E-DRUG: E-DRUG: orphan cancers and drug development (5)
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I have a somewhat different perspective on the US Orphan Drug
legislation, and some notes of caution on what I think is a very
inefficent system of subsidies. Some info is here:
[text of Jamie's referral for those without Internet access; WB]
Health Care and IP: The Orphan Drug Act
Brief note on the abuse of Orphan Drug programs in creating monopolies
CPT has been highly critical of the exclusive marketing provisions in
the US and the proposed EU orphan drug acts. Pharmaceutical companies
now obtain 20 year patents for inventions, and investments in clinical
trials and other research required for drug registration are protected
under the WTO/TRIPS (Section 7, Article 39.3) and national statutes.
In the United States protection for unfair commercial use of clinical
trial tests is five years plus a 30 month extension if even a weak
patent dispute is raised. In the European Union, protection is six to
ten years. The amount of protection for health registration data is
itself controversial, and often abused (see the page on paciltaxel for
an example of an abuse that involves a life saving government
invention).
The market exclusivity provisions of the Orphan Drug Act raise the
question, are these provisions redundant? And if not, what exactly are
governments being asked to protect?
It is important to understand that companies with claims of invention
can receive patent protection, and companies that spend money on
clinical trials, even without invention, receive exclusive rights to
rely upon research results for several years.
The marketing exclusivity provisions of the Orphan Drug Act do not
protect true Orphan Drugs, which no one wants to market because the
are unprofitable. Market exclusivity is meaningless for unprofitable
drugs. They do not reward invention, which is rewarded by patent. They
do not reward investment, which is protected by statutues on unfair
commercial use of health registration data. What do they reward?
The Orphan Drug Act is used to privatize something that is in the
public domain, such an invention paid for by tax dollars, or a patent
that has expired. It is particularly important to a company when they
have done the least to deserve the benefit. Companies use the Orphan
Drug Act to stop other companies from investing in clinical research,
or from bringing new innovative products to market. Orphan Drug
exclusivity is broader than patent protection, for a given indication.
Companies that obtain orphan drug designations in the United States
use the exclusivity provisions to build a wall around an invention in
the public domain, by obtaining patents on various manufacturing
methods, treatment regimes or minor improvements in the product, in
order to create barriers against entry by competitors. For example,
Amgen used its Orphan Drug status to build a wall of manufacturing
patents around EPO, which was in the public domain, and Bristol-Myers
Squibb used Orphan Status to keep a competitor from submitting its own
clinical research on the use of Paclitaxel for Kaposi's sarcoma.
The Orphan Drug Act has been written so that a very wide range of
drugs quality as Orphans, including, for example, all AIDS medicines
in the United States, plus countless other severe illnesses. It is not
surprising that many new drugs are "orphan drugs" under current
statutory definitions, particularly given deep federal subsidies, such
as the 50 percent tax credit for expenditures on clinical trials. And
any measure that makes the pharmaceutical industry more profitable and
provides greater subsidies will attract private sector investment, at
least in some research projects. However, it is a very blunt
instrument that is often wasteful, costly to consumers and taxpayers,
and sometimes counter productive (by discouraging investments by
rivals once markets become legally exclusive).
Lobbying on Orphan Drug Legislation is funded by the pharmaceutical
and biotech industry, with significant and often enthusiastic
assistance from patients groups, many of which receive a wide variety
of financial benefits from industry groups, and which typically
represent consumers whose expenses are paid for by third parties, such
as taxpayers or employers who pay insurance premiums. The result are
legislative programs that make sense only if money is isn't scarce.
What is needed are more targeted incentives to conduct essential
medical research, with greater public accountability.
James Love
http://www.cptech.org
January 5, 1999
January 21, 1992, Excerpts from James Love, "Comments on the
Orphan Drug Act and Government Sponsored Monopolies for Marketing
Pharmaceutical Drugs," comments submitted to Senate Judiciary
Committee, Subcomittee on Antitrust, Monopolies and Business
Rights. January 13, 1997, James Love, in the Marketletter, Call
for More Reliable Costs Data on Clinical Trials. This paper
includes a study of spending on Orphan Drug Clinical trials by
the pharmaceutical industry based upon tax credits reported on
U.S. federal income tax returns. According to this data, from
1983 to 1993, total industry spending on Orphan Drug clinical
trials was $213 million. This can also be stated as $2.3 million
per FDA Orphan Drug approval, a relatively small number relative
to widely reported industry claims of drug development costs.
The FDA web pages on the US Orphan Drug Act statute, the
regulations for the Act, and the Orphan Drug Tax Credit.
--
James Love, Director, Consumer Project on Technology
I can be reached at love@cptech.org, by telephone 202.387.8030,
by fax at 202.234.5176. CPT web page is http://www.cptech.org
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