FDA Seeks to Prevent Pharmaceutical Companies from Abusing ‘Orphan Drug’ Law

Recently, I discussed a couple of reports that have come to light, potentially exposing the shortcomings of an FDA policy on “fast tracking” the approval of certain new drugs. Now, the FDA is in the middle of a large operation to remedy other policy issues with the hopes of increasing competition and decreasing drug prices in the pharmaceutical industry. One major part of this plan in particular is an effort to prevent drug companies from abusing the Orphan Drug Act that was passed by Congress in 1983.

The term “orphan drugs” refers to pharmaceuticals that (could) treat a condition or disease that affects less than 200,000 people.  Since such a small market would provide little in the way of profits for most drug companies, Congress sought to encourage companies to still put maximum effort into developing and producing these drugs by offering financial and tax incentives through the Act.

Recently, there have been accusations that drug companies are abusing this law for their own gain. For instance, there is a requirement that a drug must be new in order to receive the status of being an orphan drug. Simply put, pharmaceutical manufacturers cannot apply for the financial incentives under the Orphan Drug Act for a drug already on the market—yet many companies are doing exactly that. According to Kaiser Health News, 70 of the 450 drugs that have received orphan status since 1983 had already been approved for use in the general population by the FDA; thereby receiving millions of dollars in government incentives as well as exclusivity rights in treating the disease for up to seven years.

Another major abuse issue is one where the manufacturers of these drugs pursue treatments for rare diseases in children—thus bypassing traditional pediatric testing requirements. Closing this loophole is just one of several measures recently announced by FDA Commissioner Scott Gottlieb in an effort to ensure that incentives are granted “…in a way that’s consistent with the manner Congress intended.”

So why are drug makers going out of their way to twist this almost 35-year-old law to their advantage? Because many patients are willing to pay dearly for orphan drugs; making them extremely lucrative for pharmaceutical companies. To combat this, the FDA wants to conduct a thorough review of how companies are abusing the Orphan Drug Act and potentially make significant changes to the application process and marketing procedure for such pharmaceuticals. If this endeavor by the FDA is successful, it could not only come as a big relief to those patients who desperately need these drugs for rare diseases, but also help address competition and pricing problems that exist on a larger scale in the drug industry. Ultimately, the FDA wishes to restore the Act’s original intent—helping an extremely vulnerable population of patients who suffer from rare diseases with few treatment options.

Our law firm of Childers, Schlueter & Smith is well-versed in drug and medical device litigation and might be able to help you or a family member who is suffering due to such lacking FDA policy or from the unavailability of affordable treatment options for certain conditions or diseases. If you have questions, please give us a call at 1-800-641-0098. All initial inquiries are free of charge and without obligation.