Companies Make Billions by Exploiting Orphan Drug Loophole

By Rachel Whetstone from In The Cloud Copy

The Orphan Drug Act of 1983 was created to encourage the development of drugs to help people with rare diseases. Drug companies don’t have much financial incentive to research and develop new medications for diseases that affect only a few people. The Orphan Drug Act was intended to help fund the creation of drugs that would not otherwise be commercially successful.

If a drug is granted orphan status, it is given seven years of exclusivity on the market, as well as a 25% tax credit for qualified clinical trials. The company also receives a waiver of application fees.

However, corporations have found ways to exploit loopholes in order to make huge profits from this well-meaning law.

Indivior Wanted Marketing Exclusivity

In 1994, Indivior applied for orphan drug status for their medication buprenorphine (Subutex), which was used for opioid addiction treatment. At the time, the opioid crisis had not yet hit the United States. Subutex was granted orphan drug status based on the claim that it would not likely bring in a profit for Indivior. Competing drugs were blocked from the market.

However, as opioid addiction swept the country, Subutex brought in billions in profits for Indivior. A loophole in the Orphan Drug Act allowed Indivior to renew orphan drug status and marketing exclusivity without needing to show that Subutex was continuing to not be profitable. A 2016 injectable version of buprenorphine called Sublocade was also granted this exclusivity, bringing in even more financial gain for the company.

The law that was created to help rare disease patients get medication that was out of their reach was instead working against patients and in favor of the drug companies.

FDA Admits Mistake

In November 2019, the FDA realized their mistake in allowing Indivior to take advantage of the law for profit, and they reversed their earlier protections for the drugs. By doing so, they allowed competitors to enter the market for opioid addiction drugs, which could provide more options and better prices for consumers.

Brixadi, an extended-release injection of buprenorphine, may now have the opportunity to enter the market, along with other similar competitive drugs.

Loopholes Still Exist in the Law

Although the FDA addressed the specific situation with Indivior, the loophole that allowed them to make billions still remains in the law. Other corporations could take advantage in the same way, driving up prices for medications and keeping the market from being competitive. Indivior isn’t the only company to have taken advantage of the law in the past, and other companies could continue to do so in the future unless the law is changed.

Advocates are calling on Congress to make changes to the law so that drug companies will need to demonstrate non-profitability for any medications to continue to be assigned orphan drug status. A bill called the Fairness in Orphan Drug Exclusivity Act (H.R. 4712) has been introduced to the House to try to amend the law to consider current drug profitability. People interested in seeing the bill approved can contact their representatives in Congress.

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