What Does the Government Investigation on the Orphan Drug Program Mean for Drug Manufacturers?

Sen. Tom Cotton, R-Ark., is one of three GOP senators seeking an investigation into six-figure annual costs for drugs intended to treat rare diseases. Photo Credit: Alex Brandon/AP

The U.S. Government Accountability Office (GAO) will investigate potential abuse of the Orphan Drug Act (ODA) by drug-makers. In a March 3 letter to the U.S. Government Accountability Office, Sens. Orrin Hatch (R-Utah), Chuck Grassley (R-Iowa) and Tom Cotton (R-Ark.) raised the possibility that regulatory or legislative changes might be needed “to preserve the intent of this vital law” that gives drug-makers lucrative incentives to develop drugs for rare diseases.

Orphan drugs are granted research and tax credits and 7 years of exclusive rights to market drugs that treat conditions that affect fewer than 200,000 patients in the United States. Approximately 1 in 10 Americans live with a rare disease.

Public scrutiny of orphan drug pricing has dramatically increased due to reported 5 and 6 figure annual price tags. In January, Kaiser Health News published an investigation that postulates that the orphan drug program is being manipulated by drug-makers to maximize profits and to protect niche markets for medicines. Since the passing of the ODA in 1983, more than 400 drug indications have been approved to treat rare diseases.

Orphan drug developers are facing increasing challenges, ranging from pricing concerns to potential policy changes that could impact commercialization timelines and objectives. Smart companies realize that they must engage with external stakeholders, including government representatives, early and often in order to anticipate and mitigate risks that could impact their business objectives.

If your company would like to learn more about how to successfully operate within this changing environment, and ensure that your development program reaches intended commercial objectives, contact us at joff@diligentiastrategy.com