The Office of Orphan Products Development (OOPD) dedicates its mission to promoting the development of products that demonstrate promise for the diagnosis and/or treatment of rare diseases or conditions. In fulfilling that task, OOPD interacts with the medical and research communities, professional organizations, academia, governmental agencies, and the pharmaceutical industry, as well as rare disease groups.
Prior to passage of historic legislation, private industry had little incentive to invest money in the development of treatments for small patient populations, because the drugs were expected to be unprofitable. For these drugs, intended for diseases or conditions affecting 200,000 or fewer persons in the United States, there is no reasonable expectation that costs of research and development can be recovered by sales of the drug in the United States, leaving no one to pursue development for rare disorders.
The Orphan Drug Act (ODA) of January 1983, passed in the United States with lobbying from the National Organization for Rare Disorders, (of which the IPPF is a member), is meant to encourage pharmaceutical companies to develop drugs for diseases that have a small market (http://tinyurl.com/q58-fda).
Since the market for any drug with such a limited application scope would, by definition, be small and thus largely unprofitable, government intervention is often required to motivate a manufacturer to address the need for an orphan drug. Critics of free market enterprise often cite this as a failure of free markets. Free market advocates often respond that without government-mandated minimum safety and efficacy requirements, drug development costs would be considerably lower. Under the law, companies that develop such an “orphan” drug (a drug for a disorder affecting fewer than 200,000 people in the United States) may sell it without competition for seven years.
The law provides three incentives:
(1) 7-year exclusive marketing rights, (which limits competition by preventing other companies from marketing the same version of the drug),
(2) a tax credit of 50 percent of the cost of conducting human clinical trials, and
(3) Federal research grants for clinical testing of new therapies to treat and/or diagnose rare diseases.
In 1997, Congress created an additional incentive when it granted companies developing orphan products an exemption from the usual drug application fees charged by the Food and Drug Administration (FDA) — these fees will total almost $500,000. Companies also may be eligible for faster review of their applications for marketing approval if their products treat a life-threatening illness. Many orphan drugs treat a serious or life-threatening disease.
Orphan drugs generally follow the same regulatory development path as any other pharmaceutical product, in which testing focuses on stability, safety and efficacy. However, some statistical burdens are lessened in an effort to maintain development momentum. For example, orphan drug regulations generally acknowledge the fact that it may not be possible to test 1,000 patients in a phase III clinical trial, (as is required for other drugs) as fewer than that number may be afflicted with the disease in question.
In the USA, from January 1983 to June 2004, a total of 1,129 different orphan drug designations have been granted by the OOPD and 249 orphan drugs have received marketing authorization. In contrast, the decade prior to 1983 saw fewer than ten such products come to market. Nevertheless, some critics have questioned allowing some pharmaceutical companies to make a large profit off of drugs that have a small market but still sell for a high price.
A new question has arisen now over the drugs that we now call “biologics”. A biologic is a medicinal product that is made from a living organism or its products — including blood and blood components, allergenics,somatic cells, gene therapy, tissues,and recombinant therapeutic proteins created by biological processes (as opposed to chemically). Biological drugs include antibodies, interleukins, and vaccines. Biologics can be composed of sugars, proteins, or nucleic acids or complex combinations of these substances, or may be living entities such as cells and tissues. Biologics are isolated from a variety of natural sources – human, animal, or microorganism – and may be produced by biotechnology methods and other technologies.
Unlike the more common traditional “small-molecule” drugs, biologics generally exhibit high molecular complexity, and may be quite sensitive to manufacturing process changes. Original patent-owner manufacturers have a molecular clone and original cell bank, and specific fermention and purification processes. Finally, nearly undetectable differences from individuals in impurities and/or breakdown products are known to have serious health implications. This has created a concern that generic versions of biologics might perform differently than the original branded version of the drug.
So, unlike most drugs, generic versions of biologics are not authorized in the US or the European Union under the same benefits applied to other drugs for orphan illnesses. This could wreak havoc as biologics are particularly expensive to develop but are relevant to orphan diseses such as P/P — treatments like IVIg, etanercept/Enbrel or infliximab/Remicade.
Because they are hard to copy exactly, biologics have not been subject to the generic competition that eventually knocks down the price of drugs like Lipitor and Prozac. Congress, as a cost-cutting piece of the overall health care effort, is preparing legislation to enable the US FDA to approve copycat versions
of biologic drugs. That could save consumers, insurers and the government billions of dollars in the coming years. The trick is to allow competition without undermining the financial incentives the pharmaceutical industry needs to undertake the risky job of developing the next drugs for cancer and other diseases.
Pharmaceutical trade groups say they require a 12-14 year exclusivity period in order to recoup their investments, but consumer groups, insurers, employers and generic drug companies say anything more than five year would eviscerate any potential savings from the new competition. So far, the biotechnology industry appears to be winning. The Unted State Senate’s health committee, for example, has agreed to 12 years of exclusivity. In the House, a bill that provides at least 12 years of exclusivity has many more co-sponsors than one that would provide five years.
The Obama administration has said that seven years would be a ‘generous compromise! But an exclusivity period could affect biologics that have already been on the market for over a decade. As for cost savings, the Congressional Budget Office has estimated that generic biologics might save the government only about $10 billion in the next 10 years, but the real savings might come more than 10 years out, as new biologic drugs appeared and as biologics represented an increasingly greater part of overall spending on drugs.
Keep your eye on this evolving dilemma.