Senator Launches Inquiry Into Potential Abuse of Orphan Drug Act

Pharma companies use 1983 law to control market, boost prices, report says

Senator Chuck Grassley (R-Iowa), chairman of the Senate Judiciary Committee, has opened an inquiry into potential abuses of the Orphan Drug Act that may have contributed to high prices on commonly used drugs, according to a report from Kaiser Health News (KHN). In a statement, Grassley said the inquiry is based on the results of a six-month investigation that KHN published in January and on “strong consumer concern” about high drug prices.

KHN found that while pharma companies are not breaking the law, they are using the 1983 Orphan Drug Act to secure lucrative incentives and to gain monopoly control of rare- disease markets, where drugs often command astronomical price tags.

KHN’s investigation also found that many drugs that now have orphan status aren’t entirely new. More than 70 were drugs that were first approved by the FDA for mass-market use. Those products include the cholesterol blockbuster Crestor (rosuvastatin calcium, AstraZeneca); Abilify (aripiprazole, Otsuka) for psychiatric disorders; and the rheumatoid arthritis medication Humira (adalimumab, AbbVie), the best-selling drug in the world.

Others are drugs that have received multiple exclusivity periods for two or more rare conditions. Approximately 80 medications fall into this category, including the cancer drug Gleevec (imatinib mesylate, Novartis) and the wrinkle-fighting drug Botox (onabotulinumtoxinA, Allergan).

Before the Orphan Drug Act passed, drugs for rare diseases were often abandoned during development—hence the name orphan. The patient populations were simply too small to be financially viable.

Dr. Robert Califf, who resigned from his post last month as commissioner of the FDA, said he believes it’s time to review the orphan drug program and the incentives offered to corporations. The decades-old act, Califf said, has been successful in bringing effective treatments to patients with rare diseases––but like any program, he said, “once it reaches a mature phase, it’s important to reassess it.”

“It’s understandable that whenever you put a financial incentive in place in the United States, people will try to figure out how to take advantage of it—almost all of them within the law,” Califf said. “So, I’m not talking about illegal activity but … there is a game of cat and mouse that goes on.”

In an interview last year, Anne Pritchett of the Pharmaceutical Research and Manufacturers of America, a lobbying group, said government incentives for orphan-drug development are needed because the research involved is costly, risky, and uncertain, and it can take years to develop a successful drug.

Dr. Martin Makary, a professor at Johns Hopkins University School of Medicine and a critic of the high prices of orphan drugs, has offered possible solutions. He suggested, for example, that drug makers should pay back some of the federal incentive money once a drug reaches a blockbuster sales level for treating a rare disease.

“That money, at a certain point, could go back to the FDA through a back tax that starts after $1 billion in annual sales,” Makary said.

Today, more than 450 orphan drugs have been approved, and gaining orphan designation is a popular business strategy for manufacturers, according to KHN. Drugs approved to treat rare diseases made up 40% of new drugs approved by the FDA in 2016 and nearly 50% of new drugs approved in 2015. These medications are also expensive, with an average annual price of $111,820 in 2014 compared with $23,331 for a mass-market drug.

As part of the 1983 law, Congress approved financial incentives to spur the development of orphan drugs. These incentives include seven years of market exclusivity for use in a specific rare disease. They also provided companies with tax credits for research and development, and waived regulatory fees. Moreover, orphan drugs are often approved with smaller and fewer clinical trials because of the smaller patient populations.

In the 1990s, lawmakers introduced several amendments to the Orphan Drug Act in Congress, including proposals to impose taxes on profits and to revoke exclusivity if the patient population exceeded 200,000. The proposals all failed.

Source: Kaiser Health News; February 10, 2017.