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ORPHAN DRUG BILL AMENDMENTS WOULD RESULT IN "UNCONSTITUTIONAL TAKING"

Executive Summary

ORPHAN DRUG BILL AMENDMENTS WOULD RESULT IN "UNCONSTITUTIONAL TAKING" of exclusive marketing rights, according to a June 4 legal memorandum prepared by the D.C. firm Arnold & Porter on behalf of Lyphomed (Fujisawa Pharmaceuticals Company). Pending amendments of the Orphan Drug Act "would apply retroactively so as to destroy the valuable exclusivity property rights for existing orphan drugs," the memo argues, and "this retroactive application constitutes an unconstitutional, uncompensated 'taking' of an existing property right in violation of the Fifth Amendment." The memorandum was distributed to members of the House Health Subcommittee chaired by Rep. Waxman (D-Calif.), principal sponsor of the legislation (HR 4638). A Senate version (S 2576) is sponsored by Sen. Metzenbaum (D-Ohio). Lyphomed opposes the Waxman/Metzenbaum amendments, introduced in late April. A summary of the legislation specifically mentions Lyphomed's aerosolized pentamidine product, along with human growth hormone and erythropoietin, as expensive products targeted by the amendments to open the currently closed market. The authors of the memo are attorneys James Fitzpatrick, Donald Beers and William Cook, Jr. The memo states that "the bills would destroy an orphan drug manufacturer's exclusive right to market the drug during the exclusivity period if: (1) other applicants establish that they 'simultaneously' developed the orphan drug; or (2) the disease or condition for which the orphan drug is designated" has a patient population whose numbers are no longer limited to 200,000. Genentech has indicated that if the amendments are enacted, the growth hormone manufacturer will seek compensatory damages in court for the loss of its previously granted intellectual property rights. Two years remain in the exclusive marketing period for Protropin. The exclusively granted for Lilly's methionyl-free Humatrope expires in 1994.

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