Orphan Drug Timeline

1980

April 17, 1980. Congresswoman Elizabeth Holtzman introduces H.R.7089 (96th Congress) – “A bill to establish an office in the National Institutes of Health to assist in the development of drugs for diseases and conditions of low incidence.” An orphan drug was defined as a new “diagnosis, prevention or treatment of the disease or condition” that was commercially unavailable due to the small market for the drug, or because exclusive rights to the development of the drug could not be obtained. Companies seeking designation for a “drug of limited commercial value” would have had to estimate expenses and revenues for the drug over a ten-year period. The bill did not pass, but it did stimulate interest in the issue by the producers of Quince M.E., a television drama staring Jack Klugman, who appears as a coroner who investigates suspicious deaths that usually suggest murder. Klugman later appears in two episodes of Quincy focusing on the orphan drug issue.

1981

Television series Quincy airs “Seldom Silent, Never Heard,” focusing attention on barriers to access existing drugs to treat rare diseases. The plot: “A tragic death of a teenager sets Quincy into action fighting for orphan drug development.”

1982

Television series Quincy airs “Give Me Your Weak.” The plot: “Quincy revisits old friends and travels to Washington DC in an effort to get the Orphan Drug act passed, and help a young mother suffering from myoclonus.”

1983

January 5, 1983. The Orphan Drug Act becomes law. (Public Law 97-414).

The benefits of the Orphan Drug Act were limited to a the use of a drug for a “rare disease or condition”, which in 1983, was defined as follows:

“SEC. 526. (a)(2). For purposes of paragraph (1), the term ‘rare disease or condition.” condition’ means any disease or condition which occurs so infrequently in the United States that there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales in the United States of such drug. Determinations under the preceding sentence with respect to any drug shall be made on the basis of the facts and circumstances as of the date the request for designation of the drug under this subsection is made.
(b) Notice respecting the designation of a drug under subsection (a) shall be made available to the public.
(c) The Secretary shall by regulation promulgate procedures for the implementation of subsection (a).

The Act created the Orphan Drug Tax Credit.

“SEC. 44H. CLINICAL TESTING EXPENSES FOR CERTAIN DRUGS FOR RARE 26 USC d4H. DISEASES OR CONDITIONS.
“(a) GENERAL RULE.-There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 50 percent of the qualified clinical testing expenses for the taxable year.

There was also a seven year monopoly for “unpatented drugs for rare diseases or conditions.”

The seven year monopoly for the registration of an unpatented drug to treat the orphan disease or condition provided an exception to the monopoly. The statutory provisions for this exception reads as follows:

21 U.S. Code § 360cc – Protection for drugs for rare diseases or conditions

(b) Exceptions
If an application filed pursuant to section 355 of this title is approved for a drug designated under section 360bb of this title for a rare disease or condition or if a license is issued under section 262 of title 42 for such a drug, the Secretary may, during the seven-year period beginning on the date of the application approval or of the issuance of the license, approve another application under section 355 of this title or issue a license under section 262 of title 42, for such drug for such disease or condition for a person who is not the holder of such approved application or of such license if—

(1) the Secretary finds, after providing the holder notice and opportunity for the submission of views, that in such period the holder of the approved application or of the license cannot assure the availability of sufficient quantities of the drug to meet the needs of persons with the disease or condition for which the drug was designated . . .

1984

October 30, 1984. U.S. Public Law 98-551, the “Health Promotion and Disease Prevention Amendments of 1984”. Among other things, this Act eliminated the means test for Orphan Drug exclusivity, and any role of the government in examining the R&D costs for the drug, or the revenues or profits.

SEC. 4. (a) Section 526(a)(2) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bb(a)(2)) is amended by striking out “which occurs so infrequently in the United States that” and inserting in lieu thereof “which (A) affects less than 200,000 persons in the United States, or (B) affects more than 200,000 in the United States and for which”.
(b) Section 5(b)(2) of the Orphan Drug Act (21 U.S.C. 360ee(b)(2)) is amended by striking out “which occurs so infrequently in the United States that” and inserting in lieu thereof “which (A) affects less than 200,000 persons in the United States, or (B) affects more than 200,000 in the United States and for which”

.. . . there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales in the United States of such drug.

1985.

August 15, 1985. Public Law 99-91, the “Orphan Drug Amendments of 1985”. This Act extended the 7 year market exclusivity period in the Orphan Drug Act to patented drugs. This was consequential because the FDA was granting broader protection to orphan drugs that were covered by patents, for some drugs.

