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The Orphan Drug Act

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Abbreviated Review of The Orphan Drug Act

Abbreviated Review of The Orphan Drug Act

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  • 1. The Orphan Drug Act Jeff W. Bailey MS Senior Regional Business Manager Shire Human Genetic Therapies June 2009
  • 2. References/Data Source
    • Information from this presentation has been taken from the following sources and cited when possible
      • The Orphan Drug Act Implementation and Impact Report from the Office of the Inspector General (OIG)
      • IMS data (IMS Health)
      • Roundtable “report” on the Use of Health Economics for Orphan Drugs (December 16, 2005)
  • 3. Table of Contents
    • Overview of the Orphan Drug Act (ODA)
    • Provisions to the ODA
    • Governmental entities implementing the ODA
    • Has the ODA met its objectives?
    • Conclusions from the OIG
    • What does this mean to you/MCOs in the future?
    • Implications
    • Conclusions
  • 4. The Orphan Drug Act
    • Congress passed the Orphan Drug Act of 1983 to stimulate the development of drugs for rare diseases
    • Currently a rare disease is defined as a disease that affects fewer than 200,000 people in the United States
    • The law has three components:
      • Provides a 7-year marketing exclusivity
      • A tax credit of 50% of the cost of conducting human trials
      • Research grants for clinical testing of new therapies to treat orphan diseases
  • 5. Provisions of the Orphan Drug Act:
    • Congress amended the Act in 1984, 1985, and 1988
    • The 1984 amendment defined a rare disease as a condition affecting fewer than 200,000 people in the USA
    • The threshold was an arbitrary ceiling based on the estimated prevalence of narcolepsy and multiple sclerosis
    • The 1985 amendment extended marketing exclusivity to patentable as well as unpatentable drugs
    • The 1988 amendment required sponsors to apply for orphan designation before submitting an application for marketing approval
    • In 1997, Congress created an additional incentive when it granted companies developing orphan products an exemption from the usual drug application or “user” fees charged by the FDA.
    • The current (2009) drug application user fee is $1,247,200
  • 6. Governmental Entities Implementing the Orphan Drug Act
    • FDA administers the Orphan Drug Act and reviews applications for orphan designations
    • The Office of Orphan Products Development awards designations and administers the small grants programs
    • The Center for Drug Evaluation and Research and the Center for Biologics Evaluation and Research review applications for marketing approval
  • 7. Has the Orphan Drug Act Met It’s Objectives?
    • The Office of the Inspector General Reviewed the FDA’s data base that contains information on all designations and approvals
    • OIG interviewed regulatory affairs staff and other representatives from a purposeful sample of 36 biotech and pharmaceutical companies
    • OIG also interviewed representatives from 37 patient advocacy groups
    • OIG also conducted a focus group with FDA staff and consulted with drug policy experts and representatives from trade groups
  • 8. Findings:
    • Since Congress passed the Orphan Drug Act in 1983, the FDA has awarded more than 1,000 designations and approved more than 200 products
    • Advocacy groups report that products are usually accessible to patients (insurance typically pays for the treatments, and companies offer patient assistance programs)
    • The Office of Orphan Products Development provides a valuable service to both companies and patients
    • Orphan products meet the legal prevalence limit, and most fall well below the threshold of 200,000 patients
  • 9. Findings: Total Orphan Designations and Approvals 68 79 67 55 60 56 58 65 56 80 89 75 73 59 33 48 41 1 D E S I G N A T E 14 20 20 19 23 11 11 13 13 12 12 12 11 9 6 7 3 2 A P P R O V A L S 00 99 98 97 96 95 94 93 92 91 90 89 88 87 86 85 84 83 Y E A R
  • 10. Findings:
    • Marketing exclusivity remains the most important incentive (why)?
    • Not all but most biotechnology companies are young, volatile cash strapped companies heavily dependent on private capital to fund research & development
    • The Orphan Drug Act helps biotechnology companies attract venture capital to support lengthy and expensive drug development process
    • Process estimated to take 14 years at a cost of 300M-500M
  • 11. Conclusion:
    • OIG concludes that the Orphan Drug Act of 1983 continues to meet the objectives it was designed to meet
    • OIG concludes that no regulatory or legislative changes are needed
    • In some instances, companies have questioned the Office of Orphan Products Development’s decisions, they generally praise the Orphan Drug Act and its implementation
  • 12. What Does This Mean To You?: Managed Care Vision Today & Beyond
    • Under the standard methods of health technology assessment (HTA) incorporating economic evaluation, orphan drugs do not usually prove to be cost effective and thus, coupled with their high cost, means that funding and patient access may be limited; however, these restrictions are not in line with societal preferences
