Rare Disease Drugs Turning Huge Profits Catch Congress’ Eye

Drug companies developing medications for extremely rare diseases could lose their longer exclusivity period if they later turn a profit under changes to the drug approval process Congress is set to debate.

Congress has been debating ways to lower drug and health-care costs for years, and changes to the Orphan Drug Act are next on the list. To that end, the House Energy and Commerce Health Subcommittee will debate the Fairness in Orphan Drug Exclusivity Act Wednesday.

The bill would change the way research and development costs are calculated to stop potentially profitable drugs from getting the extra exclusivity and other financial benefits that come with orphan drug designation. The orphan drug law encourages drug companies to develop treatments for rare diseases. It gives drug companies seven extra years of exclusivity for a product, among other perks, if the drug treats less than 200,000 people.

Companies can also win the designation if they can show that sales of the drug won’t cover research and development costs. While at least three drugs have been approved using that low sales argument, critics say some of the drugs given that special status by the Food and Drug Administration have gone on to make billions for drug companies.

One example of how loopholes have been exploited is buprenorphine drugs—specifically Sublocade and Subutex, which later lost their designation due to public outrage.

“Sublocade’s orphan approval represented not only an abuse of orphan drug policy but also a potential catastrophe in the treatment of opioid use disorder,” Kao-Ping Chau, an assistant professor pediatrics at the University of Michigan Medical School, wrote in his prepared testimony.

Sharp Increase in Orphan Status

Orphan drugs have gotten more attention over the past few years as more companies have developed those types of drugs in the last decade. A 2018 report from the Government Accountability Office found the FDA has been inconsistent with how it handles the evidence it generally uses to decide whether to give companies the additional exclusivity.

Roughly 200 drugs were designated orphan drugs in 2010 compared with the 340 designations in 2019, according to a Bloomberg Law analysis of Food and Drug Administration records. Over 450 drugs got orphan designation in 2017 when designations reached their peak level this past decade. Getting an orphan drug designation doesn’t guarantee the drug will ultimately be approved.

The drug industry is watching to see whether the new FDA commissioner, Stephen Hahn, will continue pushing for faster responses to orphan drug applications like his predecessor, Scott Gottlieb.