The Orphan Drug Act Turns 25

The legislation is credited with building biotech and spawning hundreds of drugs for rare diseases. So why do some analysts hesitate to call it a success?

By | October 1, 2008

Twenty-eight years ago, Abbey Meyers was at her wit's end. Her young son, who had Tourette's syndrome, had been cut off from the drug pimozide, which had begun to show promise in treating his debilitating condition. The doctor running the clinical trial told her the study was halted when McNeil Laboratories pulled out of producing the drug because it proved ineffective against schizophrenia, its primary (and more common) target. He told Meyers that pimozide would now be considered an "orphan drug," the term for products that target too few patients to bring in big bucks.

Now, her son's rare disorder was essentially untreatable. There was no recourse for the Connecticut housewife. "I was devastated," she says.

Meyers reached out to people experiencing similar pain and frustration. "We knew we had to solve the problem." Meyers and a small group of patient advocates convinced US Representative Henry Waxman (D-Calif.), then chairman of the House Commerce Committee's Subcommittee on Health and the Environment, to hold a hearing in 1980 to discuss orphan drugs and rare diseases. According to Meyers, the hearing was sparsely attended. But the story of the meeting eventually reached actor Jack Klugman, star of the popular television medical-mystery-drama Quincy, M.E. Klugman decided to dedicate one of the show's episodes to Tourette's syndrome and the orphan drug problem.

"Without the incentives of the ODA, many drugs never would have been developed." -Tim Coté

According to Meyers, attention from Hollywood was exactly the shot in the arm her movement needed. "That's what really started it, the Quincy episode," she says. "It was like an instant grass roots movement."

As public momentum gathered behind the cause, the orphan drug legislation made its way through Congress. On January 4, 1983, President Ronald Reagan signed the Orphan Drug Act (ODA) into law, which encourages the development and marketing of orphan drugs through incentives that lower costs to manufacturers.

Since the ODA's passage, more than 325 orphan drugs have been approved by the Food and Drug Administration, and more than 1,800 drugs have received orphan designation, meaning they treat diseases affecting fewer than 200,000 people living in the United States. In contrast, in the decade before the ODA became law, fewer than ten such products came on the market. Furthermore, the percentage of patients with rare diseases dying at a young age decreased by more than 6% from 1979 to 1998, according to a 2003 National Bureau of Economic Research working paper. Recently, the European Union and Australia have adopted statutes to encourage orphan drug development that mirror the ODA. Some analysts say that the ODA even helped to give birth to the biotech industry, which received 63% of all the orphan drug designations from 2000-2004, according to a report from the Tufts University Center for the Study of Drug Development. Two of the most well-known names in biotech - Genzyme and Amgen - both got their start from orphan drugs. "It turned out to be one of the most successful pieces of health legislation ever enacted," says Meyers.

However, some economists claim that the true benefits and costs of the act have not yet been fully assessed, making it premature to trumpet the act as an overwhelming triumph. "The conclusion that [the ODA's] a tremendous success is unwarranted based on available data," says Rob Rogoyski, an attorney specializing in intellectual property law.

The adoption process

Today's Orphan Drug Act looks slightly different from the act that was passed 25 years ago, thanks to several amendments added by Congress through the years. But the intent of the law remains intact. The ODA incentive commonly cited as the most important to drug makers is a seven year period of market exclusivity after approval. This assures drug companies full access to the market for their drug free from any competition without going through the patent process. The ODA also guarantees up to 50% of the cost of clinical trials in tax credits, grants to further defray the cost of clinical research, advice on designing clinical trial protocols, and a waiver of Prescription Drug User Fee Act filing fees, worth $1 million per application in 2008.

Tim Coté, director of the FDA's Office of Orphan Product Development, says that his office, which administers the ODA, receives about 200 applications per year. "Without the incentives of the ODA," he says, "many drugs never would have been developed." Case in point: After the morning sickness pill thalidomide was pulled for causing birth defects, a few researchers continued to study the compound and found that it was effective against some symptoms of leprosy and multiple myeloma. Still, says Meyers, "No drug company would go near thalidomide."

A success?

But with the incentives and protections of the ODA, a small biotech company, Celgene, applied for and got orphan drug status for thalidomide in the early 1990s, and is now testing thalidomide for its anti-cancer properties and its ability to alleviate symptoms of Crohn's disease.

Still, some experts hesitate to dub the ODA a resounding success. While studying law at Harvard in 2005, Rob Rogoyski conducted an economic analysis of the ODA and spotted what he calls a "correlation/causation problem." Specifically: "You can't explain the totality of the rise in drugs for orphan conditions by the ODA alone," Rogoyski says. "There's an absence of good evidence to show that that's happening."

