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HOUSE ORPHAN DRUG BILL PERMITS SHARED EXCLUSIVITY FOR "SIMULTANEOUSLY" DEVELOPED PRODUCTS; PROTECTION WOULD EXPIRE WHEN PATIENTS EXCEED 200,000

Executive Summary

The 1990 round of the orphan drug legislative debate opened April 26 with a new set of amendments from Rep. Waxman (D-Calif.) that would provide for shared market exclusivity for orphif(xzgducts "developed simultaneously." The bill would be retroactive and would permit competitive entries against the currently successful orphan drugs. Sen. Metzenbaum is set to sponsor an identical companion bill in the Senate. The Orphan Drug Act's seven-year market exclusivity for sponsors of approved orphan drugs may be shared, under the Waxman proposal, with other firms whose products are "developed simultaneously" but approved by FDA after the original orphan product. Defining "simultaneous" a summary of the legislation stipulates that products sharing market protection must be shown to have been developed "in parallel...at the beginning, the middle and the end" of the R&D process. The bill (HR 4638) establishes three requirements for shared exclusivity: (1) subsequent sponsors must request orphan status for their proetburvhuiho!six months after the first-approved product is designated an orphan; (2) subsequent sponsors must be "actively pursuing" clinical trials relied on in its marketing application when the first product's application is filed; and (3) subsequent sponsors must submit an application to FDA "less than one year after" the original product's application is filed. Waxman also is proposing a ceiling for the exclusivity benefit. The April 26 legislation suggests that FDA be authorized to eliminate the exclusivity benefit for any orphan product whose patient population grows beyond the 200,000-patient threshold. The legislative summary states that "if at any time the number of people affected by the disease or condition goes above 200,000, additional companies may seek and obtain permission to market" competing brands of an orphan product. Furthermore, the legislation stipulates that orphan status will be based on "projections as to the number of persons who will be affected by the disease or condition three years from the date" of the request for orphan designation, rather than on the size of the patient population at the time of the request. "In the case of a condition such as AIDS," the summary notes, "a drug can qualify for orphan drug status" under current law "even though it is expected that in the near future more than 200,000 people will be affected." Regarding shared market exclusivity for simultaneously developed products, the bill would permit applicants to petition FDA for permission to market subsequent versions of a first-approved product during the original sponsor's exclusivity period. The bill would set a tight 60-day deadline for FDA to determine a simultaneous development. When a subsequent sponsor request is made, the bill requires the agency to respond within 60 days as to whether it agrees the products "were developed simultaneously." To facilitate subsequent applicants' compliance with the mandate regarding the timing of the request for orphan status, the bill requires FDA to publish orphan designations "promptly" in the Federal Register. Waxman is expected to schedule a markup of the bill before his House Health Subcommittee in mid-May. The California congressman is pursuing the orphan amendments despite the mixed reception for the plan exhibited at hearings earlier this year. At Feb. 7 hearings, Waxman appeared to face opposition to changes to the orphan drug bill from important members of his subcommittee, including Rep. Scheuer (D-N.Y.), who was an original sponsor of the legislation in 1983 ("The Pink Sheet" Feb. 12, p. 5). One shift in the political stage for the bill is the renewed support of the National Organization for Rare Diseases (NORD). As recently as the Feb. 7 hearings, NORD Executive Director Abbey Meyers had indicated a reluctance to ask for changes to the act. She stated at that time that only one product, human growth hormone, appeared to represent a misuse of the law's exclusivity incentive. Based on that concern, she supported a sales cap to qualify for orphan protection. In an April 27 statement, however, NORD's Meyers has switched to support amendments. Meyers and NORD President Jess Thoene said "we enthusiastically support Congressman Waxman's and Senator Metzenbaum's bills." NORD appears to be concerned that Waxman's persistence about the alleged large-drug abuses from the act's exclusivity provisions could lead to more onerous changes to the act in the future. The NORD officials believe that "the provision about simultaneous development is sufficiently narrow that it should not jeopardize the important exclusivity provision of the Act." NORD "would have preferred a sales cap," Thoene and Meyers observed. However, they said the simultaneous development approach "is constructive and should be tried in order to prevent future abuses of the intent of the Orphan Drug Act." The need to reauthorize the Orphan Drug Act's research grant program this year provides an impetus for the legislation. The bill authorizes FDA to provide a maximum of $20 mil. in grants for orphan research and development in 1991, $25 mil. in 1992 and $30 mil. in 1993. HHS would be required by the legislation to replace its Orphan Products Board with an Office for Orphan and Rare Diseases and Conditions, to be established within the Office of the Assistant Secretary of Health. The department also would be required to appoint an advisory committee to the office. In addition, the measure would permit orphan grants for research into "medical foods" as well as drugs and devices. A medical food is consumed under a physician's direction for dietary management of a disease or condition. A separate bill would extend the Orphan Drug Act's tax credit provisions so that researchers would receive credits for research conducted in preclinical testing as well as for studies in humans. Current law provides the credits only for clinical trials, and orphan drug sponsors have suggested that credits be available for work in such areas as toxicology and formulation research. In an April 26 statement, Waxman reiterated his concern that the Orphan Drug Act, while "a tremendous success," has "in a small number of cases...provided monopoly protection for drugs that are very profitable and that would have been developed without the incentives of the act." Consequently, he said, the law "has had the unintended effect of increasing prices for otherwise profitable drugs." Waxman specifically said his measure would open three currently closed markets: aerosolized pentamidine, erythropoietin and biosynthetic human growth hormone. Noting testimony from a Feb. 7 hearing before his Health Subcommittee ("The Pink Sheet" Feb. 12, p. 3), Waxman observed that Amgen is anticipating that 1990 sales to the federal government of its orphan erythropoietin product Epogen will total approximately $200 mil. Lilly's and Genentech's growth hormone products had sales totaling more than$100 mil. last year, he added. The bill's summary estimates that Epogen "costs [patients] about $8,000 per year," Lyphomed's aerosolized pentamidine costs AIDS patients "about $1,000 per year," and human growth hormone "costs between $10,000 and $30,000 per year." In an April 26 statement on Waxman's proposal, the Pharmaceutical Manufacturers Association continued its opposition to changes in the orphan provisions. The association contended that the shared exclusivity provision would "seriously undermine" the Orphan Drug Act's "most powerful incentive." PMA said that "if the seven-year exclusivity period is diluted ...the act would no longer be a factor in a corporate decision to pursue orphan drug research." The association cited a report in which the National Commission of Orphan Diseases recommended that the Orphan Drug Act's research incentives be strengthened ("The Pink Sheet" April 3, 1989, T&G-5). "The commission specifically recommended increasing the seven-year period of market exclusivity currently provided in the act," PMA said.
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