Until the early 1980s, developing therapeutics to treat rare diseases was most often a money-losing endeavor due to high cost of development and small patient populations that these products would serve. Most drug companies opted to focus on other therapeutic areas, leaving many rare disease populations critically underserved.
In order to incentivize product development for rare diseases, the United States Congress introduced the Orphan Drug Act of 1983, which is codified in 21 CFR 316 of the Code of Federal Regulations. This legislation, together with other programs aimed at expediting product development and review, and incentives specifically for rare pediatric diseases (e.g., the Rare Pediatric Disease Priority Review Voucher Program; codified in 21 USC 360ff), breathed new life into rare disease product development.
One critical requirement that both orphan designation and the priority review voucher have in common is that the indication must be for a rare disease. According to Section 526 of the Federal Food, Drug, and Cosmetic Act (21 USC 360bb), a rare disease or condition is 1) one that affects fewer than 200,000 persons in the United States, or 2) one that affects more than 200,000 persons in the United States and for which there is no reasonable expectation that the cost of drug development and making the drug available in the United States will be recovered from sales of the drug.
In addition to requiring a rare disease indication, the priority review voucher program also requires that the disease be a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years. Additional restrictions are highlighted in Section 529(a)(4) of the FD&C Act (21 USC 360ff).
Orphan Designation: Orphan designation may be requested for a previously unapproved drug, for a new use for an already marketed drug, or for a drug that is otherwise the same as an approved drug if the Sponsor can present a plausible argument that the subsequent drug may be clinically superior to the approved drug. Importantly, for a previously approved drug, designation may only be requested for a currently unapproved use. The request for designation may be made at any time prior to submission of a marketing application for the orphan indication. Information and documentation that must be provided with the designation request and the procedure for submitting the request for designation are provided in 21 CFR 316.
Priority Review Voucher: Unlike orphan designation, to receive the priority review voucher the drug cannot contain an active ingredient that has been previously approved and the Sponsor cannot seek approval for the adult indication in the original rare pediatric disease product application. Sponsors may request that a new drug be designated as a drug intended to treat a rare pediatric disease and that the corresponding application be designated as a rare pediatric disease product application. Requests should be made at the same time as requests for orphan designation or fast track designation, although this is not necessary to receive a voucher. More details about designation of a product under the voucher program are provided in 21 USC 360ff.
Advantages of Rare Disease Incentive Programs
Both orphan designation and the priority review voucher program offer enticing incentives for Sponsors seeking to develop products targeting rare diseases. Orphan designation provides a number of perks for the development, review, and postmarket protection of the rare disease product itself, while the priority review voucher provides benefits for the Sponsor after the rare pediatric disease product is approved. Importantly, a rare disease product may qualify for both orphan designation and the priority review voucher, effectively granting the Sponsor the perks of both programs. Additional details on the benefits of each program are provided below.
Orphan Designation: For a product receiving orphan designation, the Sponsor is eligible to participate in the Orphan Products Clinical Trial Grants Program, has access to additional resources through the FDA’s Office of Orphan Products Development (OOPD), and qualifies for the Orphan Drug Credit, which provides a tax credit amounting to as much as 50% of all qualified clinical testing expenses that the Sponsor paid or incurred during the tax year. Orphan designated products also qualify for a Prescription Drug User Fee Act (PDUFA) fee exemption,which is currently worth over $2 million for standard NDAs and BLAs. Finally, upon approval, orphan products receive the benefit of 7 years of marketing exclusivity compared to the 5-year term that comes with approval of a non-orphan drug.
Priority Review Voucher: The priority review voucher is issued upon approval of a qualifying rare pediatric disease product. While it has no effect on the timing of review of the original product, since this product by statute already qualifies for priority review, it does entitle the holder to designate a single subsequent human drug application submitted under Section 505(b)(1) of the United States Federal Food, Drug, and Cosmetic (FD&C) Act [21 CFR 355(b)(1)] or Section 351 of the Public Health Service (PHS) Act (42 USC 262) to receive priority review.
Importantly, the subsequent application does not need to be for a product intended to treat a rare pediatric disease and the product does not need to qualify on its own for priority review. Also, the priority review voucher is transferable to another Sponsor and may be transferred any number of times before the voucher is used; as such, the voucher can be a source of significant revenue for the holder (sale prices through early 2017 have ranged from $60-350 million).
There are now federal programs in place that make development of therapeutics targeting rare diseases a more economically viable endeavor. Among the benefits of these programs are considerable savings of time and money, access to additional drug development resources, and opportunities for additional market protection and/or added revenue. Through these benefits, such programs incentivize the development of treatments for patients who might otherwise remain neglected due to high product development costs and small disease populations.