In the 1960s, the United States congress passed the “Drug Efficacy Amendment”, which introduced for the first time a requirement for pharmaceutical companies to disclose side effects and dangers of their drugs, as well as provide “proof-of-efficacy”. This legislation was in response to the thalidomide tragedy of the 1950s, where thousands of children were born in North America and Europe with severe birth defects, including malformed limbs, nerve damage and congenital defects effecting the ears and heart, due to a drug taken by pregnant women to treat morning sickness.

Although this amendment dramatically reduced drug-related complications and improved drug safety, it also increased both the time and cost that went into developing a single drug. As a response, pharmaceutical companies began to pool their resources into developing drugs for the most common diseases, such as heart disease and diabetes, since this would guarantee maximum return on the billions they spent on research and development. Over time, more and more novel drugs became approved for common diseases, while rare diseases became essentially ignored, and were coined “orphaned diseases”, defined as a rare disease that effects less than 200,000 citizens.

Patients suffering from orphan diseases suddenly found themselves in an impossible situation where there simply weren’t any drugs available to treat them. As calls to meet the needs of these patients grew louder, the United States congress responded in 1983 by passing the “Orphan Disease Act”, which provided incentives to pharmaceutical companies for producing drugs for rare disease, including federal funding for clinical trials, a tax credit for clinical testing costs and market exclusivity for 7 years following approval. Several developed countries followed suit which included Australia, Japan and England. In Canada, policy makers concluded that legislation addressing orphan diseases directly was not necessary, and instead, existing legislation was changed to accommodate rare diseases in 1996. Under these new laws, over 1000 drugs intended to treat orphan diseases were able to make it to market in the United States alone.

How does “orphan” status change a drug’s development?

The biggest difference between the development of orphan drugs compared to more common drugs has been the use of expedited approvals and priority review pathways for orphan drugs. According to the FDA, 73% of orphan drugs approved in 2016 used an expedited review pathway. Their data also showed that on average, orphan drugs spent 3 years less time in development compared to drugs for more common uses and spent approximately 3 months less time under review. Furthermore, from 2015-2017, over half of all new drugs approved were orphan drugs, and 50% of those were given accelerated review.

Although accelerated approval is beneficial for the patient, as it means drugs for previously untreated diseases are finally making it to market, there are also increased risks associated with these drugs. When drug approval takes the “fast track” there is a chance that the quality of research data is compromised. For example, randomized control trials (RCT) are a tried and true method for testing new cancer drugs. However, with the FDA’s approval of priority review pathways, many orphan drugs are not tested in a randomized control trial, thus accelerating their time to market while increasing the likelihood of post-market adverse outcomes. Faster review processes also mean that the drug is more likely to shift from clinical trials to routine use in the clinic before sufficient data on patient outcomes can be collected.  In the development of more common drugs, the drug must prove therapeutic efficacy based on an endpoint defined by the disorder before it can pass any clinical trials. However, since information on biomarkers and outcome tools for orphan diseases are often missing, the clinical benefit can be difficult to ascertain. Thus, the testing of orphan drugs requires the use of “surrogate endpoints”, meaning an endpoint that is thought to predict the drug’s clinical benefit, but may not necessarily be accurate. This means that the quality of the data used as a basis for clinical decisions can be called into question.

What are the pros of orphan disease status?

There is no doubt that the orphan disease act was a catalyst in the development of drugs to treat an unmet market. In addition to the federal grants provided for orphan drug development, market exclusivity is an especially attractive incentive for pharmaceutical companies. This incentive means that drug manufacturers are protected from competition for 7 years, thus increasing their potential profit on the drug and giving them a monopoly on the drug’s market. This pushes pharmaceutical companies to put more resources into the treatment of rare diseases and the innovation of non-existent drugs. Prior to the passing of the Orphan Disease Act, approximately 38 drugs were in the United States were designated as orphan drugs by the FDA. Once this law was passed, the next few years saw a surge of new drug designations, resulting in over 1000 “orphan drug” designations by 2004.

One review of the development of the drug Human Botulism Immune Globulin, used to treat infant botulism, found that without the collaboration of the FDA and the federal grants provided by the Orphan Disease Act, this treatment may not have been possible. They also found that with this treatment, more than $50 million of tax-payer money has been saved.

What are the cons of orphan disease status?

Due to the freedom of drug pricing given to pharmaceutical companies, orphan drugs have also seen an imbalance in pricing compared to more common drugs. For example, a 2014 study found that on average, the per-person cost of an orphan-designated drug was approximately $118,820. By contrast, the average per-person cost of a non-orphan drug was approximately $23,331. Additionally, take the example of Xyrem, a drug used to treat narcolepsy, which affects approximately 135,000 people in the United States. Since 2007, the price of Xyrem has risen over 850%. On the other hand, Viagra which is used to treat the more common problem of erectile dysfunction has increased in price by just 159%. Seeing these unbelievable spikes in pricing, some critics of the Orphan Disease Act have argued that this legislation is simply being used to make profit off a small but necessary market.

Despite the federal benefits provided to pharmaceutical companies for developing orphan drugs, there are many challenges associated with orphan drug development. Since orphan diseases are rare, they are often not well understood or characterized, and genetic and phenotypic diversity within a disorder adds further complexity. If these drugs were treated and tested like more common drugs on the market, they would take much longer to make it to market and would cost much more for consumers.  This brings us back to the use of expedited review pathways, which mean shorter time to market, but also the likelihood of a company having a monopoly on the drug.

For example, the drug Firdapse, used to treat the rare neuromuscular disorder Lambert-Eaton myasthenic syndrome (LEMS), was once free for patients. However, in February 2019, after filing a patent on the drug formula, the pharmaceutical company Catalyst changed the price for this medication to $375,000 annually. This was just one of many incidents that led to calls for changes to legislation regarding market exclusivity, and the use of an “innovation-based prize system” to incentivize production of orphan drugs. Under the proposed prize system, drug companies would receive federal grants for discovery and drug innovations, and the massive profits to these companies due to drug monopolies would be eliminated.

How will the development of orphan drugs change moving forward?

The flexibility provided by federal grants and an accelerated review process is at times necessary for the development of rare drugs. However, with all the financial benefits provided by the Orphan Disease Act, it isn’t difficult for pharmaceutical companies to take advantage of these incentives. With drug prices already soaring, a monopoly on the sale of orphan drugs will make them just as inaccessible to patients as when the drugs didn’t exist in the first place. This is a problem we are currently seeing in the Canadian healthcare system. Since Canada does not have an orphan drug policy, there is no incentive for Canadian pharmaceutical companies to invest in the research and development of orphan drugs. As a result, Canadians with rare diseases are at the highest risk of not receiving treatment compared to most developed countries.

The Orphan Drug Act is a great example of the important balance that must be struck between the innovation of effective treatments for rare diseases and the regulatory pathways required to keep these drugs accessible to patients.

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Salma Sheikh-Mohamed

Salma Sheikh-Mohamed is a second year Master's student in the Immunology department at UofT, researching the use of Imaging Mass Cytometry (IMC) for immunophenotyping human tissue. Her recent work using IMC in the human brain can be found in a manuscript entitled Multiplex Imaging of Immune Cells in Staged Multiple Sclerosis Lesions by Mass Cytometry. When not working in the lab, she enjoys reading, baking, and working on her food photography skills.
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