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Government Investigation Finds Flaws in the FDA’s Orphan Drug Program

by Kaiser Health News | Updated on 12.3.18

The Food and Drug Administration has failed to ensure that drugs given prized rare-disease status meet the intent of a 35-year-old law, federal officials revealed in a report today.

The Government Accountability Office, which spent more than a year investigating the FDA’s orphan drug program, said “challenges continue” in the program that was created to spur development of drugs for diseases afflicting fewer than 200,000 patients.

The investigation began after a request from three high-profile Republican senators last year, in the wake of a KHN investigation. KHN found that the program was being manipulated by drugmakers to maximize profits and to protect niche markets for medicines being taken by millions.

The GAO uncovered inconsistent and often incomplete reviews early in the process of designating medicines as orphan drugs and recommended “executive action” to fix the system. In some cases, FDA reviewers failed to show they had checked how many patients could be treated by a drug being considered for orphan drug status; instead, they appeared to trust what drugmakers told them.

In response to GAO’s probe, the FDA issued a statement saying it is “streamlining our processes” and declined requests for interviews. Officials at the Department of Health and Human Services, which oversees the FDA, said they agreed with GAO’s recommendations.

John Dicken, director of the GAO’s health care team, said the focus of the report is “ensuring that the intent of the law is being met.”

The FDA’s rare-disease program began after Congress overwhelmingly passed the 1983 Orphan Drug Act to motivate pharmaceutical companies to develop drugs for people who lacked treatments for their conditions. Rare diseases had been ignored by drugmakers because treatments for them weren’t expected to be profitable. The law provides fee waivers, tax incentives for research and seven years of marketing exclusivity for any drug the FDA approves as an “orphan.”

The incentives, though, have proven to be more powerful and highly coveted than expected, said Avik Roy, president of the Foundation for Research on Equal Opportunity, a conservative think tank.

Many people are “starting to wonder whether or not the Orphan Drug Act over-corrected for the problem,” Roy said, noting that a third of all pharmaceutical spending in the U.S. will be on so-called rare-disease medicines in 2020.

GAO investigators examined FDA records for 148 applications submitted by drugmakers for orphan drug approval in late 2017. FDA’s reviewers are supposed to apply two specific criteria — how many patients would be served and whether there is scientific evidence the drug will treat the disease.

In nearly 60 percent of the cases, the FDA reviewers did not capture regulatory history information, including “adverse actions” from other regulatory agencies. The FDA uses experienced reviewers, Dicken noted, who may already know the history of certain submitted drugs and not see the need to document it.

And 15 percent of the time FDA reviewers failed to independently verify patient estimates provided by the drugmaker.

Of the 148 records the GAO reviewed, 26 applications from manufacturers were granted orphan status even though the initial FDA staff review was missing information.

“It is tempting to think that perhaps those approvals were sort of granted routinely without sufficient scrutiny,” said Bernard Munos, senior fellow at FasterCures and the Milken Institute.

By contrast, early Orphan Drug Act advocate Abbey Meyers said she was not concerned about the lack of population estimates because many rare diseases lack population studies that show how common a disease is.

Rather, Meyers said, she’s “disappointed that there is no government-funded agency that is willing to finance” such research.

The GAO investigation began after Scott Gottlieb, who took over as FDA commissioner in May 2017, announced a “modernization” of the rare-disease program.

Critics have long complained that drugmakers game the FDA’s approval process for orphan drugs. In January 2017, the KHN investigation, which was co-published and aired by NPR, revealed that many orphan drugs aren’t entirely new and don’t always start off treating rare diseases.

The GAO report, while not analyzing the same years, found that 38.5 percent of orphan drug approvals from 2008 to 2017 were for drugs that had been previously approved either for mass-market or rare-disease use. About 71 percent of the drugs given orphan status were intended to treat diseases affecting fewer than 100,000 people.

KHN’s investigation found that popular mass-market drugs such as cholesterol blockbuster Crestor, Abilify for psychiatric conditions, cancer drug Herceptin and rheumatoid arthritis drug Humira, the best-selling medicine in the world, all won orphan approval yet were already on the market to treat common conditions.

In addition, more than 80 orphan drugs won FDA approval for more than one rare disease — or several — each one with its own bundle of rich incentives.

