Senate Holds Hearing on Rare and Neglected Pediatric Diseases

It is becoming popular in some circles to beat up on companies that employ people, make a profit and actually have the audacity to patent their innovations. In this bizarro world the logic, what little of it seems to prevail, suggests that no incentives are necessary in order innovation because innovation will just happen naturally. This naive view of the world ignores the human condition, among many other things. An appropriate incentive structure promotes innovation and benefits society. Even the most irrational and illogical critic has to agree that not all incentives to innovate are evil. Exhibit 1 – the Orphan Drug Act of 1983.

Yesterday, John F. Crowley, CEO of Amicus Therapeutics (Nasdaq: FOLD) and a member of the Board of Directors of the Biotechnology Industry Organization (BIO), testified on behalf of BIO at the Senate Committee on Health, Education, Labor and Pensions. This full committee hearing focused on rare and neglected disease. Mr. Crowley, provided background and perspectives on the current state of drug development for orphan products, and made a series of recommendations to the Committee regarding the establishment of additional incentives for companies to develop more treatments for rare and neglected diseases.

Before diving into Crowley’s testimony, let’s discuss the Orphan Drug Act.  At the time of the enactment of the Orphan Drug Act the United States Congress made several factual findings.  For example, the Congress observed that there are many diseases and conditions, such as Huntington’s disease, ALS (Lou Gehrig’s disease), Tourette syndrome, and muscular dystrophy, for example, which affect such small numbers of individuals that the diseases and conditions are considered rare in the United States.  As a result, adequate drugs have not been developed and realistically cannot be expected to be developed because companies who could produce the necessary drugs may reasonably expect the drug to generate relatively small sales in comparison to the cost of developing the drug, thereby incurring a financial loss for the pursuit of such drugs.  Therefore, Congress made the determination that a seven (7) year period of exclusivity was appropriate if a company produced a drug to treat a rare disease that affects less than 200,000 people in the United States.  Orphan designation is also possible if a disease affects more than 200,000 people if it can also be shown that there is no reasonable expectation that the cost of developing the drug could be recouped absent this period of exclusivity.

[Bio-Pharma]

During his testimony, Mr. Crowley discussed the unprecedented success of the Orphan Drug Act and its market-based incentives for biotechnology and pharmaceutical companies to develop products for rare diseases. Indeed, the Food and Drug Administration describes the Orphan Drug Act as an overwhelming success, pointing out on it’s website that “more than 200 drugs and biological products for rare diseases have been brought to market since 1983. In contrast, the decade prior to 1983 saw fewer than ten such products come to market.”  This information is, however, quite dated.  If you visit the FDA website to search for orphan drug designations and approvals you find out that as of July 22, 2010, there have been 351 drugs approved for use as orphan drugs and some 2,196 applications submitted.  So in the decade prior to enactment there was on average 1 new drug to treat rare disease each  year.  Since enactment there has been 13 such drugs per year.

Those who are opposed to exclusive rights because it prevents innovation and provides no benefit to the public really should do their homework.  They run about throwing this study from an agenda driven economist or that study from a disgruntled economist as if these fictitious mental exercises that ignore reality are evidence of some kind.  At the same time they ridicule and pick apart the Studies that reach a contrary conclusion, and simply ignore facts.  In this space we really don’t need to be doing any Studies.  We just need to observe history.  Wherever countries have gone from no intellectual property system to having an intellectual property system an economy has developed and foreign investment floods in.  Time and time again this happens and it is irrefutable.  In the same vein, the numbers simply do not lie.  Granting exclusive rights has resulted in 13 times the number of drugs to treat rare disease.

