Bipartisan Congress Intensifies Efforts To Restrict Orphan Drug Exclusivity

"Orphan" drug exclusivity, which is intended to reward drug companies' investment in the development of certain drugs, might soon be harder to get—and keep.

Over the past several months, Congress introduced two similar bills to amend a "loophole" in the Orphan Drug Act (ODA). On October 17, 2019, a bipartisan group of House members introduced H.R. 4712 ("Fairness in Orphan Drug Exclusivity Act") ("the House bill"). On February 11, 2020, bipartisan Senators sponsored a companion bill bearing the same title (S. 3271) ("the Senate bill"). Consistent with recent political interest in curbing high drug prices, the proposed legislation is intended to limit the availability of orphan drug exclusivity for certain drugs, with the goal of thereby promoting competition.

The proposed bills arise from concerns regarding potential misuse of the ODA's protections as, for example, certain lucrative and widely-used drugs have orphan drug exclusivity. The ODA was intended to incentivize the development of drugs for "rare" diseases—for example, conditions affecting fewer than 200,000 people in the United States—by helping companies recoup development-related costs. See 21 U.S.C. § 360bb(a)(2)(A). Once a drug obtains orphan drug exclusivity, the FDA cannot approve another drug for the "rare" condition for seven years. See 21 U.S.C. § 360cc(a).

Even if a drug is used for a condition that affects a larger population, it can also qualify for orphan drug exclusivity if it is expected to be unprofitable. See 21 U.S.C. § 360bb(a)(2)(B). As summarized below, the proposed bills would place a burden on drugmakers seeking to obtain or retain orphan drug exclusivity for this latter category of "§ (a)(2)(B)" drugs.

Sponsors Must Prove "No Reasonable Expectation" of Recouping Costs

To obtain orphan drug exclusivity, both proposed bills require a drug's sponsor to demonstrate that, on the date a drug's application is approved (or licensed, if the drug is a biologic), the sponsor did not reasonably expect to be able to recover costs associated with developing that drug and making it available in the United States.

The same showing would be required for existing orphan drug exclusivities. If either bill is enacted in current form, a sponsor will have 60 days to show that, at the time of approval (or license), the sponsor did not reasonably expect to recoup these costs. Without this showing, the FDA "shall revoke" the existing exclusivity.

The House bill additionally requires...