Biotech Innovation Boosts Orphan Drug Development

Economic incentives and regulatory flexibility can spur development of treatments for small patient populations.
Jul 01, 2008
Volume 21, Issue 7

Jill Wechsler
The US orphan drug (OD) program has demonstrated that economic incentives and regulatory flexibility can spur development of treatments for small patient populations. Since enactment of the Orphan Drug Act (ODA) in 1983, the US Food and Drug Administration has approved more than 300 medicines that have been used worldwide by some 12 million patients with rare conditions. However, there are some 6,000 to 8,000 rare diseases, so "we still have a very long way to go," commented Janet Woodcock, director of the Center for Drug Evaluation and Research, at a May conference commemorating ODA's 25th anniversary, sponsored by the Drug Information Association. Woodcock noted that genomic discoveries can expand understanding of the science behind many serious conditions, and personalized medicine promises an increased treatment effect and decreased side effects for innovative medicines. At the same time, high prices for many orphan therapies create challenges for insurance coverage and patient access.

Before the ODA, biomedical companies seldom invested in products unlikely to make a profit, noted Abby Meyers, prime mover behind ODA and founder of the National Organization for Rare Disorders (NORD). That changed with legislation sponsored by Rep. Henry Waxman (D-CA) offering powerful economic incentives for OD development. The most important is seven years of exclusivity for an approved orphan product; this blocks other companies from selling the same drug to treat the same rare disease. In addition, there is a 50% tax credit for clinical study costs, grants to support clinical research, and FDA protocol assistance, all of which are particularly important for small companies. Further legislation in 1985 added biologics to the program and more clearly defined ODs as treatments for diseases affecting fewer than 200,000 people in the US.

The incentives for industry have generated some controversy. Certain orphan therapies such as human growth hormone became immensely profitable, raising questions about exclusivity and "salami slicing" by manufacturers seeking orphan status for a very narrow indication with an eye to promoting the drug to broader populations. Patient advocates helped fight off changes and kept the program intact.


The ODA gave FDA the job of defining orphan diseases and proposed treatments. During the last 25 years, FDA's Office of Orphan Products Development (OOPD) has received 2,622 requests for OD designation and has awarded that status to 1,850 products. Of those, 326 ODs have been approved, and 41 of those approvals were supported by FDA grants. OOPD has awarded more than 400 grants (of 1,500 applications); 15–20 new grants are made each year, and some 70 grants are active at any one time.

In addition to exclusivity, sponsors may gain a 50% tax credit for clinical research expenses that can apply to past taxes or be carried forward up to 20 years. Designated ODs also are exempt from the user fee for filing a new drug application, which currently runs over $1 million.

The US program also has inspired similar strategies around the world, which were discussed at the 2008 meeting of the International Conference on Rare Diseases and Orphan Drugs that also took place in Washington in May. The European Union (EU) adopted an OD program in 2000, which has resulted in 28 product approvals. Now, FDA and the European Medicines Agency (EMEA) seek to harmonize relevant regulatory processes. The two authorities have developed a joint application for OD designation. Both regions already had similar approaches and benefited from political support for "trans-Atlantic administrative simplification" strategies, commented Kerstin Westermark, chair of EMEA's Committee for Orphan Medicinal Products (COMP).

The common application may simplify the designation process, but each regulatory agency still carries out its own assessment and follows policies that differ on some key points. EMEA requires manufacturers to show that a new OD will have significant benefit over any available alternative therapy. And there is variation in standards for determining the prevalence threshold for an orphan disease: it can affect only 200,000 patients in the US but the EU uses a formula that sets the threshold at about 240,000 to reflect changing population levels.

Further harmonization may involve developing a common annual report on OD development that aims to reduce the paperwork burden on small companies. There is a desire for common guidelines on OD designation and terminology and similar standards for clinical data requirements in designation applications.

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