Expert Timothy R. Coté, MD, MPH Provides Insider Insight on the Orphan Drug Act

By Timothy R. Coté, MD, MPH

In her August 4 Washington Post article, “High Prices make once-neglected ‘orphan’ drugs a booming business”, Carolyn Y. Johnson paints a picture of corporate greed taking advantage of the Orphan Drug Act’s opportunities for high price points made possible by market exclusivity.  It’s an easy argument to make: price points are indeed eye-popping, some of these drugs were previously available in different forms.  Impressive profits are being made and orphan drugs have now captured the bulk of FDA approvals.  Unfortunately, Ms. Johnson’s superficial reporting has failed to capture the real outcomes from a bipartisan statute acclaimed the most successful piece of pharmaceutical regulatory legislation of all time.  How can both accounts be true?

I spent 23 years in Federal service and my final appointment was as Director of FDA’s Office of Orphan Product Development 2007-2011.  Since 2012 I have served as CEO of Cote Orphan, a consultancy that serves about 300 biotechnology companies seeking orphan designation and marketing approval.  I have seen hundreds of orphan products go on to become essential medicines for people with rare diseases, and can report that while Shkreli-esque abuses do rarely occur, the Johnson article is completely wrongheaded.

Why do I believe in the principles of the ODA? 

First, it worked---for the 10 years prior to 1983 there were only 12 drugs approved for people with rare disease.  It made no economic sense to make drugs if the population was small.  Now we have 500+ approved orphan drugs. 

Second, our US-dominant biotechnology industry (one of the sectors we still command) blossomed because the ODA directly incentivized tiny companies. Typically, these companies are constituted from a mom who won’t just watch her kid die, a brilliant scientist, and a guy with a little bag of money---to bring forth startlingly effective therapies. 

Third, people with common conditions frequently benefit from orphan drug development: take Gelvec originally developed for the rare cancer CML that birthed a whole collection of anti-cancer drugs, epoetin originally for a rare anemia now used commonly for very ill patients or even Botox, originally for rare conditions blephoraspam and cervical dystonia (but wrinkles are hardly rare).  When medical doctors train, a large share of the knowledge base comes from studying rare diseases because these molecular lesions help us understand normal human biology.  We understand how the normal urea cycle functions because of experience with urea cycle disorders, understand hemoglobin because we encounter sickle cell disease and thalassemia, understand normal phenalanine metabolism because of PKU.  Don’t people with rare diseases deserve a therapy in exchange for all they have taught us?

Fourth, contrary to the impression left by the Johnston article, it most typically takes many millions of dollars of risky investment to make an orphan drug.  Why? Because orphan drugs have to be shown to be just as safe and effective as drugs for people with common diseases.  This is how the ODA was designed, to financially incentive their development not to water down their worth by approving somethings that “might” work.  Without that incentive, people with rare diseases would have nothing.

Fifth and lastly, it doesn’t cost that much.  Yes the price points are startling, but because these are rare conditions, prices are multiplied by few patients and entire burden of all 500+ orphan drug costs is less than 1% of US health care costs.  The exclusivity provisions are time limited---7 years---yet the knowledge is eternal.  While competitive processes have not yet brought down prices for all orphans we are at the beginning of this marketplace. It took a while for calculators and video cameras to become cheaper too.

Has the ODA backfired?  Hardly.  Through the public policy incentives of American ingenuity the ODA made us the unquestioned global leaders in biotechnology and given people with rare diseases cures where there were none before.  And we’ve only gotten started; just wait until the new gene therapies start getting approved.

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