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How Drugmakers Manipulate Orphan Drug Rules To Create Prized Monopolies

News  |  By California Healthline  
   January 18, 2017

A Kaiser Health News investigation shows that the system intended to help desperate patients is being manipulated by drugmakers to maximize profits and to protect niche markets for medicines already being taken by millions.

This article first appeared January 17, 2017 on California Healthline. It was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.

By Sarah Jane Tribble and Sydney Lupkin

More than 30 years ago, Congress overwhelmingly passed a landmark health bill aimed at motivating pharmaceutical companies to develop new drugs for people whose rare diseases had been ignored.

By the drugmakers' calculations, the markets for such diseases weren't big enough to bother with.

But lucrative financial incentives created by the Orphan Drug Act signed into law by President Ronald Reagan in 1983 succeeded far beyond anyone's expectations. More than 200 companies have brought almost 450 "orphan drugs" to market since the law took effect.

Yet a Kaiser Health News investigation shows that the system intended to help desperate patients is being manipulated by drugmakers to maximize profits and to protect niche markets for medicines already being taken by millions. The companies aren't breaking the law but they are using the Orphan Drug Act to their advantage in ways that its architects say they didn't foresee or intend. Today, many orphan medicines, originally developed to treat diseases affecting fewer than 200,000 people, come with astronomical price tags.

And many drugs that now have orphan status aren't entirely new. More than 70 were drugs first approved by the Food and Drug Administration for mass market use. These medicines, some with familiar brand names, were later approved as orphans. In each case, their manufacturers received millions of dollars in government incentives plus seven years of exclusive rights to treat that rare disease, or a monopoly.

Drugmakers of popular mass market drugs later sought and received orphan status for the cholesterol blockbuster Crestor, Abilify for psychiatric conditions, cancer drug Herceptin, and rheumatoid arthritis drug Humira, the best-selling medicine in the world.

More than 80 other orphans won FDA approval for more than one rare disease, and in some cases, multiple rare diseases. For each additional approval, the drugmaker qualified for a fresh batch of incentives. Botox, stocked in most dermatologists' offices, started out as a drug to treat painful muscle spasms of the eye and now has three orphan drug approvals. It's also approved as a mass market drug to treat a variety of ailments, including chronic migraines and wrinkles.

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California Healthline is a service of the California Health Care Foundation.


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