Drugmakers Manipulate Orphan Drug Rules To Create Prized Monopolies

[ehrnst]

More than 30 years ago, Congress overwhelmingly passed a landmark health bill aimed at motivating pharmaceutical companies to develop new drugs for people whose rare diseases had been ignored.

By the drugmakers’ calculations, the markets for such diseases weren’t big enough to bother with.

But lucrative financial incentives created by the Orphan Drug Act signed into law by President Ronald Reagan in 1983 succeeded far beyond anyone’s expectations. More than 200 companies have brought almost 450 “orphan drugs” to market since the law took effect.

Yet a Kaiser Health News investigation shows that the system intended to help desperate patients is being manipulated by drugmakers to maximize profits and to protect niche markets for medicines already being taken by millions. The companies aren’t breaking the law but they are using the Orphan Drug Act to their advantage in ways that its architects say they didn’t foresee or intend. Today, many orphan medicines, originally developed to treat diseases affecting fewer than 200,000 people, come with astronomical price tags.

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When a drugmaker wins approval of a medicine for an orphan disease, the company gets seven years of exclusive rights to the marketplace, which means the FDA won’t approve another version to treat that rare disease for seven years, even if the brand name company’s patent has run out. The exclusivity is compensation for developing a drug designed for a small number of patients whose total sales weren’t expected to be that profitable.

But the exclusivity is a potent pricing tool. Drugmakers can charge whatever they want by shielding their medicine from competition. The market exclusivity granted by the Orphan Drug Act can be a vital part of the protective shield that companies create. What’s more, manufacturers can return to the FDA with the same drug again and again, each time testing the drug against a new rare disease.

Critics have assailed drugmakers in the past for gaming the orphan drug approval process. But the extent to which companies have been winning approval for drugs that aren’t what advocates call “true orphans” hadn’t been documented until the Kaiser Health News investigation.
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Munos said he was “shocked” by the sheer number of mass market drugs being repurposed as well as those approved multiple times.

Even agency officials said they weren’t aware of the scope of the issue. After reviewing KHN’s findings for two weeks, Dr. Gayatri Rao director of the FDA’s Office of Orphan Products Development said she “appreciated the work” and expressed interest in studying how often drug companies are “repurposing” a drug for a new rare disease, or taking “multiple bites of the apple.”

“We are going to look into this,” she said, adding that she could consider a regulatory change.

http://khn.org/news/drugmakers-manipulate-orphan-drug-rules-to-create-prized-monopolies/