these critical legislative remedies to restore long-standing incentives for encouraging the development of the future cures and technologies of tomorrow.
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