In many cases, developing a product for a rare disease means developing a product for fewer than 1000 people worldwide and in some cases, less than 100. These products are clearly not being developed for the masses, they do not expect to be “blockbuster” drugs like Humira (with sales of just over $14B in 2015) and the development is certainly not expected to be (nor will it be) a walk in the park. Getting an orphan product to the market may be done in a shorter timeframe, but the challenges of developing such therapies are often abundant and costly. Under normal market conditions, developing products intended to treat such a small number of patients would prove little interest to the industry and quite certainly would rarely happen due to low ROI.
Recognizing these challenges, the FDA has put great efforts into encouraging the drug manufacturing industry to develop therapies for rare diseases. The incentives started in 1983 when the United States passed the Orphan Drug Act (ODA) followed then by Japan in 1993 and the European Union in 2000.
With these regulations in place, came a number of incentives and initiatives outlined by the Agencies and even more benefits of which are not outlined, and not exactly tangible. These non-tangible benefits might include additional FDA “love” and greater desirability in the eyes of pharma partners, investors and venture capital firms.
One incentive however is clearly tangible and worth over $2M, a savings tied to the Prescription Drug User Fee Act (PDUFA) waiver. PDUFA was a law passed by Congress in 1992 allowing the FDA to collect fees from drug manufacturers to fund the drug approval process.
Under section 736(a)(1)(F) of this act: “A human drug application for a product that has been designated as a drug for a rare disease or condition (referred to as an orphan drug) under section 526 of the Act is not subject to an application fee unless the human drug application includes an indication for other than a rare disease or condition.”
The FDA recently published the Fiscal Year 2017 User Fee Rates which will be set at “$2,038,100 for an application requiring “clinical data” (defined here in an FDA guidance document), and one-half of a full application fee ($1,019,050) for an application not requiring “clinical data” and a supplement requiring “clinical data.”
People frequently ask me; “What are the benefits of receiving an ODD?” After outlining the number of benefits, I still get “But what does that mean?” and “How much savings does that amount to?” Dollar values are not always easy to assign. It is not obvious how much more desirable you will be to investors and partners, that alone has a number of variables. Although an obvious and massive incentive, it is also not easy to calculate the exact financial benefits to accelerated pathways or market exclusivity. The waiving of this fee, however, is a clear $2M savings. Without question. So while, as the above article points out, the fees may be decreasing, the savings will continue to be substantial for these bold companies operating in the rare disease space and stopping at nothing to get their products in the hands of fewer, yet extremely desperate patient populations.
For more information follow the hyperlinks throughout, or see FDA Law Blog posted on August 1, 2016: FDA Publishes Fiscal Year 2017 User Fee Rates: Across-the-Board Decreases in PDUFA/BsUFA Rates; Facilities Get Hit With GDUFA Fee Increases