Genentech’s Avastin, a cancer treatment approved for mass-market use in 2004, won three more orphan-designated approvals this year for the treatment of three rare forms of cancer. It now has 11 approved orphan uses in all, and exclusive protections that keep generics at bay won’t run out until 2025.

Sens. Orrin Hatch (R-Utah), Chuck Grassley (R-Iowa) and Tom Cotton (R-Ark.) sent a letter in March 2017 asking the GAO to investigate the program and find out whether Congress’ original intent for it was still being followed.

“Despite the success of the Orphan Drug Act, 95 percent of rare diseases still have no treatment options,” Hatch said in a statement Friday. “I hope that my colleagues will utilize this [GAO] report as they work to strengthen the accomplishments of the Orphan Drug Act and encourage developers to continue their investment in this patient population.” The GAO report also mentioned concerns about prices, noting that “the ability to command high prices” was one reason the rare-disease market was growing so rapidly.

The average cost per patient for an orphan drug was $147,308 in 2017 compared with $30,708 for a mass-market drug, according to a 2018 EvaluatePharma report on the 100 top-selling drugs in the U.S. Celgene’s chemotherapy drug Revlimid was the top-selling orphan with $5.4 billion in sales and $184,011 in revenue per patient.

“We have accepted culturally that it’s OK for a company to charge high prices for [orphan] drugs,” said Roy. “The end result is that a lot of these orphan drugs are $10 billion drugs, even though they are for rare diseases,” he added.

From 2008 to 2017, more than 50 percent of the drugs granted orphan status were for oncology or hematology, according to the GAO report. And nearly two-thirds of drugs approved in the program were given expedited review processes, such as accelerated approval or fast-track designation.

Prior to announcing Gottlieb’s modernization plan, the FDA had a backlog of 138 drug applications for orphan status that had been waiting more than 120 days. The backlog was cleared in August 2017 after staff from across the agency stepped in to help.

Kaiser Health News

Written by Kaiser Health News

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(23)
  • burrkitty
    Voted Angry
    12/03/2018
    ···

    The for-profit “health” system took the path of maximum profit. Why is anybody surprised by that? This is what we expect when the profit motive is involved with anything. When Nixon made the change in 1973, he set us on the path to this immoral system of profiting off the sick. As long as profit is involved, morality is gone. UNIVERSAL SINGLE PAYER HEALTHCARE SYSTEM NOW! In 1973, Nixon did a personal favor for his friend and campaign financier, Edgar Kaiser, then president and chairman of Kaiser-Permanente. Nixon signed into law, the Health Maintenance Organization Act of 1973, in which medical insurance agencies, hospitals, clinics and even doctors, could begin functioning as for-profit business entities instead of the service organizations they were intended to be. And which insurance company got the first taste of federal subsidies to implement HMOA73 … *gasp* … why, it was Kaiser-Permanente! What are the odds? And to perfectly cement HMOA73 as the profiteering boondoggle that it actually was, the law Nixon mandated also included clauses that encouraged medical providers to not CURE afflictions, but to PROLONG them by only treating the symptoms. There’s no money to be made in CURING sickness. But the sky’s the limit when it comes to forcing people to endure repetitive doctor visits, endless (and often useless and redundant) tests, and … of course … let’s not forget the ever-increasing demand for American-made prescription drugs! Have you noticed recently that the words “prolonged coma” and DEATH have wormed their way into the fast-spoken side-effects list of just about every new drug you see on television or hear on the radio? Death! From the medicine that’s supposed to cure you! You know what? I’ll take restless legs over DEATH. So it’s an arms race between insurers, who deploy software and manpower trying to find claims they can reject, and doctors and hospitals, who deploy their own forces in an effort to outsmart or challenge the insurers. And the cost of this arms race ends up being borne by the public, in the form of higher health care prices and higher insurance premiums. Of course, rejecting claims is a clumsy way to deny coverage. The best way for an insurer to avoid paying medical bills is to avoid selling insurance to people who really need it. An insurance company can accomplish this in two ways, through marketing that targets the healthy, and through underwriting: Rejecting the sick or charging them higher premiums. See the pattern? Like denial management, however, marketing and underwriting cost a lot of money. McKinsey & Company, the consulting firm, recently released an important report dissecting the reasons America spends so much more on health care than other wealthy nations. One major factor is that we spend $128 Billion a year in excess administrative costs, with more than half of the total accounted for by marketing and underwriting – costs that don’t exist in single-payer systems. And this is just part of the story. McKinsey’s estimate of excess administrative costs counts only the costs of insurers. It doesn’t, as the report concedes, include other “important consequences of the multi-payor system,” like the extra costs imposed on providers. The sums doctors pay to denial management specialists are just one example. But the larger problem isn’t the behavior of any individual company. It’s the ugly incentives provided by a rigged, and now federally backed scam system in which giving care is punished, while denying it is rewarded. American health care: It’s enough to make you sick.