SEC. 2. MARKET PROTECTION.
Section 527 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360cc) is amended-
(1) by striking out “and for which a United States Letter of Patent may not be issued” in subsection (a); (2) by striking out “and if a United States Letter of Patent may not be issued for the drug” in subsection (b); and (3) by striking out “UNPATENTED” in the title of the section.

The 1985 Act also expanded the term “qualified testing” to include “preclinical testing.”

SEC. 5. FINANCIAL ASSISTANCE.
(a) QUALIFIED TESTING.-S~C~~O~ 5 of the Orphan Drug Act (21 U.S.C. 360ee) is arnended-
(1) in subsection (a) by striking out “clinical”; and
(2) by amending subsection (b)(l) to read as follows:
“(1) The term ‘qualified testing’ means-
“(A) human clinical testing- “(i) which is carried out under an exemption for a drug for a rare disease or condition under section 505(i) of the Federal Food, Drug, and Cosmetic Act (or 21 USC856. regulations issued under such section); and “(ii) which occurs after the date such drug is designated under section 526 of such Act and before the 21 USC 360bb. date on which an application with respect to such drug is submitted under section 505(b) or 507 of such Act or 21 USC 357. under section 351 of the Public Health Service Act; and 42 uSC 262.
“(B) preclinical testing involving a drug for a rare disease or condition which occurs after the date such drug is designated under section 526 of such Act and before the date on which an application with respect to such drug is submitted under section 505(b) or 507 of such Act or under section 351 of the Public Health Service Act.”.

1994

In 1994, Orphan Drug Tax Credit expired.

1996

August 20, 1996. PUBLIC LAW 104–188.

SEC. 1205. ORPHAN DRUG TAX CREDIT.
(a) RECATEGORIZED AS A BUSINESS CREDIT.—

”Sec. 45C. Clinical testing expenses for certain drugs for rare diseases or conditions.’’.
(b) CREDIT TERMINATION.—Subsection (e) of section 45C, as redesignated by subsection (a)(1), is amended to read as follows:
”(e) TERMINATION.—This section shall not apply to any amount paid or incurred—
”(1) after December 31, 1994, and before July 1, 1996, or
”(2) after May 31, 1997.’’.
(c) NO PRE-JULY 1, 1996 CARRYBACKS.—Subsection (d) of section 39 (relating to carryback and carryforward of unused credits) is amended by adding at the end the following new paragraph:
”(7) NO CARRYBACK OF SECTION 45C CREDIT BEFORE JULY 1, 1996.—No portion of the unused business credit for any taxable year which is attributable to the orphan drug credit determined under section 45C may be carried back to a taxable year ending before July 1, 1996.’’.
. . .
(e) EFFECTIVE DATE.—The amendments made by this section shall apply to amounts paid or incurred in taxable years ending after June 30, 1996.

1997

August 5, 1997. PUBLIC LAW 105–34. TAXPAYER RELIEF ACT OF 1997, restores the Orphan Drug Tax Credit.

SEC. 604. ORPHAN DRUG TAX CREDIT.
(a) IN GENERAL.—Section 45C (relating to clinical testing expenses for certain drugs for rare diseases or conditions) is amended by striking subsection (e).
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to amounts paid or incurred after May 31, 1997.

November 21, 1997, PUBLIC LAW 105–115—FOOD AND DRUG ADMINISTRATION MODERIZATION ACT OF 1997

1999

November 29, 1999, PUBLIC LAW 106–113.

TITLE II—PROVISIONS RELATING TO PART B
Subtitle A—Hospital Outpatient Services
SEC. 201. OUTLIER ADJUSTMENT AND TRANSITIONAL PASS-THROUGH FOR CERTAIN MEDICAL DEVICES, DRUGS, AND BIOLOGICALS

(b) TRANSITIONAL PASS-THROUGH FOR ADDITIONAL COSTS OF INNOVATIVE MEDICAL DEVICES, DRUGS, AND BIOLOGICALS.—Such section is further amended by inserting after paragraph (5) the following new paragraph:

”(6) TRANSITIONAL PASS-THROUGH FOR ADDITIONAL COSTS OF INNOVATIVE MEDICAL DEVICES, DRUGS, AND BIOLOGICALS.—

”(A) IN GENERAL.—The Secretary shall provide for an additional payment under this paragraph for any of the following that are provided as part of a covered OPD service (or group of services):

”(i) CURRENT ORPHAN DRUGS.—A drug or biological that is used for a rare disease or condition with respect to which the drug or biological has been designated as an orphan drug under section 526 of the Federal Food, Drug and Cosmetic Act if payment for the drug or biological as an outpatient hospital service under this part was being made on the first date that the system under this subsection is implemented.

