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Executive Summary

Rep. Waxman (D-Calif.) is dropping plans to introduce "shared exclusivity" as an amendment to the Orphan Drug Act. On Feb. 29, the California Democrat reportedly decided that he would bring his bill to reauthorize the Orphan Drug Act to the House floor without provisions to amend the law's exclusivity benefit. The full House is expected to consider the legislation by mid-March. The truncated bill would reauthorize the act for the next three years and increase ceilings on orphan product research funding from the previous level of $4 mil. per year to $10 mil., $12 mil., and $14 mil. over the next three years. In addition, the bill authorizes FDA grants for preclinical as well as clinical studies of orphan drugs. It also would provide agency funding for research on drugs not granted orphan status but which FDA considers potentially useful in treating rare diseases. The legislation further authorizes funds for studies of orphan medical devices and foods. The key change from the legislation that passed the House Energy & Commerce Committee on Oct. 14 was the deletion of provisions which would have permitted companies developing me-too orphan drugs to seek full NDA approval and to launch their products during an exclusive marketing period granted to the pioneer developer. The rationale for the provision to permit competition was that markets large enough to attract multiple NDA sponsors do not warrant the act's exclusivity incentive. However, several companies told Waxman that although his bill's full NDA requirement was a barrier to large manufacturers raiding a relatively small market, it would also leave pioneer orphan developers vulnerable to smaller companies willing to pursue a full NDA for a share of a market worth only a few million dollars. As an alternative, Waxman floated a proposal to eliminate exclusivity for orphan drugs for which annual sales exceed $25 mil. per year. That proposal elicited opposition from the Pharmaceutical Manufacturers Association, the Industrial Biotechnology Association, and FDA. By deleting the exclusivity elements, Waxman is free to move to the full House with the authorization provisions in time for fiscal 1989 appropriations. Although he is dropping the issue for now, the Commerce/Health Subcommittee chairman may eventually revisit it. Only two currently marketed orphan drugs are drawing criticism for pricing, the biosynthetic human growth hormones and Burroughs Wellcome's Retrovir (AZT). However, if future orphan products enter the market with high prices and a large market potential, Waxman could try again to limit the law's exclusivity provisions. One product being watched by Capitol Hill is genetically engineered erythropoietin (EPO), an orphan drug being developed by Amgen for end-stage renal disease. EPO is expected to enter the market with a high price tag and an indication targeting a small patient population, but could ultimately be prescribed for anemia and other types of renal disease. Orphan drug developers are likely to argue that exclusivity under the Orphan Drug Act does not prevent competitors from developing their products for broader, nonorphan indications. National Organization for Rare Diseases Executive Director Abbey Meyers said NORD is "delighted" with Rep. Waxman's decision. Meyers maintained that a "hesitancy" to pursue orphan product research could have resulted from legislation limiting exclusivity. Although a "small number" of biotech firms endorsed the concept of "shared exclusivity," the "security" that the incentive will remain intact is more important, and might produce an "upsurge" in research activity, she said.

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