FDA's orphan drug program under GAO scrutiny after senators allege abuse

The GAO has agreed to strike up an investigation into orphan drug policies at the FDA. Image: GAO/YouTube

Just weeks after senators raised questions about the FDA's orphan drug program—and after Marathon Pharmaceuticals caught fire for an $89,000 list price on an old-turned-new orphan med—the GAO has agreed to strike up an investigation.

The U.S. Government Accountability Office will take a look orphan drug laws at the request of Sens. Orrin Hatch, R-Utah, Chuck Grassley, R-Iowa, and Tom Cotton, R-Ark., who wrote the agency earlier this month outlining some concerns about potential abuse. In a letter (PDF) to Comptroller General Gene L. Dodaro, the senators asked the GAO to come up with legislative suggestions to help “preserve intent” of a “vital law.”

As part of the inquiry, Hatch, Grassley and Cotton are also asking the agency to produce a list of orphan drugs that have been either approved or denied, plus list the non-orphan uses of those that reached the market.

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

A GAO spokesperson told FiercePharma the agency “accepted a Congressional request to look at the topic.” He added that the inquiry “won’t get underway for several months, due to other reports our healthcare team already has currently underway.”

First approved in 1983, the Orphan Drug Act offers incentives to spur development in disease areas that might otherwise be ignored. But the legislation has come under fire for its potential loopholes, with Grassley highlighting the law last month. According to a letter from GAO's Congressional Relations managing director to Grassley, the agency's analysis will start in about nine months.

The new orphan drug scrutiny follows a wave of backlash into Marathon's pricing strategy for Emflaza, a decades-old steroid just approved by the FDA to treat the rare disorder Duchenne muscular dystrophy. Emflaza won orphan drug exclusivity for the drug, with minimal effort, experts said, and placed an $89,000 sticker price on the med.

RELATED: Marathon, under heavy fire for Emflaza pricing, makes surprise deal to sell drug for $140M-plus

Facing the swell of criticism, the company first "paused" its launch and then unloaded the drug to PTC Therapeutics in a deal potentially worth more than $190 million. Marathon also got a priority review voucher under orphan rules, which it can sell to a drugmaker looking to speed a new product through the agency; previously, vouchers have sold for $300 million-plus.

Back in January, a Kaiser Health News investigation found that drugmakers have legally used the orphan drug act to reel in big development incentives for mass-market meds.

Some best-selling drugs notched initial approvals for diseases with broad patient populations and then, when the drugmakers applied for approval in rare diseases, brought in benefits such as tax breaks and monopoly pricing power. That list includes AstraZeneca's cholesterol med Crestor, Otsuka's antipsychotic Abilify, Roche's cancer med Herceptin and AbbVie’s rheumatoid arthritis med Humira.

RELATED: Senator says drugmakers may be misusing FDA orphan drug rules—and costing taxpayers money

Alternatively, Allergan’s Botox first won approval to treat muscle spasms of the eye and eventually grew into a global brand as it notched a slew of wider uses.

Once GAO starts its work, first on the agenda will be to “determine the scope of what we will cover and the methodology to be used,” he added. “There is no timeline set until those first steps are complete,” according to the GAO spokesperson.