ORPHAN DRUG AMENDMENT PROPOSAL REDUCES MARKET EXCLUSIVITY

Executive Summary

ORPHAN DRUG AMENDMENT PROPOSAL REDUCES MARKET EXCLUSIVITY to five years, but allows sponsors of products with "limited commercial potential" to apply for a five-year extension. The proposal was drafted by member companies of BIO, the merging Industrial Biotechnology Association and the Association of Biotechnology Companies, and circulated on Capitol Hill during the week of May 24. The industry proposal is prospective and is drafted to apply only to orphan products for which clinical trials have not yet begun. The draft provides that "no earlier than four years after approval" of an orphan drug, the sponsor could apply to FDA for a five-year extension of market exclusivity. To qualify for an extension, the product's patient population must be limited to 100,000 patients or fewer. The patient threshold for initial orphan designation is 200,000, as under current law. The proposal places the burden on the company to document that the product has "limited commercial potential," and competitors may submit evidence to the contrary. The draft notes that evidence might include the number of companies investigating the drug, the number of countries where a marketing application is pending and the prevalence of the indicated condition. Companies have been criticized for seeking orphan designations to obtain market exclusivity for biotechnology products that otherwise cannot qualify for patent protection. To address such situations, the industry draft proposes an alternative in which companies can obtain four-year market exclusivity for biotech products. The proposal defines a biotech product as a drug or biological product "primarily developed or manufactured using recombinant DNA technology, recombinant RNA technology, hybridoma technology, computer-aided amino acid sequence selection and identification or other processes involving site-specific genetic manipulation techniques, or...protein, peptide or biopolymer extracted from a cellular source." Under a proposed system that would parallel FDA's orphan drug procedures, the agency will not approve duplicates of a biotech drug or biological "for use in any disease or condition," regardless of the size of the patient population. FDA may approve competing versions under the proposal only if there are shortages of the first approved product during the four-year exclusivity period, the owner of the first product consents to marketing of the competing version, or the products were developed simultaneously. The draft defines products developed simultaneously as those for which marketing applications were submitted to FDA within 12 months of one another. The companies sent the proposal to Sens. Kennedy (D-Mass.), Metzenbaum (D-Ohio), Kassebaum (R-Kan.) and Hatch (R-Utah) and Reps. Waxman (D-Calif.) and Bliley (D-Va.). The industry reportedly is awaiting an indication of support from the legislators.