Companies abuse orphan drug designation, team says
Photo by Steven Harbour
Health experts are calling on US lawmakers and regulators to “close loopholes” in the Orphan Drug Act.
The experts say the loopholes can provide pharmaceutical companies with millions of dollars in unintended subsidies and tax breaks and fuel skyrocketing medication costs.
They argue that companies are exploiting gaps in the law by claiming orphan status for drugs that end up being marketed for more common conditions.
“The industry has been gaming the system by slicing and dicing indications so that drugs qualify for lucrative orphan status benefits,” says Martin Makary, MD, of Johns Hopkins Hospital in Baltimore, Maryland.
“As a result, funding support intended for rare disease medicine is diverted to fund the development of blockbuster drugs.”
Dr Makary and his colleagues express this viewpoint in a commentary published in the American Journal of Clinical Oncology.
The US Food and Drug Administration (FDA) grants orphan designation to encourage the development of drugs for diseases that affect fewer than 200,000 people in the US. The Orphan Drug Act was enacted in 1983 to provide incentives for drug companies to develop treatments for so-called orphan diseases that would be unprofitable because of the limited market.
Dr Makary and his colleagues say the legislation has accomplished that mission and sparked the development of life-saving therapies for a range of rare disorders. However, the authors say the law has also invited abuse.
Under the terms of the act, companies can receive federal taxpayer subsidies of up to half a million dollars a year for up to 4 years per drug, large tax credits, and waivers of marketing application fees that can cost more than $2 million. In addition, the FDA can grant companies 7 years of marketing exclusivity for an orphan drug to ensure that companies recoup the costs of research and development.
Dr Makary says companies exploit the law by initially listing only a single indication for a drug’s use—one narrow enough to qualify for orphan disease benefits. After FDA approval, however, some such drugs are marketed and used off-label more broadly, thus turning large profits.
“This is a financially toxic practice that is also unethical,” says study author Michael Daniel, also of Johns Hopkins.
“It’s time to ensure that we also render it illegal. The practice inflates drug prices, and the costs are passed on to consumers in the form of higher health insurance premiums.”
For example, the drug rituximab was originally approved to treat follicular B-cell non-Hodgkin lymphoma, a disease that affects about 14,000 patients a year. Now, rituximab is also used to treat several other types of cancer, organ rejection following kidney transplant, and autoimmune diseases, including rheumatoid arthritis, which affects 1.3 million Americans.
Rituximab, marketed under several trade names, is the top-selling medication approved as an orphan drug, the 12th all-time drug best-seller in the US, and it generated $3.7 billion in domestic sales in 2014.
In fact, 7 of the top 10 best-selling drugs in the US for 2014 came on the market with an orphan designation, according to Dr Makary and his colleagues.
Of the 41 drugs approved by the FDA in 2014, 18 had orphan status designations. The authors predict that, in 2015, orphan drugs will generate sales totaling $107 billion. And that number is expected to reach $176 billion by 2020.
Dr Makary says this projection represents a yearly growth rate of nearly 11%, or double the growth rate of the overall prescription drug market. The authors also cite data showing that, by 2020, orphan drugs are expected to account for 19% of global prescription drug sales, up from 6% in the year 2000.
