When orphan drugs are blockbusters: Researchers call on Congress to make companies pay back tax credits
A new research letter published today in JAMA questions whether there needs to be continued orphan drug incentives considering the spike in the number of approvals in rare disease areas, and as many later become blockbusters.
Among 315 drugs reviewed from 2008 to 2016, 83 (26%) were initially indicated for orphan-designated conditions. Median, five-year net sales were $719 million for orphan-designated drugs and $812 million for non-orphan drugs. The West Virginia and Harvard researchers said their data showed how “drugs initially approved for an orphan designated condition were just as lucrative for their manufacturers as drugs developed for more common conditions.”
So how could the rare disease drugs be just as lucrative? The academics point to higher launch prices, and from 2008 to 2018, launch prices for orphan-designated drugs were seven times higher than for non-orphan drugs, they wrote.
“Congress could reform the statutory incentives in the Orphan Drug Act, such as by requiring manufacturers to repay tax credits when orphan-designated products are commercial successes,” the researchers wrote.
Democrats back in 2021 sought to curtail the tax credits too. A bill from former House Speaker Nancy Pelosi would have tweaked the wording around the section of the orphan drug law, moving from, “Testing must be related to use for rare disease or condition,” to, “Testing must be related to first use or indication for rare disease condition.”
The credits, which in 2015 were saving biopharma companies more than $100 million in development expenses, have been used as a pawn for years now by both sides of the aisle — Republicans once sought to eliminate the credits entirely — even if it has generally been helpful in the approval of 351 orphan drugs from 2008 to 2017 in 27 different therapeutic areas, according to the GAO.
Congress also recently reauthorized $30 million in orphan drug grants from 2023 through 2027 to help defray the costs of developing drugs for rare diseases or conditions, including qualified trial expenses. The grants program, run by FDA, has funded clinical research since 1983, including trials that led to the approval of more than 80 drugs.