Johns Hopkins Researchers Call for Orphan Drug Reform

Regulatory NewsRegulatory News | 20 November 2015 |  By 

A team of researchers at Johns Hopkins are calling for reforms to the Orphan Drug Act, saying that loopholes have allowed drug companies to skirt the act's intent by taking advantage of its incentives for non-orphan conditions.


The Orphan Drug Actof 1983 was passed to spur drug development for rare diseases. The act created incentives for drugs that treat diseases affecting fewer than 200,000 individuals in the US per year. The incentives include seven-years of market exclusivity, tax credits for clinical trial expenses, user fee waivers and federal grants.

By some measures, the act has been a success. Since its passage, FDA says it has approved more than 400 orphan drugs, compared to "fewer than 10 such products supported by industry … between 1973 and 1983."

Gaming the System

However, in a commentary appearing in the American Journal of Clinical Oncology this week, Johns Hopkins researchers say those numbers are misleading, arguing that "companies are gaming the system to use the law for mainstream drugs."

The intent of the law, the researchers say, is to "incentivize pharmaceutical companies to direct resources into the development of new agents for 'unprofitable' orphan diseases."

However, in practice, the researchers argue, many drugs with orphan designation go on to enjoy broad success. According to data from EvaluatePharma, "7 of the top 10 projected worldwide best selling drugs in 2015 have an FDA-approved orphan indication."

The researchers say several practices have allowed companies to benefit from orphan drug incentives for products that have a broad use.

First, companies often apply for a narrow indication for a drug so it qualifies for orphan designation. Then, after approval, many companies will attempt to broaden the drug's indication, in some cases to where the total patient population for the drug is over 200,000.

The researchers cite the drug rituximab as an example of this practice. Rituximab was originally approved to treat a rare form of non-Hodgkin's lymphoma, but was later approved to treat rheumatoid arthritis, which affects 1.3 million people in the US.

Second, off-label use in more common conditions is often a significant source of revenue from drugs initially approved for an orphan indication. Here the researchers point to two drugs, Lidoderm and modafinil, both approved for orphan indications, but earned 82.3% and 87.8% of their revenue from off-label use.

Third, recent advances in scientific understanding have allowed companies to engage in a practice called "salami slicing," where diseases can be broken down into narrow subgroups based on gene expression. The authors argue that this allows for "almost any cancer medication [to] be maneuvered into an orphan disease category."

Potential Reforms

To remedy the situation, the authors say that companies should not receive orphan drug incentives for a product if it exceeds the 200,000 patient threshold or has strong economic potential.

The researchers say this could potentially be done through the following reforms:

  1. "Increased submission scrutiny to ensure that benefits are allocated to drugs truly intended to treat orphan disease"
  2. A stratified benefit system (i.e. benefit tiers for diseases affecting fewer than 20,000 patients, 20,000 to 100,000 patients and 100,000 to 200,000 patients.)
  3. "Decreased exclusivity periods when benchmark profits are achieved"
  4. "Decrease benefits to drugs that reach a much larger target disease population"
  5. "Increased price transparency"

The researchers also look to Japan, where companies are taxed if an orphan drug earns more than 100 million yen annually. The tax continues until the company has paid the government back for any subsidies it was granted.

The Orphan Drug Act: Restoring the Mission to Rare Diseases


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