(g) LIMITING VARIATION OF COSTS OF SERVICES CLASSIFIED WITH A GROUP.—Section 1833(t)(2) (42 U.S.C. 1395l(t)(2)) is amended by adding at the end the following new flush sentence:

”For purposes of subparagraph (B), items and services within a group shall not be treated as ‘comparable with respect to the use of resources’ if the highest median cost (or mean cost, if elected by the Secretary under subparagraph (C)) for an item or service within the group is more than 2 times greater than the lowest median cost (or mean cost, if so elected) for an item or service within the group; except that the Secretary may make exceptions in unusual cases, such as low volume items and services, but may not make such an exception in the case of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug and Cosmetic Act.”

2002

November 6, 2002. PUBLIC LAW 107–280— RARE DISEASES ACT OF 2002

The purposes of this Act are to—
(1) amend the Public Health Service Act to establish an Office of Rare Diseases at the National Institutes of Health; and
(2) increase the national investment in the development of diagnostics and treatments for patients with rare diseases and disorders.

November 6, 2002. 116 STAT. 1992 PUBLIC LAW 107–281. This Act may be cited as the ‘‘Rare Diseases Orphan Product Development Act of 2002’’.

2007

September 27, 2007. PUBLIC LAW 110–85. The ‘‘Food and Drug Administration Amendments Act of 2007’

SEC. 103. AUTHORITY TO ASSESS AND USE DRUG FEES.

(f) EXEMPTION FOR ORPHAN DRUGS.—Section 736 (21 U.S.C. 379h) is further amended by adding at the end the following:

‘‘(k) ORPHAN DRUGS.—

‘‘(1) EXEMPTION.—A drug designated under section 526 for a rare disease or condition and approved under section 505 or under section 351 of the Public Health Service Act shall be exempt from product and establishment fees under this section, if the drug meets all of the following conditions:

‘‘(A) The drug meets the public health requirements contained in this Act as such requirements are applied to requests for waivers for product and establishment fees.

‘‘(B) The drug is owned or licensed and is marketed by a company that had less than $50,000,000 in gross worldwide revenue during the previous year.

‘‘(2) EVIDENCE OF QUALIFICATION.—An exemption under paragraph (1) applies with respect to a drug only if the applicant involved submits a certification that its gross annual revenues did not exceed $50,000,000 for the preceding 12 months before the exemption was requested.’’.

March 23, 2010 Public Law 111-148., the Patient Protection and Affordable Care Act (ACA) becomes law. Provides an exemption from certain FDA user fees for certain Orphan Drugs.

SEC. 9008. <> IMPOSITION OF ANNUAL FEE ON BRANDED PRESCRIPTION PHARMACEUTICAL MANUFACTURERS AND IMPORTERS.

(e) <> Branded Prescription Drug Sales.–For purposes of this section–

(3) Exclusion of orphan drug sales.–The term “branded prescription drug sales” shall not include sales of any drug or biological product with respect to which a credit was allowed for any taxable year under section 45C of the Internal Revenue Code of 1986. The preceding sentence shall not apply with respect to any such drug or biological product after the date on which such drug or biological product is approved by the Food and Drug Administration for marketing for any indication other than the treatment of the rare disease or condition with respect to which such credit was allowed.

Also, provides an exemption from additional pricing rebate on new formulation of existing drugs.

(d) Additional Rebate for New Formulations of Existing Drugs.–

(1) In general.–Section 1927(c)(2) of the Social Security Act (42 U.S.C. 1396r-8(c)(2)) is amended by adding at the end the following new subparagraph:

“(ii) No application to new formulations of orphan drugs.–Clause (i) shall not apply to a new formulation of a covered outpatient drug that is or has been designated under section 526 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bb) for a rare disease or condition, without regard to whether the period of market exclusivity for the drug under section 527 of such Act has expired or the specific indication for use of the drug.”.

And this clarification:

SEC. 7002. APPROVAL PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS.

