President-elect Trump’s nominee for commissioner of Food and Drugs, Martin A. Makary, MD, MPH, argued in 2016 that Congress should reform the Orphan Drug Act (ODA) because drug companies “are gaming the system to use the law for mainstream drugs.”[i] This alert summarizes his position, discusses some areas of contention about how the ODA works, and explores how these ideas could affect drug development if he is confirmed to lead the FDA.
Makary’s basic beliefs seem to be that an orphan drug should have a single use in a single orphan disease, otherwise it may not actually be an orphan drug; that a drug is not an orphan drug if it is used to treat more than 200,000 patients (notwithstanding that the ODA ties the 200,000 patient limit to a particular disease use, not use across all diseases); and that an orphan drug should not generate significant profit or be sold at a high price.
On the one hand, Makary (and his co-authors) observe, drug companies pursue orphan indications post-approval for drugs initially approved for non-orphan indications:
Over the past decade, ... a significant proportion of blockbuster drugs have been repurposed and are now expensive agents designated to treat less common conditions.
On the other hand, drug companies squeeze non-orphan drugs into the orphan drug category:
[A] pharmaceutical company will submit a drug for FDA approval with a narrow indication listed—one that is narrow enough to qualify for orphan drug benefits. After FDA approval, however, the drug can be used more broadly.
In some instances, drug companies gain this broader use, and pursue high prices, by seeking additional orphan indications and the orphan exclusivity that accompanies each of them:
These extreme prices are made possible by the ODA’s 7-year, FDA-approved exclusivity period. This exclusivity period can run past a drug’s trademark office patent. The exclusivity period protects a drug from generic competition and can run concordantly or sequentially on the basis of the number of indications for the drug, effectively providing pharmaceutical companies with government-sponsored monopolies over the drug and the ability to set the price of sometimes life-sustaining medications free from market competition.
As this quote illustrates, Makary shares with others a misunderstanding of how the ODA’s seven-year orphan drug exclusivity works. In fact, the orphan exclusivity protects only the drug coupled with the orphan indication for which the drug has orphan designation. Accordingly, when a drug has two (or more) indications, only one of which is protected by orphan exclusivity, FDA can and does approve generic versions (provided other exclusivities or patents do not block generic approval) or biosimilars (provided the reference product’s 12-year exclusivity has expired) with labels that include only the indication(s) not protected by the orphan exclusivity. More generally, a new indication on a drug or biologic never has the effect of delaying generic or biosimilar approval, as FDA carves the new indication out of the generic or biosimilar label. An exception, of sorts, is the pediatric exclusivity provision, which can delay generic or biosimilar approval by six months if the drug sponsor has completed FDA-requested pediatric studies (whether or not there is a pediatric indication added to the product label).
Makary’s comments devalue the development and FDA approval of new (orphan or non-orphan) indications of a drug, yet new indications are immensely valuable to patients and providers, as well as to drug sponsors. For example, a new indication may prove the safe and effective use in a new patient population (e.g., for Crohn’s patients after initial approval of use for psoriasis patients), which benefits the new patient group (both in terms of providing robust information about use of the drug for them and easing insurance reimbursement) as well as the drug sponsor by expanding the market for the drug. Or, a new indication may provide a deeper understanding of the therapeutic benefit of a drug (e.g., the heart benefits (such as reduced stroke and heart attacks) for diabetes patients of a drug initially approved to treat diabetes; a drug not only treats HIV infection but also substantially reduces viral transmission), which can help patients and their providers choose among therapeutic options, as well as help the drug sponsor compete against other therapies for the treated disease. If a drug has blockbuster status from its use to treat multiple common diseases, it is still vitally important that its use to treat a rare disease is studied and approved by FDA if it is safe and effective for that use.
It’s also noteworthy that Makary, like the Department of Health and Human Services (HHS) secretary nominee Robert F. Kennedy Jr., has concerns about government-provided monopolies, such as those from patents and drug exclusivities: The point of such monopolies is to provide a limited period “free from market competition” to incentivize innovation, whether that be the discovery of a drug and its uses or the years and dollars spent at risk to study the drug in an effort to gain FDA approval. (It’s also worth noting that products protected by patents or exclusivities are often not actually “free from market competition”: although they won’t face competition from the “same” product, there may be products that treat the same disease in basically the same way (for example, treating hepatitis C or diabetes) and against which there can be price competition.)
