The Orphan Drug Act: An Appropriate Approval Pathway for Treatments of Rare Diseases?

Abstract

The Orphan Drug Act provides financial incentives to pharmaceutical manufacturers to develop treatments for rare diseases affecting limited patient populations. Since passage of the Act in 1983, the U.S. Food and Drug Administration (FDA) has approved more than 600 orphan drug indications from greater than 450 distinct drug products. The annual number of orphan drug designation approvals has increased significantly in the recent past with much of this increase driven by approval of secondary indications for previously approved treatments. This recent increase has led to concerns regarding the Act as some pharmaceutical manufacturers have reaped outsized financial benefits while avoiding the regulatory requirements and costs associated with nonorphan drug development.

In 1983, President Ronald Reagan signed the Orphan Drug Act into law. The purpose of this Act is to encourage pharmaceutical manufacturers to develop treatments for individuals with rare diseases.^1-3 In the United States, there are approximately 7000 rare diseases, defined as either illnesses affecting <200 000 individuals or conditions that affect >200 000 individuals, but for whom manufacturers are not expected to recover drug development costs.^1,4 These diseases affect an estimated 25 to 30 million people, of which >50% are children.¹ In return for investment in rare disease drug development, manufacturers receive an orphan drug designation on U.S. Food and Drug Administration (FDA) approval with associated incentives including tax credits, a waiver of user fees, and 7 years of marketing exclusivity.⁵ Since passage of the Orphan Drug Act, the FDA has approved more than 600 orphan drug indications from more than 450 distinct drug products compared with only 10 such product approvals in the decade prior to enactment.

Notably, the largest annual numbers of orphan drug designation approvals have occurred in the recent past (2014-2017),^2,5 with 39% of drugs and biologics approved by the FDA in 2017 conferred an orphan designation.⁶ A significant proportion of this increase is driven by approval of secondary indications for previously approved treatments not unique molecular entities developed specifically for a rare disease.² The increase in orphan drug development and approval is beneficial for the treatment of diseases affecting limited patient populations. However, concerns regarding the Orphan Drug Act have recently arisen leading to investigations of the approval process and potential future revisiting of the language within the law.^3,7,8

In March 2017, Republican Sens. Orrin Hatch, Chuck Grassley, and Tom Cotton requested that the Government Accountability Office (GAO) investigate the orphan drug program after a Kaiser Health News investigation suggested that the program was “being manipulated by drug makers to maximize profits and to protect niche markets for medicines being taken by millions.”⁸ This investigation revealed that FDA reviews of orphan drug applications were inconsistent and often incomplete, particularly regarding 2 specific criteria: the number of patients that would potentially benefit from the drug product and whether scientific evidence existed indicating that the medication actually treated the rare disease. In some cases, it appeared that FDA reviewers simply trusted whatever information the sponsor provided rather than investigate claims independently, which could potentially lead to orphan approval and associated benefits without sufficient regulatory scrutiny.

Beyond the GAO investigation, others have expressed concerns that the recent exponential increase in successful orphan drug designations under the Act may adversely impact the pharmaceutical market place and the integrity of the US drug approval system.^3,7 With the attractive nature of the incentives within the Orphan Drug Act and the burdensome requirements of traditional drug approval, there has been a noticeable shift among some pharmaceutical companies to focus disproportionately on orphan drug development.³ This shift can be observed in the fact that one-third of all pharmaceutical spending in the United States in 2020 is expected to be on rare disease medicines.⁸

Critics of the Orphan Drug Act note 2 major issues—pharmaceutical manufacturers who apply for an orphan drug designation can often avoid the potentially exorbitant costs associated with nonorphan drug development and these companies charge astronomically high prices due to the lack of generic competition.^3,7 In 2017, the top 10 orphan medications each generated more than $1 billion in sales annually, a benchmark that is typically touted as “blockbuster status” for nonorphan therapies.³ That same year, all orphan drug products generated approximately $125 billion in sales, representing an estimated 16% of the total prescription drug market.

These issues have led some to question whether the current statutory language within the Orphan Drug Act should be revisited or, alternatively, if the orphan drug classification should be abolished in its entirety.^3,7 As pharmaceutical companies can reap $1 billion annual sales for orphan medications, is there really a need to continue to incentivize research into treatments for rare diseases as the Act currently allows? Additionally, should legislators revisit the language of the Act to encourage pharmaceutical manufacturers to focus research efforts in long ignored conditions and leverage the benefits of the orphan approval process to maintain affordable patient access to rare disease medications? These are key questions that must be addressed for the Orphan Drug Act to function with appropriate legislative intent and provide patients with rare diseases necessary therapies.