    • Given the new administration and their desire for national health care, and investigating what has been transpiring in the (EU) regarding orphan drug access, I opine that eventually access will be restricted to patient “sub-populations” and we will see a shift in reimbursement away from the payer towards governmental payment or cost sharing between the government and third party payers
  • 13. Trends & Concerns (Abroad & Here)
    • Genuine success in terms of patients with rare diseases realizing increased life expectancy and/or quality of life can be hard to define
    • Decisions regarding access and reimbursement are taken at national, state, regional and provider levels
    • Several studies have documented the variability and constraints in access to available treatments for orphan diseases
    • In only 9/25 EU countries were all 10 then approved orphan drugs (ODs) marketed and in only 1/25 countries were all 10 ODs on a national reimbursement list (Alcimed, 2005)
  • 14. Trends & Concerns (Abroad & Here)
    • In the UK a survey of orphan disease associations and support groups in the UK indicated that, out of 62 orphan conditions, some form of treatment was available for 38 (69.1%)
    • Where a treatment was available, 34.2% of them were provided unconditionally by the National Health Service (NHS)
    • In a further 31.6% of cases the treatment was provided selectively by different health authorities
    • In the remaining 34.2 of cases no treatment was provided (Kanavos and Saka, 2005)
  • 15. Trends & Concerns: Abroad & Here
    • A survey compared access in Europe to care between countries and between different rare diseases (EURORDIS 2005)
    • In only 1 of 26 European countries studied, was there access (in December 2004) to all 12 orphan medicinal products authorized before December 2003
    • In only 34% of the countries (9/26) was there availability for half the products (6/12)
  • 16. Trends & Concerns: Abroad & Here
    • Today in the US, payers do not have a separate reimbursement process for orphan drugs but often solicit input from (KOLs) before determining appropriate (PAs)
    • KOLs are usually favorable towards any new orphan therapy since it enables them to treat previously untreatable patients
    • Payers traditionally put no major restrictions on these drugs
    • For products on the medical side, MCOs have historically covered all infused orphan therapies-even the most expensive!
  • 17. Trends & Concerns: Abroad & Here
    • Given the current favorable access environment for orphan drugs, and the large number of new, “expensive” orphan drugs recently launched (at least 15 new orphan drugs have been launched in the last 24 months, including six priced at over $100,000 per year) IMS Data
    • US payers will inevitably consider becoming more restrictive
    • The current payer system, however, is limiting payers’ ability to contain costs
    • Given payers’ limited knowledge of rare diseases , KOLs, who are reluctant to limit access, are usually consulted
    • Additionally, limited options for orphan diseases, as well as political sensitivity in this area, further reduces payers’ ability to be more restrictive with orphan drugs
  • 18. Implications
    • Given the increasing scrutiny of market access for orphan drugs, improved clinical data will be more critical moving forward
    • Proving the value of orphan drugs is next on the horizon
    • It will be critical for companies to consider various factors in launching orphan drugs:
      • Cost of alternative therapies
      • Gain in life expectancy/survival data
      • Patient yearly out of pocket costs
      • Budget impact and potential payer behavior
      • Patient life-time maximum coverage (in the US)
  • 19. Implications
    • Payer and governmental concerns:
      • Do HTA based decisions adequately reflect societal preferences
      • Underlying principle of equity in access to treatment
      • Patients suffering from a rare disease should be entitled to the same opportunity of receiving treatment as other patients with more frequently occurring disorders
      • How should same/equal opportunity be interpreted?
      • If standard HTA procedures were to be applied to orphan drugs virtually none of them would be “cost effective”
      • However, modest budget impact (between 0.7% and 1% of national medicine budgets) (Alcimed 2005)
  • 20. Conclusions
    • I believe the US will look to the (EU) not necessarily for guidance but for trends and to analyze these trends for effectiveness as a means for implementing these ideas into our healthcare system
    • Oregon has used some logic from the (EU) to restrict therapy based on QALY data
    • The most severe patients may be denied therapy
    • Payers are in a pickle regarding orphan drugs (the government wants them, advocacy groups want them and of course patients and families with rare diseases desperately want them)
    • Even if national health care doesn’t become a reality, I believe a cost sharing scheme between the federal government and third party payers’ will prevail

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