Johns Hopkins: Drugmakers are Taking Advantage of Orphan Drug Act

While pharmaceutical companies mostly balance their books on profits made off of drugs that treat major diseases such as cancer and high cholesterol, there are drugmakers who focus on a smaller segment of the population.

These companies develop treatments that are meant to help a small number of people who are dealing with less popular illnesses. Often these are rare diseases or conditions for which there is currently no cure. These are called “orphan drugs.” The United States government permits the development, manufacture and sales of these medications under the Orphan Drug Act.

Experts at Johns Hopkins Medicine have raised issues of potential impropriety, recently highlighted in a report published in the American Journal of Clinical Oncology. The article suggests that some drugmakers are getting around the FDA approval system by using the quicker-to-market approach permitted by the Orphan Drug Act. The article goes on to say that by getting orphan drug status, it’s far less expensive and faster to get the same drug approved for other uses in much larger populations.

What’s the problem with that, you may be asking. Simply put: the government sets aside funds for the development of seriously needed medications. By going for the Orphan Drug status, the companies can take their share of millions of dollars in tax breaks permitted by the Act. However, they turn around and sell the drug to the wider market making billions of dollars in profits. These activities, the report’s experts say, are diverting much-needed subsidies from companies that truly need them to focus on orphan drugs.

According to the report, seven of the 10 top-selling drugs in the world are currently have Orphan Drug designation. These include: AbbVie’s Humira; Roche’s Rituxan, Avastin and Herceptin; Johnson & Johnson’s Remicade; Celgene’s Revlimid and AstraZeneca’s Crestor. These drugs, of course, are widely sold to treat major illnesses — not rare conditions with no known cure or treatment.

Many of the drug companies say their medications are designated for the smaller populations facing lesser-known conditions and that they do not actively promote off-label use of these drugs. In fact, a spokesperson from Celgene has said that its treatment for bone marrow cancer and rare blood cancer, Revlimid, is marketed solely for those purposes.

Lead researcher from Johns Hopkins, Marty Makary, responds to Celgene’s argument. “From the perspective of Celgene’s executive suite, Revlimid is only used for narrow orphan indications, but on the front lines of medicine, it’s used broadly off-label as a second-line agent for a variety of conditions, including chronic lymphocytic leukemia and Hodgkin’s lymphoma.”

Michael Daniel, co-author of the report and a research fellow in the Department of Surgery at Johns Hopkins, asserted that this practice “inflates drug prices” passes the costs onto consumers who are forced to pay higher premiums for health insurance.”This is a financially toxic practice that is also unethical. It’s time to ensure that we also render it illegal,” he said.

Unfortunately, illegal practices are taking place throughout the US healthcare system. It’s critically important for people who come across information about unethical or fraudulent actions being taken against the government to speak up. If you have information about wrongdoing involving the federal government, talk to a knowledgeable attorney at Begelman & Orlow about your whistleblower case today.