Drugmakers 'hijacked' the FDA's orphan system to score premium pricing on mass-market meds: report

FDA
About one-third of the orphan drug approvals the FDA has doled out since starting up the program have been for repurposed, large-market products or drugs with multiple orphan green lights.

There’s no denying that financial incentives for orphan drug development spawned meds that have saved hundreds of thousands of lives. But they’ve also helped mass-market drugmakers rack up millions in incentives, tax breaks and patent-protected profits—in some cases through monopoly pricing, a new report contended.

About one-third of the orphan drug approvals the FDA doled out since the program began more than 30 years ago have been for repurposed, large-market products or drugs with multiple orphan green lights, according to a new investigation from Kaiser Health News.

Best-sellers such as Crestor from AstraZeneca, Abilify from Otsuka, Herceptin from Roche and Humira from AbbVie fall into the category of big sellers whose makers snagged millions in government incentives—not to mention seven years of exclusive rights on the market—when they resubmitted their therapies as treatments for smaller populations. Others, such as Allergan blockbuster Botox, started out as small-market meds and proceeded to collect multiple orphan approvals.

“What we are seeing is a system that was created with good intent being hijacked,” Bernard Munos, a former corporate strategy adviser at drug giant Eli Lilly, told Kaiser, noting that it’s “quite remarkable that it has gone on for so long.”

Repurposing a drug isn’t necessarily a bad thing, of course, if it can help get a treatment to additional patients. “We always talked about how we permit the second bite of the apple, third bite of the apple, as one small way to incentivize repurposing,” Dr. Gayatri Rao, director of the FDA’s Office of Orphan Products Development, told KHN.

But when the orphan incentives allow competition-free drugmakers to charge whatever prices they want for their meds? “Now, all of sudden, it seems like, wow, this practice may be driving up prices,” Rao said.

Drugmakers have long turned to their orphan statuses as a justification for high price tags, and companies are increasingly falling back on their products’ uniqueness as the public scrutiny on drug prices intensifies.

And more and more industry players are catching on. Coupled with the fact that orphan meds are easier to usher through the clinic—“about half of them get through with just one pivotal clinical trial,” which is “not so for common diseases,” Tim Coté, Rao’s predecessor in the FDA’s orphan drug office, told KHN—the pricing power has proved a big lure for industry players. In 2016, orphan approvals made up 40% of all new meds, up from 29% in 2010.

Rao told KHN, “we are going to look into this,” and added that a regulatory change wasn’t out of the question.

“Our goal is to try to get it right,” she said. “There are over 7,000 rare diseases, likely more, the vast majority of which have nothing … I want to ensure that we continue to keep our eye on that prize.”

Industry lobby groups, though, are unsurprisingly in favor of maintaining the status quo. With rare diseases “tragically killing and brutalizing mostly children,” incentives for orphan drugmakers should be kept in place, Jim Greenwood, president of the Biotechnology Innovation Organization (BIO), argues.

“I would argue that the risk of losing incentives in the system far outweighs the benefit of trying to save a few pennies on the health care dollar,” he told Kaiser.