Principles and Practice of Pharmaceutical Medicine

21.17 Rating the effects of the

Orphan Drug Act in the

United States

With over 650 active designations and over 120
orphan drugs approved for the market, plus numer-
ous grants awarded since 1983, it is clear that the
Act has been very successful and has been a major
stimulus for certain pharmaceutical companies.
The fact that some blockbuster drugs have been
approved under this legislation is a controversial
topic for reasons relating to drug cost. The tax
credit for clinical trial costs has been very modest
and does not represent a significant sum of money
to most companies.
The number of designations have increased
in recent years not only because of the incentives
of the Act but also related to advances in science
and medicine, increased investments made in
research and development by companies and aca-
demic institutions, increased competition within
the pharmaceutical industry and an increased
interest in this legislation by the biotechnology
industry.

21.18 Lessons of the Orphan Drug

Act for Europe

By 1996, a number of European countries and
organizations started to pay much more attention
to this issue than before. The United States experi-
ence offered a number of lessons for the Europeans
to consider as they discussed and considered
numerous issues.

1. True incentives for the pharmaceutical industry
   are required in order for any orphan drug legis-
   lation to be successful. Without true incentives,
   the legislation will have little, if any, effect. The
   major incentive required is a period of exclusiv-
   ity for marketing. Without this incentive, indus-
   try is not likely to modify its activities in this
   area. A 10-year period of marketing exclusivity
   ruther than seven at in the U.S. is appropriate

and is not excessive if the potential abuses of the

legislation are prevented. Other incentives are

secondary and are not really necessary for leg-

islation to be successful.

2. Abuses of the law by the pharmaceutical industry
   must be prevented. The simplest way of avoiding
   abuses is to have a sales cap. This means that the
   market exclusivity disappears when the cumula-
   tive sales of a drug reach a predetermined level.
   This amount of money should be set at a fair
   value to incentivize the companies and to protect
   the government or other groups that pay the bill
   for excessive charges.


3. All potential medicines for indications or dis-
   eases meeting prevalence numbers should
   qualify for designation and a drug’s potential
   profitability should not be a barrier to receiving
   orphan drug designation.


4. A specific regulatory group must be in place to
   decide on ‘gray’ issues. There will always be
   issues to resolve, such as determining whether
   or not an indication is real or represents salami
   (wurst) slicing of a larger one. Another com-
   monly encountered ‘gray’ issue is to decide
   whether or not a new dosage form qualifies for
   designation. The Committee on Orphan Medic-
   inal Products within the EMEA is now well
   established.


5. Regulatory review of orphan drugs should be
   based on the drug’s medical value and medical
   need and not on whether or not an official
   orphan drug status is present.

References

Spilker B. 1991.Guide to Clinical Trials. Raven Press:

New York.

Spilker B. 1994.Multinational Pharmaceutical Com-

panies: Principles and Practices, 2nd edn. Raven

Press: New York.

276 CH21 ORPHAN DRUGS