(h) <> Orphan Products.–If a reference product, as defined in section 351 of the Public Health Service Act (42 U.S.C. 262) (as amended by this Act) has been designated under section 526 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bb) for a rare disease or condition, a biological product seeking approval for such disease or condition under subsection (k) of such section 351 as biosimilar to, or interchangeable with, such reference product may be licensed by the Secretary only after the expiration for such reference product of the later of–

(1) the 7-year period described in section 527(a) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360cc(a)); and

(2) the 12-year period described in subsection (k)(7) of such section 351.

November 26, 2007. EMEA press release announces the FDA and the EMEA have adopted a common Orphan Drug designation application form, to “ease sponsor burden.”

2010

March 30, 2010. PUBLIC LAW 111–152. ‘‘Health Care and Education Reconciliation Act of 2010’’

SEC. 2302. DRUGS PURCHASED BY COVERED ENTITIES.
Section 340B of the Public Health Service Act (42 U.S.C. 256b), as amended by sections 7101 and 7102 of the Patient Protection and Affordable Care Act, is amended—

‘‘(e) EXCLUSION OF ORPHAN DRUGS FOR CERTAIN COVERED ENTITIES.—For covered entities described in subparagraph (M), (N), or (O) of subsection (a)(4), the term ‘covered outpatient drug’ shall not include a drug designated by the Secretary under section 526 of the Federal Food, Drug, and Cosmetic Act for a rare disease or condition.’’.

December 15, 2010. PUBLIC LAW 111–309. ‘‘Medicare and Medicaid Extenders Act of 2010’’.

SEC. 204. CONTINUED INCLUSION OF ORPHAN DRUGS IN DEFINITION OF COVERED OUTPATIENT DRUGS WITH RESPECT TO CHILDREN’S HOSPITALS UNDER THE 340B DRUG DISCOUNT PROGRAM.

(a) DEFINITION OF COVERED OUTPATIENT DRUG.—

(1) AMENDMENT.—Subsection (e) of section 340B of the Public Health Service Act (42 U.S.C. 256b) is amended by striking ‘‘covered entities described in subparagraph (M)’’ and inserting ‘‘covered entities described in subparagraph (M) (other than a children’s hospital described in subparagraph (M))’’.

2011

October 19, 2011. The Food and Drug Administration (FDA) is proposes to amend the 1992 Orphan Drug Regulations issued to implement the Orphan Drug Act. FR notice here.

2013

August 12, 2013. The Food and Drug Administration (FDA) issues final regulations amending the 1992 Orphan Drug Regulations issued to implement the Orphan Drug Act. Background here,
copy of rule here

Among other things, the new rules added “a definition of ‘orphan subset’ to § 316.3(b)(13)”, noting that “Orphan subset is a regulatory concept relevant to eligibility for orphan-drug designation.”

§ 316.3 Definitions.

(b) * * *

13) Orphan subset of a non-rare disease or condition (“orphan subset”) means that use of the drug in a subset of persons with a non-rare disease or condition may be appropriate but use of the drug outside of that subset (in the remaining persons with the non-rare disease or condition) would be inappropriate owing to some property(ies) of the drug, for example, drug toxicity, mechanism of action, or previous clinical experience with the drug.

The ability to claim Orphan Drug status when a product is used to treat a non-rare disease (also common before the rule was changed) creates more opportunities to yet another way to claim Orphan Drug benefits, including the tax credits, reduced user fees, limits on government discounts, and exclusivity.

The new rule modified a provision in the purposed rule that would have limited certain benefits to products that did not establish a “major contribution to patient care”.

Removing the language in the proposed rule that, to demonstrate clinical superiority in terms of “major contribution to patient care” (§ 316.3(b)(3)(iii)), the drug must provide safety and effectiveness “comparable to the approved drug.” This language incorrectly implied that FDA would require direct proof of comparability to the already approved drug to demonstrate that a drug provides a major contribution to patient care (e.g., through non-inferiority trials).

In the new rule, there was a “clarification” that:

. . . a designation request need include only “relevant” in vitro laboratory data, as well as data from “clinical experience” with the drug in the rare disease or condition (§ 316.20(b)(4)).

The rule also clarified that :

a designated drug that is otherwise the same as a previously approved drug receives 7-years market exclusivity (“orphan-drug exclusivity”) upon approval . . . if the sponsor of the second-in-time drug demonstrates upon approval that its drug is clinically superior to the previously approved drug (§ 316.34(c)).

2014

July 23, 2014. Interpretive Rule: Implementation of the Exclusion of Orphan Drugs for Certain Covered Entities Under the 340B Program.

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