Drug development has always been expensive and time consuming. In 1983, Congress passed the Orphan Drug Act (ODA) to create incentives for pharmaceutical developers to create products for conditions that occur in fewer than 200,000 people in the United States.
Rare conditions have historically been less desirable for pharmaceutical development given the challenges drug manufacturers have in recouping their investments, says Stacy Lauderdale, PharmD, BCPS, senior director, Drug Information, Vizient, Inc., a member-driven healthcare services company. ODA offers financial incentives including tax credits and financial grants as well as additional market exclusivity to encourage drug development for rare diseases.
Recently, FDA Commissioner Scott Gottlieb announced the FDA will move to close loopholes in the program. Here’s more on what those loopholes are, and how the FDA will address them.
The loophole: Companies are pursuing orphan designation as a means to avoid pediatric clinical studies
When the FDA bestows an “orphan” designation, it validates a product’s potential benefit. However, this designation also exempts a product from clinical studies in a pediatric population. When a product is approved for an adult population (not an orphan population), sponsors can pursue and receive an orphan designation for a pediatric population which waives Pediatric Research Equity Act (PREA) requirements, explains Greg Dombal, chief operating officer, Halloran Consulting Group, a management consulting firm.
But as medical understanding has expanded, the FDA has grown concerned that some companies are pursuing an orphan designation with the primary purpose of avoiding the post-approval commitment, cost, and risk of a pediatric clinical study. This apparent reduction in clinical studies is contrary to what the agency was seeking with the ODA.
In addition, ODA’s market exclusivity provision bars the FDA from approving any new or abbreviated application for the same drug for the same indication during the period of exclusivity and the manufacturer can price the drug at what the market can bear, Lauderdale explains. In 2016, the average cost per patient per year for orphan drugs was 5.5 times higher than non-orphan drugs (using median prices) and with a return on investment of 1.89 times greater than a non-orphan drug.
How the FDA plans to fix it
The FDA is proposing to stringently enforce the requirements for pediatric studies and ensure that orphan designations are granted for the purpose of (and actually encourage) studies in all groups who might benefit from a drug. “The proposed changes could eliminate the waiver of PREA requirements for some orphan products,” Dombal says.