Makary uses several examples to illustrate how drugs can have many similar indications and how drug prices are high and can increase over the life of the drug. Yet his examples do not show that orphan designation or exclusivity play a role in the phenomena he describes. As noted above, orphan exclusivity for one indication does not block follow-on products, whether generic or biosimilar, that have other FDA-approved indications. With respect to biologics, over the time periods the paper discusses, there was no biosimilars pathway in the United States; in effect, before 2010 when Congress enacted the biosimilar pathway, a biologic sponsor had an infinitely long “exclusivity” blocking competitors from marketing the “same” biologic based on the sponsor’s data, and if exclusivity played a role in the phenomena he describes, it is this “exclusivity” that did it. This pathway led to the first two biosimilar approvals in 2015 and 2016. So, for example, the paper’s Table 1 of the top 10 drugs in 2015 worldwide sales includes five biologics, none of which faced biosimilar competition in the United States in 2015, and all of which were among the seven such drugs with orphan indications. With respect to the small molecule examples, patent expiration or settlements determined generic approval, not orphan exclusivity.
Makary cites data that the number of orphan drugs has been increasing and that, increasingly, a greater share of drugs FDA approves each year are orphan, suggesting both are a problem. Rather, it is the incredibly successful result of a much better environment for orphan drug development, achieved by, inter alia, the ODA, Congress’ decades long commitment to medical research through the National Institutes of Health (NIH), an FDA that has been learning from and striving to improve its support for orphan drug development, and a health care marketplace that now actually makes orphan drug development profitable by supporting the prices needed to incentivize that development. Makary seems to prefer the market for orphan drugs of 1983, when the ODA was enacted, to the current ecosystem that supports vibrant rare disease biomedical research and product development.
That said, most of the solutions Makary proposes—such as a tax on orphan drug revenues to recoup orphan grants and orphan R&D tax credits or reducing orphan exclusivity when drug revenues exceed some amount (like $1 billion)—are not that draconian, and they would require legislation. He may advocate for legislative reforms of the ODA if confirmed as FDA commissioner, but could he pursue orphan drug reform administratively as FDA commissioner? Probably not.
He credits FDA for having issued a guidance to reduce “salami slicing” indications to gain orphan designation (basically, if a sponsor wants orphan designation for a subset of a common disease, FDA expects the sponsor to explain based on a characteristic or feature of the drug why it cannot treat the larger population). He also argues for developing drugs whose molecular target is expressed in cancers of different organs simultaneously across all organs. In 2022, FDA issued a draft guidance on how a sponsor can pursue such a tissue agnostic cancer indication. Notably, this draft guidance describes an approach a sponsor may pursue: It would be a stretch, involving a creative use of FDA’s misbranding authority that courts would almost certainly overturn, for FDA to require the sponsor of a molecularly targeted oncologic to develop its drug in a tissue agnostic way.
In any case, such a requirement would be a bad idea. A tissue agnostic approach may seem good for patients, in that patients across the spectrum of affected tissues gain a drug approved for all tissue types as early as possible. Yet a tissue agnostic clinical development program is particularly challenging. As the 2022 draft oncology guidance highlights, there are several technical challenges to such development that mean it is simply inappropriate for many targeted cancer drugs. In addition, while it may be more efficient when all the cancers implicated by a drug’s molecular target are very rare (e.g., because grouping patients across tissue types may facilitate achieving a statistically significant sample size more quickly), it will likely be more difficult (more expensive, less quick) for a sponsor to pursue when the cancer is not very rare in one or more tissues. As such, a requirement to pursue a tissue agnostic approach may mean some cancer drugs that would otherwise be developed in a stepwise fashion will not be, which would be a loss for patients. Simply put, the more traditional stepwise approach to drug development is likely to lead to the development of more drugs than the all-at-once approach that Makary seems to prefer.
Next Steps
Orphan drug development is significant for both rare disease patients awaiting new treatments and for the industry developing orphan drugs. We expect that the Senate will raise the issue of orphan drugs to Makary as he moves through the confirmation process. He is expected to appear before the Senate Health, Education, Labor and Pensions Committee before his nomination will be considered by the full Senate. We will monitor the process and report further if clarity is gained on the issue of Makary’s approach to orphan drugs at the FDA.
[i] M.G. Daniel, T.M. Pawlik, A.N. Fader, N.F. Esnaola and M.A. Makary, The Orphan Drug Act: Restoring the Mission to Rare Diseases, American Journal of Clinical Oncology, Vol. 39, No. 2 (April 2016).
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