Healthcare
The Orphan Drug Act
A legacy of fostering revolutionary policies, or an issue abandoned?
Ashlin Ferris (Edited by Amy Liu) - Spring 2022
More than 25 million Americans live with rare diseases [1]. Although "orphan" conditions are rare and affect fewer than 200,000 patients individually, their cumulative impact leaps to 300 million patients worldwide [2, 3]. These diseases are "orphaned" conditions because, without government intervention, they are abandoned by pharmaceutical companies. Companies have no incentive to research, manufacture, or patent orphan treatments given the small market for each disease.
To combat the poor supply of treatments, the United States passed the Orphan Drug Act (ODA) in 1983. This Act provided numerous financial benefits to companies who produced orphan drugs. But, as the number of approved orphan drugs grows, many believe that the Act is being exploited, making orphan drug development a predatory financial opportunity rather than a philanthropic motivator.
So, if orphan drugs target groups under 200,000 people, they must be substantially capped on potential profits, right? Not exactly.
Due to the ODA, clinical trials for orphan drugs have more flexible FDA standards, which makes their trials more likely to be nonrandomized with smaller sample sizes. While smaller trials are anticipated due to the scarcity of patients with orphan diseases, the net result for companies is a development process costing less than half of that for typical drugs [4]. This, in addition to a 50% tax credit, a seven year market exclusivity period, fee waivers, and increased numbers of grants, makes it clear how the ODA entices companies [5].
On top of these obvious benefits, the ODA doesn't restrict how many orphan designations a single drug can get. If a single drug treats multiple conditions, that drug can gain a new orphan status for each condition and, subsequently, acquire all accompanying benefits. For instance, treatments like "interferon, somatropin and levocarnitine [...] can obtain up to 33 orphan designations each'' [6]. Hence, drugs that are initially thought to treat small populations and receive benefits compensating for this scale often have a reach far larger than the 200,000 person cap.
Beyond multiple orphan designations, drugs can be granted orphan status while also treating multiple common diseases. A prime example of this is Rituximab, which was first an orphan-designated drug for follicular non-Hodgkin's lymphoma, but became the "fourth best-selling drug in the world in 2014" because it also treats several more common afflictions [7].
Another more recent example is Adalimumab, an orphan drug which treats tumor necrosis which, in 2018, rocketed to be "the [US's] top-selling prescription drug with $13.7 billion in sales" [8]. Of course, a majority of its profits came from its non-orphan disease applications. These two examples are nothing out of the ordinary. Drugs with orphan designations often form a considerable portion of the top best-selling drugs each year, despite their supposedly small scope [9].
While some of these broader scopes may be happy coincidences discovered during development, there are undoubtedly companies that intentionally try to pass off a drug that primarily treats common conditions as an orphan drug. This was demonstrated in 2020 when Remedesivir, a drug that treats the COVID-19 virus, was granted orphan designation because, at the time of initial application in 2019, there were sufficiently few cases [8]. Today, the ODA benefits that were intended for drugs that treat small populations are actualized for drugs with much larger scopes.
But companies taking advantage of orphan drug designations aren't even the largest problem with the ODA - the prices are.
The average cost of the most commonly sold orphan drugs in 2014 was $137,782 yearly per patient, but for comparable non-orphan drugs it was only $20,875 [7]. If this is jointly considered with the seven year exclusivity benefit that the ODA provides and the lack of generic alternatives, patients are left with little choice but to find ways to cover the exorbitant costs for treatments.
Half of those diagnosed with orphan diseases are under the age of 18 [3]. Consequently, the cost-burden for treatments often lies with the patients' caretakers, or rather with their insurance companies. In the US, where health insurance can cost fortunes and orphan-designated drugs face more coverage restrictions, this is especially problematic [10].
Coverage varies from drug to drug and from insurance policy to insurance policy. While some drugs may be completely covered, even 'small' percentages of medical benefit costs can result in thousands per month in out-of-pocket fees [11]. Orphan drugs are often included in the highest copay categories by health plans like Medicare and, over time, co-insurance and copayment costs are only expected to increase [12].
Make no mistake, the ODA is a revolutionary piece of government legislature that has improved the lives of millions. However, the number of orphan drug designations is increasing, with no definite limits on price. It is vital that these issues are brought to light. The first step towards a solution, which may include price caps or closing designation loopholes, is acknowledging that improvements are not just possible, but necessary.
References
[1] FAQs About Rare Diseases | Genetic and Rare Diseases Information Center (GARD) - an NCATS Program
[2] Rare diseases: Over 300 million patients affected worldwide -- ScienceDaily
[3] Rare and Orphan Diseases - NCSL
[4] Evaluating The Impact Of The Orphan Drug Act's Seven-Year Market Exclusivity Period | Health Affairs
[5] Incentives for orphan drug research and development in the United States. - Abstract - Europe PMC
[6] The US Orphan Drug Act: Rare disease research stimulator or commercial opportunity? - ScienceDirect
[9] Blockbuster drugs are stacking up orphan approvals
[10] Are payers treating orphan drugs differently? - PubMed (nih.gov)