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ORPHAN DRUG AMENDMENTS PASSED BY HOUSE JULY 30

Executive Summary

ORPHAN DRUG AMENDMENTS PASSED BY HOUSE JULY 30 in a voice vote under suspension of rules. Referred to the House floor by the Energy & Commerce Committee, the measure authorizes FDA to revoke market exclusivity for products when patient populations for an orphan indication exceed 200,000 ("The Pink Sheet" July 23, T&G-3). A suspension of House floor rules means that the bill is considered without discussion or amendment, but a two-thirds majority is needed for passage. The bill (HR 4638) also allows companies to launch competing versions of orphan drugs during a first product's seven-year market exclusivity period when it can be shown that the subsequent products were simultaneously developed throughout the R&D period. However, the simultaneous development provision would not result in products sharing exclusivity for at least five years, industry observers speculate, because it applies only to products whose sponsors applied for orphan designation or began clinical studies after July 16, 1990. Consequently, the bill would not apply to any of the three high-priced products -- Genentech and Lilly's biosynthetic human growth hormone products, Lyphomed's Nebupent aerosolized pentamidine and Amgen's Epogen erythropoietin -- that Rep. Waxman (D-Calif.) said he was targeting when he introduced the legislation. Nor would the bill apply to any potentially lucrative products currently in the pipeline, particularly colony stimulating factor drugs. The simultaneous exclusivity provision was made retrospective during the Commerce/Health Subcommittee's markup of the measure. Orphan drug legislation must now be considered in the Senate, where the Labor & Human Resources Committee has jurisdiction. Chairman Kennedy (D-Mass.) and Ranking Republican Hatch (Utah) reportedly are very early in discussions about amending the Orphan Drug Law. Though the two senators are said to be willing to consider legislation that does more than simply reauthorize the law's FDA grant program, both have indicated opposition to Waxman and Sen. Metzenbaum's (D-Ohio) proposals regarding simultaneous development. Nonetheless, Metzenbaum is said to remain committed to his legislation (S 2576). Despite possible reservations of Kennedy and Hatch, the legislation has gained momentum by House passage. If Metzenbaum finds the House-passed bill's prospectivity objectionable, or if the Labor & Human Resources Committee fails to move any legislation, he retains the option of attaching his or the House bill to separate legislation on the Senate floor. Rep. Stark (D-Calif.) also has launched another legislative attack on drugs that he believes abuse the orphan law. A bill (HR 5421) he introduced July 31 would establish a "windfall profits tax" on any company that recaptures more than twice its R&D costs and earns a 25% annual profit off an orphan drug in any taxable year during the orphan product's exclusivity period. In such cases, the company would be taxed at a rate of 75% on its orphan drug's profits each year for the remainder of the exclusivity period.
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