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Orphan drugs

Expensive to produce, they offer hope to those suffering from rare diseases

December 1, 2003
Margaret Miille
NYT Regional Newspapers

Dr. Richard Brown searched everywhere he could think of to find a treatment for a patient with a rare disease.

In this case, it's a 60-something woman diagnosed with a cancer called medullary thyroid carcinoma. Malignant cells have spread to her bones, and time is running out.

Brown, an oncologist and hematologist in Sarasota, Fla., found an obscure reference to a so-called orphan drug that might help her. Drugs designated as ''orphans'' treat diseases affecting fewer than 200,000 Americans.

Brown referred her to a renowned cancer center in Texas and consulted other specialists and drug wholesalers.

No one had heard of the drug. The lack of headway frustrates Brown.

''You really need to dig; you really have to be able to track it down,'' he said. ''You won't get any major chemotherapy studies on this disorder because there are just not enough patients out there to accumulate for a study. Everything becomes anecdotal.''

By contrast, he said, pharmaceutical representatives typically inundate his office with literature on popular drugs used by millions of people.

Medical research and drug development targeting people with rare diseases have made strides, thanks to the 1983 Orphan Drug Act.

The federal law gives drug manufacturers substantial financial incentives to research, develop and produce drugs for small groups of patients. It also guarantees that no one else can bring an identical drug to market for seven years.

Today, 248 designated orphan drugs are on the market, and more than 1,000 in various stages of development. There's still a long way to go - at least 25 million Americans suffer from one of more than 6,000 rare diseases and disorders.

Some critics say the Centers for Medicare and Medicaid took a step backward in January, by greatly reducing payments to hospitals and doctors for all but four orphan drugs taken by Medicare patients. The federal agency has proposed expanding the number to 11 in 2004.

The National Organization for Rare Disorders, or NORD, says the move creates an access problem for all other orphan drugs. Some worry that because the lower Medicare payments fall well below the costs to produce the drugs, it will discourage hospitals from stocking them.

NORD estimates that under the new rules, Medicare reimbursement for orphan drugs, excluding the special four, will drop to an estimated $396.53 million this year. That's 22 percent less than the $509.36 million paid last year and 35 percent less than the $605.89 million paid in 2001.

''We are happier that they are identifying 11 rather than four, but they are still missing the majority of orphan drugs that are not being recognized as orphan drugs,'' said Paul Radensky, a Miami health law attorney and NORD's adviser on this issue.

''It's very much a hollow protection because there is nothing that they are doing to protect the payment rate for those products.''

The profit motive

Before the Orphan Drug Act, there was scant interest in developing drugs for small numbers of people. It simply wasn't profitable.

Scientists realized they couldn't make a living studying rare diseases. Some concocted medicines for them by hand. But without a manufacturer, no two batches were exactly alike.

Fewer than 10 orphan drugs were brought to market in the decade preceding the Orphan Drug Act.

''It was just terrible,'' said Abbey Meyers, NORD's president. ''We realized we were never going to get these treatments unless we got the commercial sector involved.''

The act was designed as a series of financial incentives to entice companies to develop drugs of limited commercial value. The biggest lure lies in an exclusivity clause, which says no competitor can bring the same product on the market for seven years - unless it's superior.

''What it said to the commercial sector is, 'You are not going to lose money and you stand a good chance of making a profit,''' Meyers said.

Drug sponsors - whether drug companies or clinical researchers at academic centers - get 50 percent tax credits for monies spent on research, and from $150,000 to $300,000 in research grants.

While most major pharmaceutical houses didn't take the bait, at least not initially, the lure gave rise to a crop of small- and medium-sized biotech businesses that dominate the orphan drug industry today.

''We learned they were perfectly happy to get drugs that made $500,000 or more in annual sales,'' Meyers said. ''Most of the big companies at the time would not even consider manufacturing drugs under $100 million a year.''

Today, some orphan drugs make their manufacturers more than $1 billion annually.

The debate about how Medicare reimburses these drugs centers on how truly ''orphan'' a particular drug is. The Centers for Medicare and Medicaid classifies those used for more than one disease as common treatments, in contrast to those that treat just one.

An example is Botox, which first was introduced as an orphan drug to control problematic muscle contractions. It since has gained a loyal following of patients who get injections to smooth wrinkles.

But Radensky says restrictive criteria still apply to dozens of orphan drugs beyond the four that Medicare now reimburses at ''reasonable cost.''

NORD's task force, a broad coalition of representatives from patient organizations and manufacturers of rare drugs, is lobbying to get Medicare to exempt all orphan drugs from their current classification, thereby making them eligible for the same special payment status as the current four.

Furthermore, to ensure the policy benefits only those receiving rare disorder treatments, NORD recommends that the federal agency cover high-volume orphan drugs - those generating 30,000 or more claims annually - only when they are used to treat rare diseases.

Rare diseases, rare drugs

Many rare diseases have become a part of our national vocabulary - cystic fibrosis, sickle-cell anemia and multiple sclerosis. Then there are lesser-known ones - AIDS-related dementia, Faucher's disease and prophyria.

Many rare diseases also are genetic.

Although orphan drugs still go through the same rigorous approval process as mainstream ones, it takes less time because there's less clinical data.

That's a consequence of dealing with small groups of people, says Marlene Haffner, director of the FDA's Office of Orphan Products Development.

Most orphan drugs are taken intravenously or are injected. Most also are for chronic diseases, ensuring a group of small but steady customers for the companies that make them.

''While it's true the population is small, it's also true that patients will be taking them possibly the rest of their lives,'' Haffner said.

Many hospital pharmacists say it's simply too expensive to stock orphan drugs that might be used by only a handful of patients.

Even those that conduct clinical trials on new medicines say they rarely come across orphan drugs, if at all.

Jackie White, assistant pharmacy director at Fawcett Memorial Hospital in Port Charlotte, Fla., said requests for orphan drugs are usually physician-driven, meaning hospitals order them if a doctor asks.

The costs can be high: A five-day supply of Ontak, a drug used for non-Hodgkin's lymphoma, can run $40,000 at wholesale, White said. Payments for such orphan drugs typically are cobbled together by Medicare, subsidies from the manufacturers and sometimes, private insurers.

Many orphan drugs treat serious and life-threatening diseases. Time isn't necessarily on the side of the patient, says Henrietta Hyatt-Knorr, a director at the Office of Rare Diseases. That office was established in 1993 under the National Institutes for Health.

''It takes a while to be diagnosed with rare diseases. In many cases, the physician has never seen a case exactly like that,'' said Hyatt-Knorr. ''It's not unusual to wait three to five years for a correct diagnosis to be made, and that doesn't necessarily mean there is a treatment out there for it.''

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