The Orphan Drug Act has helped pharmaceutical industry profits soar.
By Sharon Lerner & Lee Fang
The Intercept (3/23/20)
ON MONDAY AFTERNOON, the Food and Drug Administration granted Gilead Sciences “orphan” drug status for its antiviral drug, remdesivir. The designation allows the pharmaceutical company to profit exclusively for seven years from the product, which is one of dozens being tested as a possible treatment for Covid-19, the disease caused by the new coronavirus.
Experts warn that the designation, reserved for treating “rare diseases,” could block supplies of the antiviral medication from generic drug manufacturers and provide a lucrative windfall for Gilead Sciences, which maintains close ties with President Donald Trump’s task force for controlling the coronavirus crisis. Joe Grogan, who serves on the White House coronavirus task force, lobbied for Gilead from 2011 to 2017 on issues including the pricing of pharmaceuticals.
“It’s absurd that this would happen in the middle of an epidemic when everything is in short supply.”
“The Orphan Drug Act is for a rare disease, and this is about as an extreme opposite of a rare disease you can possibly dream up,” said James Love, director of Knowledge Ecology International, a watchdog on pharmaceutical patent abuse.
“They’re talking about potentially half the population of the United States,” said Love, adding that “it’s absurd that this would happen in the middle of an epidemic when everything is in short supply.”
The 1983 Orphan Drug Act gives special inducements to pharmaceutical companies to make products that treat rare diseases. In addition to the seven-year period of market exclusivity, “orphan” status can give companies grants and tax credits of 25 percent of the clinical drug testing cost. The law is reserved for drugs that treat illnesses that affect fewer than 200,000 people in the U.S. But a loophole allows drugs that treat more common illnesses to be classified as orphans if the designation is given before the disease reaches that threshold. As of press time, there were more than 40,000 confirmed cases of Covid-19 in the U.S, and some 366,000 worldwide.
The distinction could severely limit supply of remdesivir by granting Gilead Sciences exclusive protection over the drug and complete control of its price. Other pharmaceutical firms, including India-based pharmaceutical firm Cipla, are reportedly working toward a generic form of remdesivir, but patients in the U.S. could be prevented from buying generics with lower prices now that Gilead Sciences’s drug has been designated an orphan.
Stock price boom
Today, Gilead abruptly announced that it would no longer provide emergency access to remdesivir, telling the New York Times that “overwhelming demand” left it unable to process requests for the drug through its compassionate use program. Hours later, the FDA gave the drug orphan status. Almost immediately, Gilead’s stock price shot up. Gilead did not immediately respond to a request for comment. The White House, on behalf of Grogan, declined to comment on the record.
The special orphan designation, which can also be granted to drugs when there is little reasonable expectation that a company will recoup its research costs, was given to remdesivir despite hefty support by the government for the development of the drug.
Gilead Sciences’ remdesivir was developed with at least $79 million in U.S. government funding, according to a paper published last week by KEI. …