Orphan Drug Exclusivity Keeps Biosimilars Off the Market, Study Says

Investigators found that manufacturers appear to be exploiting orphan drug exclusivities to extend market dominance and keep generics and biosimilars at bay.
Deana Ferreri, PhD
June 25, 2020
The Orphan Drug Act of 1983 spurred research and development in rare diseases, clearly benefiting these patient populations; however, the authors of a new study on the budget impact of multiple orphan approvals say the costs associated with additional exclusivity periods may outweigh those benefits.

The legislation allows filing for orphan status if the prevalence of the disease is less than 200,000 individuals, as well as for a manufacturer to seek an unlimited number of orphan approvals for a single drug, driving concern that approvals for multiple orphan indications could forestall competition by generics or biosimilars.

For each rare disease approval, the market exclusivity of the drug is extended by 7 years for that indication, which prevents the potential approval of a generic or biosimilar to treat the indication. The innovator company also receives tax credits on the cost of clinical trials associated with orphan approval.

The investigators suggest “certain drug manufacturers may be timing the filing of orphan designations to maximize the duration of exclusivity.” By analyzing FDA orphan drug approvals and claims data from 1983 to 2017, they sought to determine, for drugs with multiple orphan approvals, how many extra years of market exclusivity manufacturers gained and the associated costs.

Years of Additional Market Exclusivity

During this study period, 432 branded drugs were approved for 615 orphan indications. The investigators found the rate of orphan approvals increased over time. On average, there were 1.47 approvals per drug, and market exclusivity was extended by 1.6 years. About 25% (108) of the drugs had 2 or more orphan approvals.

Drugs with a second orphan approval increased their market exclusivity by 4.7 years; for the third approval, 3.1 years; for the fourth,  2.7 years; and for the fifth, 2.9 years. Combined, orphan drugs with 5 approvals extended their market exclusivity by 13.4 years, “nearly tripling the initial market exclusivity period.”

Thirteen drugs had at least 10 additional years of market exclusivity stemming from multiple approvals for orphan indications; 7 of those 13 had market exclusivity for 20 years or longer, including 4 biologics: adalimumab, bevacizumab, coagulation factor VIIA, and filgrastim.

Budget Impact of Multiple Approvals

Seven biologics (adalimumab, bevacizumab, botulinum toxin type A, canakinumab, coagulation factor VIIA, filgrastim, and ofatumumab) and 5 small molecule drugs (bortezomib, everolimus, ibrutinib, imatinib mesylate, and lenalidomide) whose multiple orphan approvals extended their exclusivity beyond the initial 7 years for the first approval. Assuming a 20% price drop after the seventh year for biologics due to biosimilar introduction and 75% for small molecules due to a generic introduction, the authors estimated the potential cost to the United States was an average $591 billion for the 7 years following the end of the extension from the first approval.

Questioning the Orphan Status of Drugs With Multiple Approvals

Although the Orphan Drug Act was intended to increase research and development into diseases affecting fewer than 200,000 people, the authors wrote, “Stacking multiple orphan drug approvals may result in total orphan populations of more than 200,000 individuals.” Although these drugs are treating rare diseases, “they are not orphan drugs since they are commonplace in the US health care sector and profitable to produce without government assistance.”

Furthermore, they said, several of the drugs with multiple orphan approvals were not initially developed for rare diseases. Nine of the 13 orphan drugs with more than 4 approvals “were introduced on the market for common diseases first before receiving an orphan approval several years into their availability.” The authors suggest this is incentivized partly because the research and development costs for a new drug are very high, whereas running a clinical trial on an existing approved drug in a new patient population costs much less. “Multiple indications and additional exclusivity can allow manufacturers to generate additional profits without considerable additional expense,” they wrote.

The authors concluded that limiting the number of rare disease approvals or years of market exclusivity from the Orphan Drug Act “could provide some savings in the billions of dollars with respect to the availability of generics or biosimilars at lower prices.” The authors acknowledged, “Doing so could impact future innovations and discovery of drugs for rare diseases.” However, they also questioned whether the $591 billion “for questionable exclusivity practices is worth the price of innovation across all orphan drugs.”

In a 2018 report, the Government Accountability Office found serious deficiencies with the ways in which the Orphan Drug Act is administered by the FDA. Read about that report here.
 

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