Elsevier

Health Policy

Volume 95, Issues 2–3, May 2010, Pages 216-228
Health Policy

The US Orphan Drug Act: Rare disease research stimulator or commercial opportunity?

https://doi.org/10.1016/j.healthpol.2009.12.001Get rights and content

Abstract

Objectives

This study investigates issues associated with the United States Orphan Drug Act.

Methods

A comprehensive orphan drug database was compiled from FDA data and corporate annual reports of major pharmaceutical companies. Analysis allowed the generation of a descriptive orphan drug portrait as well as documentation of orphan drugs along their lifecycle.

Results

Currently, 2002 products have obtained orphan drug designation with 352 drugs obtaining FDA approval. Approximately 33% of orphan drugs are oncology products. On average, products obtain 1.7 orphan designations with approximately 70% obtaining a single designation. At least 9% of orphan drugs have reached blockbuster status with two-thirds having two or more designations. An additional 25 orphan drugs had sales exceeding US$ 100 million in 2008 alone. Since 1983, at least 14 previously discontinued products have been recycled as orphan drugs.

Conclusions

The United States Orphan Drug Act has created issues which, in some cases, have led to commercial and ethical abuses. Orphan Drug Act reform is necessary but current incentives, including 7 year market exclusivity, should be maintained in order to favour patients as well as economic prosperity. Suggested reforms include price regulation, subsidy paybacks for profitable drugs and the establishment of an International Orphan Drug Office.

Introduction

The United States Drug Act was implemented as a direct result of the political and social context following the thalidomide scandal of the late 1950s. The Kefauver–Harris amendments of 1962 mandated that pharmaceuticals demonstrate their innocuity and therapeutic efficacy resulting in substantially increased drug development costs. In order to maximize returns, the pharmaceutical industry focused on large disease populations while smaller rare disease populations were “orphaned” [1]. NGOs, such as the National Organisation for Rare Diseases, shed light onto the plight of rare disease sufferers and public pressure influenced political thinkers and health policy of the late 1970s [2]. With the objective of stimulating rare disease research as well as the development of pharmaceutical agents for the treatment of rare conditions, President Ronald Reagan signed the Orphan Drug Act (ODA) into law in 1983.

At the heart of the ODA, is the concept of “orphan disease” defined as a disease with a U.S. patient prevalence of less than 200 000 and/or for which drug development costs are unlikely to be recovered through sale in the United States [3], [4]. The ODA created a number of incentives for the pharmaceutical industry which include: (i) 7 year market exclusivity for orphan drugs; (ii) tax credits totalling half of development costs; (iii) research and development grants; (iv) fast-track development and approval; (v) access to Investigational New Drug Program and pre-approval; (vi) waived drug application fees [2], [3]. Orphan drug status is granted through the FDA and is independent of the patent system [2]. In addition, orphan drug market exclusivity periods come into effect at the date of market approval and are not expended during product development [1], [2].

With over 2000 orphan designations and an excess of 300 currently approved orphan drugs, the US Orphan Drug Act appears highly successful. Nonetheless, the current political, social and economic context has evolved over the 25 years since its implementation. Mean patient populations for orphan diseases are consistently rising [5] and technological advances forecast an era of personalised medicine. According to the National Institutes of Health, a total of 6819 rare diseases are presently registered in the United Sates [6]. These diseases afflict an estimated 20–25 million Americans and approximately 250 new rare diseases are described annually [6]. Manufacturers are increasingly interested in orphan designation as orphan drugs often face less competition and are more likely to demonstrate “proof of concept” [3], [6]. In addition, the ODA may potentially provide manufacturers with non-economic advantages as a company's ethical profile may benefit from the association to a rare disease [4]. As a result, orphan drugs are likely to seize an increasingly greater proportion of the annually approved pharmaceutical products and occupy larger fractions of healthcare budgets. In effect, sales of biopharmaceutical drugs, which include many orphan drugs, have increased by over 100% in the US and over 200% in most European nations during 2001–2005 [7].

Few studies have exposed the issues surrounding the orphan drug act. In addition, most of these investigations have based their conclusions on a relatively small number of exceptional and controversial orphan drugs. Few studies have used a quantitative approach or addressed orphan drugs in general along with extreme cases. Yin [8] is among the first studies to investigate the effects of ODA incentives on pharmaceutical innovation through mathematical analysis of an orphan drug database. Seoane-Vazquez et al. [6] investigated the effect of orphan drug status on market exclusivity length and provided a descriptive portrait of designated and approved orphan drugs. The present investigation attempts to expand ODA knowledge and stimulate discussion. Through the analysis of a comprehensive database, this study quantitatively characterises and describes the multiple outcomes of orphan drug products along their lifecycles. Advantages and disadvantages of the ODA are identified and presented. The frequency, extent and impact of ODA flaws are exposed and enumerated. Issues such as the validity of the currently accepted definition of orphan drug and rare diseases, the perceived profitability of orphan drugs, the vulnerability of patient populations and the potential need for ODA reform are addressed.

Section snippets

Data sources and database construction

Orphan drug data was obtained from the online List of Orphan Drug Designations and Approvals of the US Food and Drug Administration (last updated 5/5/2009; http://www.accessdata.fda.gov/scripts/opdlisting/oopd/index.cfm). Designation date, market authorisation date, indication, sponsor, name of active ingredient and trade name of all drugs with orphan designations were entered into a Systat 8.0 data file (SPSS Inc, Chicago, USA). Data relating to the designation and approval date as well as

Orphan designations granted in the United States

As of 5 May 2009, the FDA has granted 2002 orphan designations since the creation of the Orphan Drug Act. During its first year of implementation, only two products obtained orphan designation. In 2008, at its current highest point, 164 products were granted an orphan designation in this single year (Fig. 1). Over the last quarter century, the FDA has generally granted increasingly more orphan designations on an annual basis (Fig. 1). On average, 47 products per year were granted orphan

Issues with the United States Orphan Drug Act

Once a product has obtained orphan drug exclusivity, the FDA cannot approve a new brand name or generic drug application for the same product and for the same rare disease indication [6]. On the other hand, the same drug can obtain approval for a different disease indication and there is no limit on the number of drugs that may be designated for a specific disease [2], [6]. Allowing multiple products for specific rare diseases potentially benefits patients through the increased availability of

Conclusion

The Orphan Drug Act is recognized as one of the most successful legislation actions of the United States in recent history [1]. Prior to its enactment, only ten products which treat rare diseases were approved in the United States [2]. The ODA significantly increased the annual flow of new clinical trials, spurred innovation in novel drug technologies as well as in personalized drugs and lead to the identification of numerous new disease types [8]. The multitude of orphan products now available

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