Patent Protection vs Orphan Drug Market Exclusivity

Massive Scandal or a Massive Misunderstanding of Regs and Laws for Orphan Drugs

Most of you know, I have been writing on healthcare for a long time and much of it has been negative about healthcare and the costs. I am not defending Gilead’s marketing of Remdesivir; but, a few articles (Common Dreams, The Intercept, etc.) written and the pundits amongst us appear to have misunderstood the issue for Remdesivir’s status.

I can understand why people would become excited and upset with the actions by the FDA to “designate” Remdesivir an orphan drug “candidate (note the quote notation).” In the past, I have found myself to be distracted by headlines (Intercept) which lead me to believe something bad was to come about only to find out it was not as serious as described in the headlined article. With all the issues we are faced with from COVID 19, the half attempt to mandate a lockdown of us in our homes, people “still” clustering, and our government led by a jackass; it is easy to get agitated.

Some thoughts; Given the pandemic, COVID 19 appears to be the exact opposite of a rare disease and describing a new drug for it as an orphan-drug does sound absurd.

A Little History

The seventies found incentives for profit-making drug companies not aligning with the needs of people having rare diseases. Drug Development of new drugs was expensive even 40 years ago. Companies concentrated on needed new therapies and pharmaceuticals potentially having high customer demand yielding increased profits rather than focusing  on those therapies and pharmaceuticals needed by a handful of patients. In 1983, the Orphan Drug Act was passed to encourage R&D for these drugs.

The FDA was given the power to grant a drug “orphan” status and to compounds without patent protection. If a company got its product “approved” as an orphan drug, it gained a period of market exclusivity of seven years. No one else was allowed to sell the same product to treat that specific disease. Additionally, the costs associated with developing that orphan drug including payroll for scientists, and miscellaneous costs were subject to a tax credit. Under the Orphan Drug Act, more than 800 orphan drugs and biologics have been approved by the FDA out of more than 5,300 applications. The Whys and Whats after the leap   .   .   .

Why Would Remdesivir be Designated and Approved as Such if not Rare?

Typically when a disease is labeled as rare, it implies a condition affecting fewer than 200,000 individuals in the United States. To date, the COVID-19 pandemic will affect multiple times the 200,000 before it is under control. The Orphan Drug Act does have an exception for more common diseases with unmet needs which allows the FDA to consider granting orphan drug status to a treatment for;

– “a disease affecting over 200,000 persons in the US and

– for which there is no reasonable expectation the cost of developing and making available a drug for such disease will be recovered from sales in the US.”

It is this provision that Gilead used with its Remdesivir orphan drug application.

What is Remdesivir Orphan Drug Status?

The FDA has “designated” Remdesivir as an Orphan Drug; however, it has not been “approved.” The designation allows Gilead the ability to start to track development expenses. Getting Remdesivir FDA approval as an orphan drug is another matter requiring actual clinical data derived from trials. The approval typically happens four or five years after designation. It could happen sooner, after clinical trials, and given we are in the midst of a pandemic even sooner. While Remdesivir was designated as an Orphan Drug in 2014 as a treatment for Ebola; aAs of March 2020, an approval has not been granted for the treatment of ebola.

A Phase III trial in the US has been started in February 2020 and another Trial in China  for Remdesivir is also occurring. The seven years of Orphan Drug exclusivity (and high prices) can only happen after the trials and the FDA approval.

Other Impacts

As a patent holder for Remdesivir , Gilead can jack up the prices regardless of orphan drug status.

Gilead has a 20 year US Patent on Remdesivir granted by the US Patent and Trademark Office. This gives Gilead an intellectual property right, which can be broader than the narrow definition of an Orphan Drug. Gilead is well positioned to charge high prices once the Phase III Clinical Trials are completed and without being approved as an Orphan Drug. In the case of Gilead not being able to adequately supply Remdesivir, the FDA could authorize  another pharmaceutical  to manufacture Remdesivir to assure the availability of sufficient quantities.

There is merit to the criticisms of the Orphan Drug Act. Orphan drugs come with high prices and 95 percent of the many (7000) identified rare diseases lack effective treatment. The market exclusivity granted under the act is beneficial for about a third of orphan drugs and it is the corporate-tax advantage driving that calculation.

And with a new and improved mention the patent life can be extended for exclusivity just like Mylan did for EpiPen.

Some References:

Rare disease designation for coronavirus drug is just a tax break, ARS Technica, March 24, 2020

Coronavirus Treatment Developed by Gilead Sciences Granted “Rare Disease” Status, Potentially Limiting Affordability, The Intercept, March 23, 2020