Instead, Rogoyski argues that the passage of the ODA and the rise in orphan drugs may be simply coincidental, and based more on reforms to the patent system and leaps in biomedical technology that both occurred in the 1980s. For instance, of the 29 orphan drugs approved between 2001 and 2003, 79% already had some level of patent rights. This would negate the market exclusivity commonly cited as the main incentive offered by the ODA, and suggest that these, and many other orphan drugs, would have reached the market without the ODA, argues Rogoyski.

Frank Lichtenberg, a business professor at Columbia University, credits the ODA for encouraging innovation targeting rare diseases, but says that alone does not qualify the ODA as an overall economic success. "The aggregate benefit to society is not very big because of the small market size," he says. "The fact that [the ODA] did encourage more drug development does not necessarily mean that it succeeded," he adds. "That's a minimum requirement."

Additionally, Lichtenberg says it's possible the ODA has diverted resources away from common conditions. Since 1995, orphan drugs have accounted for about 20% of all the drugs approved by the FDA. "It is conceivable that [the ODA] caused firms to reallocate their investments towards orphan drugs and away from non-orphan drugs after the ODA was passed, but I doubt that effect, if it indeed exists, would have been very large."

Then there's the problem of drug companies charging exorbitant prices (See Box on p. 68) for orphan drugs in order to recoup R&D costs on a medication intended for a small patient population. Genzyme, for example, said in 2005 that the average cost to treat a patient with Gaucher's disease with Cerezyme - an orphan drug - was $200,000. Similarly, patients with mucopolysaccharidosis paid an average of $175,000 per year for BioMarin Pharmaceuticals' enzyme replacement therapy. Even thalidomide, one of the ODA's main success stories, sells for more than $150 per pill. Abbey Meyers, who founded the National Organization for Rare Disorders while helping to get the ODA signed into law, says her organization tried to tackle this problem by urging drug makers to offer prescription assistance programs, as the ODA matured.

As a result of her efforts in the early 1980s, Meyers's son was able to go back on pimozide, and today, "He's doing very well," she says. But in the end, it wasn't the ODA that saved her son: McNeil Laboratories eventually developed pimozide as a Tourette's syndrome treatment of their own accord, in response to the arguments about human responsibility that convinced Congress to eventually enact the ODA. "They changed their mind voluntarily and they developed it without getting it designated as an orphan drug," says Meyers.

Orphan Blockbusters

Generic Name Trade Name Sponsor Orphan Indication Price* (USD for 30 day supply) US Sales in 2007 (USD)
Topiramate Topamax Johnson & Johnson Pharmaceutical Lennox-Gastaut Syndrome in children $114 (60 25mg tablets) $1.837 billion
Lamotrigine Lamictal Glaxo Wellcome Lennox-Gastaut Syndrome $248 (60 100mg tablets) $1.717 billion
Etanercept Enbrel Immunex Polyarticular-course juvenile rheumatoid arthritis $179 (1 kit 25mg injections) $0.874 billion
Modafinil Provigil Cephalon Narcolepsy $237 (30 200mg tablets) $0.744 billion
Tacrolimus Prograf Astellas Pharma Prophylaxis of organ rejection in patients receiving allogenic heart transplants. $239 (60 1mg capsules) $0.515 billion
Raloxifene Evista Eli Lilly and Co. Reduction in risk of invasive breast cancer $92 (30 60mg tablets) $0.503 billion
Adalimumab Humira Abbott Laboratories Juvenile idiopathic arthritis $1,391 (2 kits 40mg/0.8 mL injections) $0.462 billion
Imatinib mesylate Gleevec Novartis Pharmaceuticals Various cancer-related symptoms $3,164 (30 400mg tablets) $0.384 billion
Glatiramer acetate Copaxone Teva Pharmaceuticals Relapsing-remitting multiple sclerosis $1,771 (1 kit 20mg/mL injection) $0.303 billion

