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Orphan Medication Proposal: A Windfall for Pharma, False ‘Cure’ for Patients

Dec. 8, 2015

Orphan Medication Proposal: A Windfall for Pharma, False ‘Cure’ for Patients

Single Provision in 21st Century Cures Act Could Cost the Public $12 Billion

WASHINGTON, D.C. – Just one provision in the 21st Century Cures Act could cost U.S. taxpayers, private insurers and patients $12 billion over 10 years, according to a new Public Citizen analysis.

In July 2015, the U.S. House of Representatives passed the 21st Century Cures Act, a bill purported to provide “help and hope for patients through biomedical innovation.” Yet in many ways the “cure” presented by the legislation is a false one. The Senate has not yet released its draft of the House proposal.

Public Citizen’s report, “House Orphan Drug Proposal: A Windfall for Pharma, False ‘Cure’ for Patients,” focuses on just one of the costly problems with the bill: a provision that would allow pharmaceutical companies to charge high prices for brand-name medications for longer periods, in exchange for repurposing those medications to treat rare, or “orphan,” diseases that affect fewer than 200,000 patients nationwide.

The report comes as skyrocketing prescription medication prices are outraging doctors and patients alike. A U.S. Senate panel is investigating price hikes, and the U.S. Secretary of Health and Human Services convened a forum last month to address the issue.

The orphan provision would give an extra six months of monopoly protection to manufacturers for medications granted an additional approval to treat an orphan disease. Since the extra six months of monopoly rights would apply to all the uses of the medication, not just the new orphan use, manufacturers likely would rush to find new uses for their most lucrative, blockbuster medications. The end result would be costly delays in patient access to lower-cost generics, including those used to treat much more widespread diseases.

And by providing manufacturers an incentive to repurpose existing medications to treat orphan diseases, the provision would further spur non-innovative research into orphan products. Two-thirds of orphan medications approved from 2000 to 2009 represented copies of, or minor variations on, existing therapies, rather than truly new treatments.

Conservatively, the provision would cost U.S. taxpayers and patients around $4 billion over 10 years, but given the structure of the financial incentive, the cost could easily approach $12 billion over that time, Public Citizen concluded.

“Such a gift to the pharmaceutical industry is hardly necessary at a time when investment in orphan medications is already soaring,” said Dr. Sammy Almashat, a researcher with Public Citizen’s Health Research Group. “Worse, the costs of the new incentive would fall not only on taxpayers but also on the backs of patients with common, non-orphan diseases, who could be denied potentially life-saving, affordable generic medicines for six additional months.”

According to the report, the current orphan approval system is hardly in need of a stimulus, as companies are pursuing, and achieving, orphan approvals at record rates. Even without the 21st Century Cures Act, pharmaceutical companies already receive huge incentives to develop orphan medications. These include research grants, tax credits that cover half of clinical trial costs and a seven-year monopoly on sales for the orphan use.

As a result, in the past two years, records have been set on both new orphan designations and approvals.

The pharmaceutical industry has benefited greatly. The average return on investment for orphan medications is nearly double that for non-orphan medications, due to both low development costs and astronomical prices: In 2014, half of orphan medications cost patients $98,534 per year or more, compared with $5,153 or more for non-orphan medications.

“The industry already receives special monopoly protections and taxpayer subsidies to develop orphan medications, and it reaps windfall profits as a result,” said Steven Knievel, campaign coordinator with Public Citizen’s Access to Medicines division. “This provision would not help get us better treatments for orphan diseases. It is simply a gift to the industry and evidence of the political influence of pharmaceutical companies.”

Further, the orphan medication approval system has serious flaws. For instance, orphan drugs are approved under substantially lower safety and efficacy standards, and there is often widespread off-label use of these products beyond the targeted orphan patient group, resulting in potentially unsafe or ineffective products being used in patient populations far larger than the orphan threshold of 200,000.

“This provision would exacerbate current patterns of orphan medication development, which already result in the approval of far too many poorly tested medications, and it would open the door to even more gaming and abuse of the system,” said Sarah Sorscher, attorney with Public Citizen’s Health Research Group. “Like many proposals in the 21st Century Cures Act, this is bad policy for medical innovation in this country and offers a false cure to American patients.”

Read the report.