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Regulatory Focus™ > News Articles > 2020 > 3 > Gilead’s Orphan Drug Designation for COVID-19 Antiviral Raises Questions

Gilead’s Orphan Drug Designation for COVID-19 Antiviral Raises Questions

Posted 24 March 2020 | By Zachary Brennan 

Gilead’s Orphan Drug Designation for COVID-19 Antiviral Raises Questions

As Gilead begins to streamline the process for COVID-19 patients to receive its experimental antiviral remdesivir on a wider basis, the company also raised some eyebrows on Monday by obtaining an orphan drug designation for the potential COVID-19 treatment.

Orphan designations are meant to help companies developing treatments for limited populations (less than 200,000 people) and they provide incentives like tax credits for research and seven years of exclusivity for the sponsors of such drugs. Although the number of COVID-19 cases is currently below 200,000, some have begun to criticize this designation as just the latest in a series of orphan drug abuses.

Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes, told Focus that he’s “not surprised at all, the world at large might be focused on the need to alleviate global suffering, but we are nevertheless depending on the for profit pharmaceutical space to produce treatments, and they will take advantage of whatever special programs increase their profits or decrease their risk where they can. This seems particularly problematic because the disease prevalence is so unlikely to stay below the threshold even over the next month, although of course we all hope that it does.”

Walid Gellad, director of the Center for Pharmaceutical Policy & Prescribing at the University of Pittsburgh, similarly told Focus: ”It's not an orphan drug. Gilead knows this. Not a good look for them and hopefully not the first sign of what's to come in terms of drug pricing (if it's approved). Obviously we all hope it works. Incidentally, its designation as an orphan drug is yet another side effect of the US's complete failure in testing for [COVID-19].”

And even if the number of COVID-19 patients rises (cases currently total about 50,000 nationwide) above the 200,000 threshold, the orphan designation for remdesivir will not be revoked, according to the regulations on revoking orphan designations. A Gilead spokesman told Focus that "at the time of the request for orphan drug designation, only a small number of Americans were affected by COVID-19." 

Matthew Herder, director of the Health Law Institute at Dalhousie University in Nova Scotia, also told Focus: “That there have been fewer than 200,000 confirmed cases of COVID-19 in the US to date is an artefact of the limited availability of COVID-19 testing, not actual prevalence. Yet, the agency seemingly accepted the numbers at face value.”

As the treatment’s patents all run longer than the orphan designation’s seven years exclusivity (meaning generic versions of the treatment may not come to market for more than seven years), the other perk from the designation for Gilead, if the drug is approved, is a 25% tax credit for its research and development on the treatment.

Five clinical trials are currently underway and Gilead is running two of them. The company also says it’s manufacturing two formulations of remdesivir (liquid and freeze-dried), expanding its network of manufacturing partners and has begun internal manufacturing to supplement remdesivir capacity. 

What’s unknown, as Gellad mentioned, is how Gilead would price the antiviral if it is approved as an orphan drug. Orphan drug prices can be set very high (the average orphan drug price in 2017 at launch was $186,758), but Bernstein biotech analyst Ronny Gal said in an investor note on Monday that if it’s approved and priced as high as other, similar treatments (about $5,000) and if it’s only used on critical care patients in hospitals (it’s an infused antiviral), Gilead could end up bringing in about $11 billion from the treatment.

Herder added: “It's possible Gilead will price remdesivir exorbitantly. Given the number of people likely to be infected in the US, it may not need to. But even more importantly, this could negate any efforts by the US government to override Gilead's patent rights related to remdesivir in order to ramp up supplies of the anti-viral if and when it proves to be an effective treatment.”

Meanwhile, the use of a wider expanded access program for remdesivir could enable a faster regulatory filing or faster decisions from payers on whether to cover the treatment.

A Gilead spokesman told Focus: "If remdesivir is proven to be safe and effective to treat COVID-19, we are committed to making the medicine both accessible and affordable to governments and patients around the world."

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