Executive Summary

Rep. Waxman (D-Calif.) is expected to be joined by Sen. Metzenbaum (D-Ohio) during the week of Sept. 28 in introducing bills to amend the Orphan Drug Act. The legislators are seeking to deny the act's exclusivity benefits for highly profitable products for which multiple sponsors are simultaneously seeking marketing approval. The bill's effect will be prospective. In addition, the measure is also expected to extend Orphan Drug Act benefits to medical devices. Waxman has scheduled a hearing on the proposal for Oct. 1. FDA and National Organization for Rare Diseases Executive Director Abbey Meyers have agreed to testify. The Pharmacetical Manufacturers Association, the Health Industry Manufacturers Association, the Generic Pharmaceutical Industry Association, and a number of biotechnology companies also were asked to testify. Waxman's interest in amending the criteria for receiving orphan drug benefits stems from experience with products like biosynthetic human growth hormone and Burroughs Wellcome's Retrovir (zidovudine, or AZT). The Orphan Drug Act provides its benefits, particularly seven years of exclusive marketing, to drugs approved for diseases whose patient population is no more than 200,000. The rationale was that with such small patient populations, drug manufactures would need incentives to be able to realize return on the R&D investment needed to develop needed therapies. However, the authors of the Orphan Drug Act did not anticipate that the costs to patients for such therapies would reach as high as the $13,000-$17,000 annual cost for human growth hormone or the $8,000-$10,000 annual cost for Retrovir. The market for human growth hormone is currently estimated at approximately $100 mil. With $25,000 AIDS patients, the Retrovir market could reach $250 mil. The profit potential has stimulated extensive research efforts. At least five manufacturers, for example, have developed biosynthetic human growth hormone products. Congress has several alternatives for amending the act. Last year Sen. Hatch (R-Utah) introduced a bill to provide that when more than one firm is developing an orphan product, all manufacturers that had submitted NDAs for an orphan product may share (upon FDA approval) in the seven-year exclusivity period earned by the first product approved. Another option is to lower the 200,000 patient ceiling or at least to suspend exclusivity if the ceiling is exceeded (for example, through use for a second indication). A third alternative is to set an upper limit on dollar volume. When introducing his bill last year, Hatch called simultaneous development by several manufacturers "commendable," maintaining that multiple sources can assure supplies and lead to lower prices and continued improvements through competition. The Utah senator added that Congress "ought not to shut off the second or third company from taking the product to market by permitting only one company" sole exclusivity for seven years. In fact, the current Orphan Drug Act in other respects encourages simultaneous development by providing more than one company tax credits and protocol assistance from FDA, Hatch noted.