* As per DestinationRx Price Index (


Avatar of: Stephen Dolle

Stephen Dolle

Posts: 16

October 2, 2008

One way of looking at the Orphan Drug Act is thru its activism of "affirmative action." It is affirmative action in that it aims to provide more generous funding and expedient approval considerations on R&D projects in limited population or "orphan" type disorders. In many respects this reasoning is justifiable, though through another lens it is affirmative action that discriminates against disorders whose numbers don't meet the threshhold.\n\nIt is without argument that in the U.S. the most important aspect of fundraising and successful treatment comes thru "advocacy." The patient advocacy movement was predominantly pioneered by groups in support of breast cancer during the 1970s. In the 1980s, AIDS activitists along with Hollywood took it too a higher and sometimes civil disobedient level. More recently, advocates for autism have had remarkable success in fundraising and awareness.\n\nSo it would seem that disorders that are fortunate enough to have either of great activism eg. AIDS, orphan support through ltd numbers, big profit and Wall Street's blessing like ED (Viagra, Cialis), Wall Street activism like Michael Milken and prostate CA, or the old and proven way in which a researcher takes an interest in a disorder and makes a BIG discovery - that these will see the most benefit to industry and patient care (though they are not necessarily simultaneous).\n\nIn 1999 I had my own startup for DiaCeph Test technology I pioneered for the treatment of hydrocephalus. I was not only a scientist/ inventer, but also an affected patient. Hydrocephalus did not qualify for orphan consideration due its larger numbers, though it had been as similarly neglected as any orphan disorder. Then, after the project's advisory board had been set up at an area California university (UCI), the business office killed it saying no one on staff could work on it or write NIH grants unless they owned it. This is absolutely where commerization and greed have done health and science discoveries wrong.\n\nAfter actor Christoper Reeve suffered a spinal cord injury and found only ltd progress despite millions spent, he set out on a campaign to motivate spinal cord research. The best thing he did was to "call out" the industry on how they had conducted themselves. This brought change more than money could, like a coach giving a big speech before a championship game. Where are such inspiring efforts today?\n\nIn my 16 years of research and advocacy with hydrocephalus, most all of the benchmarks I have seen for new developments have been more about money for industry, than discoveries for patient care. It is truly trickle-down research! And a large number of people and groups involved in clinical trials and product development appear to have some type of financial conflict. It is too much Wall Street and not enough Main Street!\n\nI think in commercialzing so much of our research, we have isolated progress. There is too little pure research which others can draw upon, with much proected by IP. Its akin to each home on a street erecting a big fence or wall between them. Soon you have a much less level of communication. I believe we need to re-think how we fund and grow our most precious resource, our research.
Avatar of: Anne Lodge

Anne Lodge

Posts: 1

October 3, 2008

I was surprised to see Tacrolimus, Enbrel and Copaxone on the list of blockbuster orphan drugs. This highlights another shortcoming of the Act. These only qualify as orphans because they aimed at a smaller indication initially and convinced the Office of Orphan Drug that they met the criteria. Tacrolimus is used to prevent rejection in liver and kidney transplants, not only cardiac transplants. Enbrel is used in rheumatoid arthritis, not just the juvenile poly articular course. It's a big indication, not an orphan. Copaxone for MS: The National MS Society lists a prevalance of 400,000 though I'd accept closer to the 200,000 cut off for orphan status. You'd only get there by focussing on splitting forms of MS into relapsing remitting, chronic progressive, etc. \n\nGleevec qualifies as an orphan drug but it is laughable to list it as treating cancer related symptoms. It is a breakthrough drug for chronic myelogenous leukemia and has been an interesting study in receptor tyrosine kinase inhibition. \n\nMy point is that these drugs were the focus of significant research and have significant patient populations. Tacrolimus and Enbrel would have been developed for the market with or without the Orphan Drug Act but the drug makers were clever to take advantage of the government give away. I'm sure there are others who have managed to get approval (as orphan drug) on a small indication and expand into a much larger one.
Avatar of: Paul Stein

Paul Stein

Posts: 23

October 23, 2008

There is no doubt that orphan drugs have truly helped many patients. However, the economists may be correct. Comparing the incentives the Government granted through the Orphan Drug Act to the list of amounts of money earned by the various companies, one can only think that there is some gross imbalance here. Business, it appears, has exploited the System.\n\nCompanies cannot be blamed for this as their highly paid and educated law departments are there to gain profits for the companies through loopholes/weaknesses in laws. As a taxpayer, however, I feel a little ripped off. Shouldn't the law be modified such that once there are enough profits gained by a company for a particular drug to offset the incentives that those incentives would then be returned to the federal coffers? Let's be fair.
Avatar of: Ellen Hunt

Ellen Hunt

Posts: 199

February 27, 2009

See: \nIn any data set, there is a bell curve. (Remember that from freshman stats?) Today there are 1951 orphan drugs. (See top of page of all drugs list link.) \n\nThere are, according to this article, 9 big successes. That is 0.46% of the total. So 99.54% are not in this group. \n\nRemember this rule? 68% 95% 99.7% \n68% fall in 1 standard deviation of the mean. \n95% fall in 2 standard deviations of the mean. \n99.7% are in 3 standard deviations of the mean. \n\nWhat these figures really say is that these successes are 3 standard deviations out from the mean. In biology, if you have 99.5% not working, that means that you have scientific proof something ISN'T happening. \n\nIn other words, this article is rubbish, and those pundits consulted don't have a clue what they are talking about. \n\nThis data proves that the orphan drug program is working wonderfully, and that big money success stories are EXTREMELY rare!

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