ORPHAN DRUG LAW SHOULD PERMIT CONCURRENT DEVELOPMENT EFFORTS BUT NOT PENALIZE ORIGINAL SPONSORS BY LIMITING EXCLUSIVITY, FDA COM. YOUNG TELLS REP. WAXMAN

Amendments to the Orphan Drug Act designed to limit exclusive marketing benefits for products with significant commercial potential should permit unintentional, concurrent development of orphan products by separate sponsors, FDA Commissioner Young testified at an Oct. 1 hearing before Rep. Waxman's House Commerce/Health Subcommittee. FDA "sometimes" receives NDAs for the same drug from two sponsors, neither of which "knows the other has put it forth -- [NDA submission] is commercial and privileged information," Young explained. "Under such circumstances," the FDA commissioner said, "I could clearly envision there would be, in all good faith, two companies coming forward with an idea that has become obvious." Young, however, urged Congress to make sure that incentives for originators are not undercut by me-too development efforts. The commissioner continued, "if a company is willing to put the funds into" development of an orphan drug, it should not have its exclusivity period jeopardized because a second company recognizes the product's commercial potential and tries to follow along into the market. Amendments to the orphan drug law, Young declared, should allow FDA to "distinguish between the two companies that would come through accidentally and the commercial venture on a case-by-case basis." Under Waxman's proposed Orphan Drug Amendments, the reward of a seven-year marketing exclusivity period for developing an orphan product would apply only to protection from ANDA or paper NDA copies. Exclusivity would not prevent follow-up applications with full NDAs. The rationale for that approach is that a second company's willingness to undergo the full NDA review process demonstrates a substantial commercial potential for the product. The commissioner cited biosynthetic human growth hormone to illustrate both sides of his argument. "As a geneticist, when we were looking in the early 1970s for things to clone, growth hormone was obvious: small molecule, well-characterized, easy to do," he said. "I could see a number of companies looking at this as a first, general test of the system." On the other hand, "there are other uses with this particular compound which now are far beyond the original orphan intent." Young questioned the Waxman bill's approach of defining commercial potential by the willingness of a sponsor to file a full NDA. Development of an orphan drug by multiple sponsors, Young said, is "not necessarily" indicative that a drug will be profitable and is therefore unworthy of orphan status. "Multiple company development is not necessarily a sign of likely drug profitability," he said. "In other words, designation of multiple companies may not always be a sufficient measure of drug profitability." "Since the enactment of the Orphan Drug Act, there have been seven instances in which more than one company has simultaneously sought marketing exclusivity for the same drug product. These seven instances are from a total of 159 designations," Young pointed out. "Each situation must be evaluated on a case-by-case basis." One area in which Congress should consider expansion of the act's benefits is awards of grants for preclinical studies, Young maintained. Noting that grants can be awarded only for clinical trials under current law, the commissioner argued that grants are appropriate for small companies that find the expense of "difficult toxicological studies" sufficient to "block development." Glaxo R&D VP Pedro Cuatrecasas also recently suggested extension of orphan development incentives to preclinical work ("The Pink Sheet," Sept. 28, p. 7). The commissioner pointed out that FDA has conducted "over 250 meetings" since the law was enacted "to provide information to prospective sponsors, assist them in meeting various provisions of the act, advise on clinical studies to be conducted, and to provide guidance on the process for applying for marketing approval of an orphan drug." "Over 150 drugs have been designated as orphans," Young reported, and 18 have been approved. In fiscal 1987 "a total of $4 mil. in grants was awarded" -- 25 new grants and 28 continuation grants. Although Young testified that FDA supports grants for research into development of orphan medical devices and medical foods, the agency does not support a proposed study of the appropriateness of exclusivity to encourage development of such products. "I would rather put our limited resources on focusing on" approval of orphan products, the commissioner said. "My best professional advice would be that we seem to have in hand the information that would show that [exclusivity] is not as relevant at all in any stretch of the imagination, and thus we would prefer to focus on the . . . approval process itself." National Organization for Rare Disorders Executive Director Abbey Meyers suggested that the act be amended so that exclusivity is granted to products with limited annual sales rather than to those with a limited patient population. NORD would "support legislation that puts a ceiling on the amount of total sales for an orphan drug, after which [its] exclusivity would expire," Meyers said. "For example, most orphan drugs are orphans because projected annual sales are under $5 mil. per year. If Congress puts a generous cap on total sales" -- such as $70 mil. over a seven-year period -- and "that plateau is reached before seven years, the manufacturer would lose the remaining years of exclusivity." Such a criterion for orphan status "would encourage manufacturers to keep the prices of these drugs as low as possible in order to maintain exclusivity for as long as possible," she reasoned. "It is important for Congress to send a signal to the corporate world that you don't expect manufacturers to lose money on these drugs, but you do expect their profit to be reasonable." Meyers testified that NORD is "cautiously endorsing" Waxman's proposed amendments.