Orphan Drug Designation: The Gift That Keeps on Giving

In the world of exclusivity, there is one overarching rule: all good things must come to an end. New chemical entity (NCE) exclusivity expires after five years (sometimes four); orphan drug exclusivity ends after seven years; and even Reference Product exclusivity expires eventually – after a whopping 12 years. But there is one glaring exception to this general rule: Orphan Drug Designation (ODD). If exclusivity periods were candies, ODD would be an Everlasting Gobstopper.

While ODD is not an exclusivity period in its own right, it is close enough. It comes with a multitude of benefits – such as exemptions from user fees and pediatric testing requirements and tax credits for research and development. More importantly, it functions as the main gatekeeper for Orphan Drug Exclusivity (ODE), perhaps the most important incentive created by Congress to encourage the development of orphan drugs. ODD is critical to the proper operation of the Orphan Drug Act because it ensures that the seven-year ODE period is granted only to bona fide orphan drugs that are intended to treat rare diseases. Indeed, Congress felt so strongly about the importance of ODD that it required sponsors to request designation prior to the submission of a marketing application (21 U.S.C. § 360bb(a)(1)).

FDA's "Everlasting Gobstopper" Policy

So it is noteworthy that under a little-known FDA policy, ODD, once granted, never expires. And it isn't limited to the drug product that was originally designated. Instead, it can be used over and over again to transfer ODD status to new drugs in the original sponsor’s product line, without even a new request. The only requirement is that the new product must contain the same active moiety and be intended for the same orphan use as the drug that received the original designation. If these criteria are met, the new product will receive all the benefits of ODD – including the possibility of seven years of ODE – without any demonstration that it still qualifies as a bona fide orphan drug or is potentially “clinically superior” to the previously approved versions of the drug (as required by FDA regulations at 21 C.F.R. § 316.20(a)).

The origins of FDA’s informal policy are murky because it is not described in any regulation, guidance document or petition response. But FDA appears to have begun applying it only recently – perhaps as recently as 2016. Indeed, the first case we've seen in which it was applied was the 2016 decision to grant ODD to Orenitram (treprostinil) extended-release tablets.

In that case, FDA had granted both ODD and ODE to two previous treprositinil products from the same sponsor, United Therapeutics Corporation (UTC). When UTC requested ODD for Orenitram, its third treprostinil drug, FDA initially rejected that request on the grounds that Orenitram had not been shown to be “clinically superior” to the two previous products. However, in a March 23, 2016, letter, FDA abruptly reversed course and took the position that “Orenitram was covered under UTC’s previous orphan drug designation for the active moiety treprostinil for use in the treatment of PAH.” According to the Agency, ODD is conferred on the active moiety rather than the product formulation. Thus, “because FDA previously granted orphan drug designation to UTC for treprostinil in the treatment of PAH (i.e., for Remodulin), UTC was not technically required to submit a request to designate [Orenitram] for the treatment of PAH.”

It is not clear what prompted FDA to reverse course so abruptly. Perhaps it is an extension of FDA’s long-standing position that ODD should be “granted liberally.” 56 Fed. Reg. 3338, 3340 (Jan. 29, 1991). FDA has explained that a liberal designation policy encourages the development of drugs for orphan diseases by “allowing [such] drugs to benefit from development incentives that flow from designation, including tax credits and exemption from application user fees.” And allowing an automatic transfer of ODD to a new product certainly is consistent with the view that ODD should be granted liberally.

Problems With the "Everlasting Gobstopper" Policy

But even good things can create serious problems without reasonable limits. A piece or two of candy may be a great treat, but a whole bag will make you sick. The same can be said of FDA’s “Everlasting Gobstopper” policy, which grants valuable orphan drug development incentives – including the possibility of seven years of exclusive marketing – to drugs that are no longer bona fide orphan drugs.

The primary problem with FDA’s informal policy is that there are no time limits. A new drug product can be designated as an “orphan drug” based upon data and information that is decades old. During that time period, the information regarding patient prevalence or cost recovery is likely to become invalid or inaccurate. FDA’s policy thus might be reasonable if it incorporated reasonable time limits. In similar situations, FDA has imposed time limits to prevent a grant of ODD based upon stale and outdated information to drugs that no longer qualify as orphan drugs. See 21 C.F.R. § 316.24(a). But not here.

Another problem with FDA’s informal policy is that it facilitates evergreening of ODE by permitting infinite, successive, seven-year periods of ODE based upon a single designation. In essence, it creates orphan drug “estates” that provide substantial – and permanent – benefits to a few lucky owners. This seems inconsistent with Congress’s intent that the incentives created by the Orphan Drug Act should be reserved for bona fide orphan drugs.

Finally, FDA’s informal policy arguably violates the requirement that FDA treat similarly-situated products and sponsors in a similar manner. Significantly, FDA’s informal policy only applies where both the new and prior drug products are developed by the same sponsor. A new product developed by a different sponsor could not receive ODD unless the sponsor satisfied applicable statutory and regulatory requirements by demonstrating that (1) its new product was a bona fide orphan drug (e.g., is intended to treat a disease that affects less than 200,000 patients); and (2) there was a “plausible hypothesis” that its new product was clinically superiority to previously approved products. By contrast, a new product developed by the same sponsor would receive ODD automatically – without submitting a new designation request or satisfying any of the otherwise applicable statutory and regulatory requirements.

Buprenorphine Petition

The problems created by FDA’s “Everlasting Gobstopper Policy” are displayed in sharp relief in a situation involving buprenorphine drugs intended to address the Opioid Epidemic. There, FDA appears to have granted ODD to Sublocade, a new buprenorphine depot product, based upon a prior ODD decision for a different drug product (Subutex) made nearly 25 years ago. The prior decision relied on the Orphan Drug Act’s Cost Recovery prong and the claim that Subutex would not recover its development and marketing costs. Subutex, however, reaped hundreds of millions of dollars in revenue, and its sponsor has asserted that Sublocade could eventually be a blockbuster drug with peak annual revenue of a billion dollars. Thus, even if the original designation decision were valid for Subutex in 1994 (and there are reasons to suspect that it wasn't), it clearly is no longer valid and thus should have no bearing on whether Sublocade qualifies as an orphan drug now.

An even more troubling development is that FDA currently is considering whether to grant Sublocade orphan drug exclusivity even though (a) Subutex already received ODE, and (b) Sublocade is not a bona fide orphan drug. If granted, ODE could block approval of competing buprenorphine drugs for another seven years – in the middle of one of the worst opioid epidemics in U.S. history. If this type of evergreening were permitted, it arguably would be a significant perversion of the Orphan Drug Act.

A petition recently was submitted by Braeburn, Inc. challenging this state affairs and requesting FDA to revoke ODD for Sublocade. A copy of the petition is available here and a link to the applicable docket is here. In addition, NPR recently ran a good story describing this situation and its dire public health implications, which is available here. And here is a late-breaking op-ed on the issue from Diane Dorman, who previously served as vice president for public policy at the National Organization of Rare Disorders. In the interest of transparency, Lassman Law+Policy is representing Braeburn in connection with the petition.

UPDATE: On November 7, 2019, FDA granted Braeburn's Citizen Petition and revoked ODD for Subutex (and thus for Sublocade). This means that Sublocade is not eligible for ODE. You can read the FDA decision here. There is no indication yet whether the sponsor of Sublocade will challenge FDA's decision.

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