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An investigation by Kaiser Health News (KHN) suggests some pharmaceutical companies are using the Orphan Drug Act to create monopolies and charge high prices for drugs that are already approved for mass market use in the US.
The US Food and Drug Administration (FDA) grants orphan designation to drugs and biologics intended to treat, diagnose, or prevent conditions that affect fewer than 200,000 people in the US.
The designation provides incentives for sponsors to develop products for rare diseases. This includes a 50% tax break on research and development, a fee waiver, access to federal grants, and 7 years of market exclusivity if the product is approved.
However, the KHN investigation showed that some companies have been applying for—and obtaining—orphan designation for drugs already used to treat large populations.
The report states that more than 70 drugs that currently have orphan status were first approved by the FDA for mass market use.
In fact, 7 of the 10 best-selling drugs of 2015 were also orphan drugs. Included on this list are Rituxan (rituximab), Neulasta (pegfilgrastim), and Revlimid (lenalidomide).
The report also states that more than 80 drugs with orphan designation have been approved to treat more than one rare disease. For example, Gleevec (imatinib) has 9 orphan designations.
The KHN investigation revealed that, overall, about a third of orphan designations granted since the Orphan Drug Act was passed in 1983 have been either for repurposed mass market drugs or drugs that received multiple orphan designations. (Roughly 450 orphan drugs have been brought to market since 1983, according to the report.)
For each orphan designation, a drug’s developer qualifies for “a fresh batch of incentives,” the report notes.
The exclusivity incentive means the FDA won’t approve another version of an orphan drug to treat the rare disease(s) in question for 7 years, even if the company’s patent on the brand-name drug has expired.
For example, generic versions of imatinib are being used to treat chronic myeloid leukemia in the US because the patent for Gleevec has expired. However, because of an orphan designation, Novartis still has exclusivity for Gleevec (and will until 2020) as a treatment for patients with newly diagnosed Philadelphia chromosome-positive acute lymphoblastic leukemia who are also on chemotherapy.
The KHN report notes that exclusivity can be “a potent pricing tool” due to a lack of competition. And this means orphan drugs may “come with astronomical price tags.”
For instance, there are 33 orphan drugs that cost at least $28,000 for a 30-day supply and 4 orphan drugs that cost more than $70,000 per month.
According to the KHN report, the FDA is planning to investigate this issue.
Gayatri Rao, MD, director of the FDA’s Office of Orphan Products Development, has asked for a review of all orphan designations granted in 2010 and 2015. She said the review will not extend further because the FDA does not have the resources to review all orphan drugs. 
Photo courtesy of the FDA
An investigation by Kaiser Health News (KHN) suggests some pharmaceutical companies are using the Orphan Drug Act to create monopolies and charge high prices for drugs that are already approved for mass market use in the US.
The US Food and Drug Administration (FDA) grants orphan designation to drugs and biologics intended to treat, diagnose, or prevent conditions that affect fewer than 200,000 people in the US.
The designation provides incentives for sponsors to develop products for rare diseases. This includes a 50% tax break on research and development, a fee waiver, access to federal grants, and 7 years of market exclusivity if the product is approved.
However, the KHN investigation showed that some companies have been applying for—and obtaining—orphan designation for drugs already used to treat large populations.
The report states that more than 70 drugs that currently have orphan status were first approved by the FDA for mass market use.
In fact, 7 of the 10 best-selling drugs of 2015 were also orphan drugs. Included on this list are Rituxan (rituximab), Neulasta (pegfilgrastim), and Revlimid (lenalidomide).
The report also states that more than 80 drugs with orphan designation have been approved to treat more than one rare disease. For example, Gleevec (imatinib) has 9 orphan designations.
The KHN investigation revealed that, overall, about a third of orphan designations granted since the Orphan Drug Act was passed in 1983 have been either for repurposed mass market drugs or drugs that received multiple orphan designations. (Roughly 450 orphan drugs have been brought to market since 1983, according to the report.)
For each orphan designation, a drug’s developer qualifies for “a fresh batch of incentives,” the report notes.
The exclusivity incentive means the FDA won’t approve another version of an orphan drug to treat the rare disease(s) in question for 7 years, even if the company’s patent on the brand-name drug has expired.
For example, generic versions of imatinib are being used to treat chronic myeloid leukemia in the US because the patent for Gleevec has expired. However, because of an orphan designation, Novartis still has exclusivity for Gleevec (and will until 2020) as a treatment for patients with newly diagnosed Philadelphia chromosome-positive acute lymphoblastic leukemia who are also on chemotherapy.
The KHN report notes that exclusivity can be “a potent pricing tool” due to a lack of competition. And this means orphan drugs may “come with astronomical price tags.”
For instance, there are 33 orphan drugs that cost at least $28,000 for a 30-day supply and 4 orphan drugs that cost more than $70,000 per month.
According to the KHN report, the FDA is planning to investigate this issue.
Gayatri Rao, MD, director of the FDA’s Office of Orphan Products Development, has asked for a review of all orphan designations granted in 2010 and 2015. She said the review will not extend further because the FDA does not have the resources to review all orphan drugs.
Photo courtesy of the FDA
An investigation by Kaiser Health News (KHN) suggests some pharmaceutical companies are using the Orphan Drug Act to create monopolies and charge high prices for drugs that are already approved for mass market use in the US.
The US Food and Drug Administration (FDA) grants orphan designation to drugs and biologics intended to treat, diagnose, or prevent conditions that affect fewer than 200,000 people in the US.
The designation provides incentives for sponsors to develop products for rare diseases. This includes a 50% tax break on research and development, a fee waiver, access to federal grants, and 7 years of market exclusivity if the product is approved.
However, the KHN investigation showed that some companies have been applying for—and obtaining—orphan designation for drugs already used to treat large populations.
The report states that more than 70 drugs that currently have orphan status were first approved by the FDA for mass market use.
In fact, 7 of the 10 best-selling drugs of 2015 were also orphan drugs. Included on this list are Rituxan (rituximab), Neulasta (pegfilgrastim), and Revlimid (lenalidomide).
The report also states that more than 80 drugs with orphan designation have been approved to treat more than one rare disease. For example, Gleevec (imatinib) has 9 orphan designations.
The KHN investigation revealed that, overall, about a third of orphan designations granted since the Orphan Drug Act was passed in 1983 have been either for repurposed mass market drugs or drugs that received multiple orphan designations. (Roughly 450 orphan drugs have been brought to market since 1983, according to the report.)
For each orphan designation, a drug’s developer qualifies for “a fresh batch of incentives,” the report notes.
The exclusivity incentive means the FDA won’t approve another version of an orphan drug to treat the rare disease(s) in question for 7 years, even if the company’s patent on the brand-name drug has expired.
For example, generic versions of imatinib are being used to treat chronic myeloid leukemia in the US because the patent for Gleevec has expired. However, because of an orphan designation, Novartis still has exclusivity for Gleevec (and will until 2020) as a treatment for patients with newly diagnosed Philadelphia chromosome-positive acute lymphoblastic leukemia who are also on chemotherapy.
The KHN report notes that exclusivity can be “a potent pricing tool” due to a lack of competition. And this means orphan drugs may “come with astronomical price tags.”
For instance, there are 33 orphan drugs that cost at least $28,000 for a 30-day supply and 4 orphan drugs that cost more than $70,000 per month.
According to the KHN report, the FDA is planning to investigate this issue.
Gayatri Rao, MD, director of the FDA’s Office of Orphan Products Development, has asked for a review of all orphan designations granted in 2010 and 2015. She said the review will not extend further because the FDA does not have the resources to review all orphan drugs.