In July 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), a tax and budget reconciliation law that amends the Inflation Reduction Act's orphan drug exclusion12.
The tweak broadens the exclusion to cover orphan drugs designated for one or more rare diseases, as long as all approved indications are for rare conditions, previously limited to single rare disease indications12.
It delays negotiation eligibility for orphan drugs approved for non-orphan indications, starting the clock from the non-orphan approval date instead of the original approval12.
This will increase Medicare spending by $8.8 billion from 2025-2034 per updated CBO estimates, affecting drugs like Keytruda, Opdivo, and Darzalex, and delaying their price negotiations starting in 20261.
By simplifying orphan drug eligibility rules for Medicare negotiation, the changes reduce administrative complexity for CMS and FDA in designating and tracking orphan statuses, making regulatory processes smoother12.
Sources:
1. https://www.kff.org/medicare/people-with-medicare-will-face-higher-costs-for-some-orphan-drugs-due-to-changes-in-the-new-tax-and-budget-law/
2. https://www.sidley.com/en/insights/newsupdates/2025/07/key-inflation-reduction-act-amendment-broadens-us-protection-for-orphan-drugs