Biomarker-Defined Subsets of Common Diseases: Policy and Economic Implications of Orphan Drug Act Coverage

In PLOS Medicine, Aaron Kesselheim and colleagues, including LDI senior fellow Steven Joffe, investigate the policy and economic implications of the Orphan Drug Act of 1983, and examine the circumstances surrounding a drug’s discovery and development, secondary approvals, off label uses, subsequent revenues, and the reported monthly cost of biomarker-defined disease subsets. The Orphan Drug Act of 1983 was intended to incentivize the development of pharmaceutical products for rare diseases by providing manufacturers with the opportunity to earn grants, tax credits, free waivers, and seven years of post-approval market exclusivity for the approved indication. It allows for companies to apply for an orphan drug designation from the FDA based on the rarity of the targeted disease (fewer than 200,000 patients in the US annually).  Over the past decade, the number of orphan drug designations has roughly doubled, with a simultaneous increase in those that target biomarker-defined subsets of common diseases. However, orphan designated drugs to treat biomarker-defined subsets of common conditions have a number of characteristics that make them ill-suited to the orphan drug designation, including short development times and rapid expansion of off-label indications after approval. The authors conclude that application of the Orphan Drug Act in these cases risks wasting resources that might be better focused on truly rate conditions.