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  • Robert
    12/03/2018
    ···

    Orphan drugs?

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  • ManfromNebraska
    Voted Angry
    12/03/2018
    ···

    Never trust drug companies! They are only concerned about making money off sick people. They should never be given important roles in these programs. They need to be punished for their actions!

    Like (4)
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  • SneakyPete
    Voted Angry
    12/03/2018
    ···

    It’s a sad 😢 State Of Affaires Folks The Question now is, What’s going to be done, about it SneakyPete..... 12*3*18.....

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  • C.j.
    Voted Angry
    12/04/2018
    ···

    For profit health care has ran its course. The people of America are suffering under this yoke.

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  • Steve
    Voted Angry
    12/04/2018
    ···

    The swamp is huge. Drain the swamp.

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  • Joel
    Voted Angry
    12/05/2018
    ···

    Single payer insurance for everyone. Health care should be the #1 concern of every voting American. Remember the GOP voted to kill Obamacare over 70 times and now they lie about wanting to protect us against the Insurance Lobby prayer of doing away with pre-existing condition protection. Protect yourselves and vote these guys out. YOU DON'T HAVE TO BE CRUEL TO BE STRONG!!!

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  • Tooluser1
    Voted Angry
    12/04/2018
    ···

    The rest of us find "flaws" in the FDA.

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  • Mary
    Voted Angry
    12/04/2018
    ···

    It is shameful and so discouraging that the drug companies only motivation is making money. The fact that the FDA plays a role

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  • ColonelMoose
    Voted Angry
    12/04/2018
    ···

    Wait...people can take advantage of government funded medical programs???? 😵color me surprised. Thank god obama care isn’t lining any pockets like the FDA does. (Dear snowflakes, that’s sarcasm). End government funding. Let competition level the field.

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  • Lisa
    12/03/2018
    ···

    We don’t have a ”health care” system in the USA - we have greedy pharmaceutical companies that are out to profit and they’re clients of the FDA.

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  • Dawn
    Voted Angry
    12/04/2018
    ···

    This has been going on for years and now they are in an uproar over it. Yet again Congress had their heads up their butts and allowed it to happen. The FDA has allowed so many things to come out on the market that have later had to be recalled because they never actually checked the statistics. It’s about time the government steps in and holds everyone the drug companies and the FDA accountable for all the faulty information they have given consumers as well as the dangerous situation we have been put in by the misleading information.

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  • Sean
    Voted Angry
    12/05/2018
    ···

    Orphan drugs may not be important to you but they are to people that need them

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  • Idamarie
    Voted Angry
    12/05/2018
    ···

    That’s what happens when we have a ‘for profit healthcare system ‘ 😡

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  • Cindy
    12/04/2018
    ···

    If you read the article it was because the GOVERNMENT allowed DRUG COMPANIES to manipulate the process. Yet ANOTHER REASON WHY THE GOVERNMENT SHOULD NOT BE IN HEALTHCARE!!! They can’t manage a reliable study but yet progressives and uneducated Americans think they can manage Single Payer/Medicare for all-idiots!

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  • Mitchell
    Voted Angry
    12/04/2018
    ···

    This is simply outrageous.

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  • Steph
    Voted Angry
    12/04/2018
    ···

    This is our tax dollar NOT AT WORK! Drugs they rushed through 10 years ago are the lawsuits of today. If I did my job as poorly as this I would be fired!

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  • Kellikaustic
    Voted Angry
    12/22/2018
    ···

    No trust with the FDA.

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  • S
    Voted Angry
    12/04/2018
    ···

    Those drug mfgs should be criminally prosecuted.

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  • Kendy
    Voted Angry
    12/04/2018
    ···

    The FDA is nothing but a bunch of greedy heartless people who will push a deadly drug through just for money. 🤬

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