Orphan drug provisions in the House-passed 21st Century Cures Act could increase US healthcare spending by billions of dollars over the next decade, consumer advocacy group Public Citizen warns, though the bill still remains in limbo in the Senate.

The provisions in question would add an additional six months of marketing exclusivity for approved drugs that later go on to be approved to treat rare diseases. The extended period of exclusivity would apply to all indications of a given drug, which Public Citizen argues will lead to increased spending and delay access to generic drugs for all patients.

Background

The Orphan Drug Act of 1983 was passed to spur drug development for rare diseases affecting fewer than 200,000 individuals in the US annually. The incentives include seven-years of marketing exclusivity, tax credits for clinical trial expenses, user fee waivers and federal grants.

In November 2014, the Oprhan Product Extensions Now Act (OPEN Act) was introduced in the US House of Representatives to grant already-approved products an additional six months of marketing exclusivity if the product is later approved for an orphan indication.

The OPEN act is based largely on the Pediatric Research Equity Act (PREA), which was passed under the Food and Drug Administration Modernization Act of 1997 (FDAMA). Under PREA, companies could gain an additional six months marketing exclusivity for approved drugs that go on to be approved for a pediatric indication.

Both the OPEN Act and PREA are intended to increase research into drug safety and effectiveness in populations where research has historically been lacking.

The provisions of the OPEN Act were later incorporated into Subtitle I of the version of the 21st Century Cures Act passed by the House of Representatives in July 2015. The Senate version of the bill, known as the Innovations for Healthier Americans Act, has yet to be released by the Senate Health, Education Labor & Pensions Committee is facing an uphill battle and has missed a series of deadlines.

Public Citizen

In its report, called House Orphan Drug Proposal: A Windfall for Pharma, False 'Cure' for Patients, Public Citizen warns that the orphan drug provisions in the 21st Century Cures Act could increase US drug spending by $3.9 billion to $11.6 billion by 2025.

The reason, the report says, is that the additional six months marketing exclusivity awarded for new orphan indications for already approved drugs would apply to all indications of the product, thus delaying generic competition.

While the orphan drugs provisions of the Cures Act are intended to increase research into treatments for rare diseases, Public Citizen argues that instead, the provisions incentivize companies to look for ways to get orphan indications for top selling drugs.

Public Citizen points to a 2013 McKinsey report which found that pediatric exclusivity extensions added $71 billion in additional revenue for drugmakers, and disproportionately benefited blockbuster drugs.

Furthermore, the group argues, "the current orphan drug approval system is hardly in need of a stimulus." In recent years FDA has seen far more requests for orphan designation, and orphan drugs make up a large percentage of new drug approvals.

The group also points to a recent commentary by Johns Hopkins researchers appearing in the American Journal of Clinical Oncology, which argues that companies are "gaming the system" by receiving orphan drug incentives for products that have broad use.

Public Citizen