Manufacturers

Orphans, Maybe Not So Lonely

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A few weeks ago, we reported that the Food and Drug Administration (FDA) has been struggling to keep up with reviewing orphan drug designations, due to a 30% increase in requests over the last 2 years. The FDA attributed the growth to the Orphan Drug Act (ODA) passed by Congress in 1983. The Act created the Orphan Drug Designation Program, which provides financial incentives to companies that develop drugs and biologics for rare diseases, such as tax credits and eligibility for 7-year market exclusivity. In addition, no user fee is required for orphan drug product submissions, except when an application includes an indication for a non-rare disease or condition.

While, overall, the ODA has been seen as a tremendous success, America's Health Insurance Plans (AHIP) put out a report this week highlighting the potential unintended consequences of ODA as part of AHIP's efforts to combat high drug pricing. Its study looked at 46 drugs with orphan indications available from 2012 to 2014 and found that just under half of the usage for these products was for non-orphan indications. Additionally, drug pricing for those used primarily for treatment of non-orphan indications increased by about 37%, while those limited to orphan indications went up 12%. All of this, of course, forces the question of whether some manufacturers are "gaming" the process by using the perks of the ODA while seeking blockbuster gains.

As orphan drugs now comprise about 50% of the drugs approved by the FDA, it is clear payers will need to re-evaluate how they budget for and reimburse these treatments. They will also have to consider how they work with manufacturers on contract negotiations (a point missing from the report). However, the mission of the ODA is still critical - more orphan drugs on the market means more patients have the opportunity to receive treatment for their rare diseases where there may previously have been no treatments at all.

Access this article as it appeared in the August 19, 2016 issue of Health Policy Weekly

HPW Logo  The above excerpt was featured in the 8/19/16 issue of Health Policy Weekly.  Health Policy Weekly, a weekly e-newsletter delivered every Friday, recaps legislative and regulatory developments and healthcare reform news that impacts the healthcare industry.  Health Policy Weekly is developed by Xcenda as a complimentary service for clients of AmerisourceBergen Corporation as well as industry decision makers within the manufacturer, managed care, healthcare provider and pharmacy community. Click here for more information or to subscribe to Health Policy Weekly.

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