During his testimony on Capitol Hill, Crowley made several recommendations on new policies for the Committee’s consideration to accelerate the development of treatments for rare and neglected diseases that will complement and advance the objectives of the Orphan Drug Act and facilitate the availability of the next generation of orphan products for children.  These recommendations included:

  • Improving the U.S. Food and Drug Administration (FDA) regulatory environment for pediatric rare diseases;
  • Establishing a separate Division of Genetic and Metabolic Disorders at FDA;
  • Urging FDA to publish further guidance regarding increased use of surrogate endpoints for product approval, either for full approval or accelerated approval purposes;
  • Improving standards for demonstrating safety and efficacy of rare disease products;
  • Improving communications processes for rare disease stakeholders;
  • Extending the Qualifying Therapeutic Discovery Project Tax Credit; and
  • Fully funding the Cures Acceleration Network (CAN).

John F. Crowley commented in his testimony, “We have come very far in the last quarter of a century but we have much further to go. The change brought about by the Orphan Drug Act improved millions of lives in this country and abroad, helped launch an industry and established the global rare disease advocacy movement. It does not come easily for every family that struggles with illnesses and then receives a life-altering diagnosis of a rare disease with no treatment or cure. However, each of us committed to orphan drug development, including the FDA and those responsible for seeing the Agency is appropriately funded, owe those families a more-than-fighting chance that their medical needs will be met.”

“Through his compelling personal story and his professional passion, John Crowley truly understands the importance of the Orphan Drug Act and the need for additional incentives to spur the development of breakthrough treatments for rare and orphan diseases,” said BIO President and CEO Jim Greenwood. “The recommendations John made in his testimony today reflect the concerns and interests of our member companies who are actively researching the next generation of therapies and the patients and their families who so desperately need them.”

So the next time you hear someone criticize the patent system or exclusive rights as unnecessary, evil, immoral or anti-innovation you can chuckle at the ignorance and arrogance.  You might also want to cite the Orphan Drug Act and the way that for-profit companies in the biotechnology and pharmaceutical sector are helping people live longer and more productive lives without the pain and suffering they would otherwise endure.  Then you can politely point to the facts that since the Orphan Drug Act treatments for diseases that would have otherwise gone ignored have grown by 1300%, and then suggest we need more not less exclusive rights.  Then step back and watch the dodging and weaving that will surely accompany the apoplectic fit you are about to witness.

Who says this stuff isn’t fun?

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14 comments so far.

  • [Avatar for Andy Brek]
    Andy Brek
    September 13, 2010 10:04 am

    Hi I take the occasion to point out on my new blog dedicated to genetics and rare diseases: http://www.allongenetics.com.
    I’m a medical geneticist and I work as a consultant geneticist in a research centre dedicated rare disease affected patients. In my blog I report freshly hints and news that I gather from my daily work and from the counselling to specific (difficult) cases, with particular regard to genes identification and treatment updates.
    The blog is just born, but material is growing. Hope you find ti useful!

    Wishes
    http://www.allongenetics.com

  • [Avatar for Gene Quinn]
    Gene Quinn
    September 10, 2010 11:42 am

    Lucille-

    I understand what you are saying, but allow me to interject that the buying up of small companies by large companies is exactly causing more spending on research and development. First, the large pharma companies and biotech companies research and develop all the time, but don’t always hit homeruns. So they they acquire smaller companies with exciting prospects. That is an exit strategy for start-up pharma and biotech companies and why investors are willing to pump in many millions of dollars to fund highly speculative start-ups in this space. So the fact that large companies do acquire means there is a race to develop to be acquired.

    -Gene

  • [Avatar for Lucille Giacino]
    Lucille Giacino
    September 10, 2010 01:14 am

    On the other hand, some companies with exclusive rights make it impossible for patients who need new medicines to afford them. We need to find a way for companies to profit from their discoveries but not make treatment available only for the rich. The years of exclusive profits have not increased what companies are spending on research and development; just buying small companies who come up with the good stuff.

  • [Avatar for David Koepsell]
    David Koepsell
    July 23, 2010 03:07 am

    Gene said: “Correlation that repeatedly occurs every single time simply cannot be ignored and you are being intellectual dishonesty. ”

    So, given that 2010 has been the hottest year so far on record, and 6 of the hottest ten years on record happened this past decade… taken with this fact:

    The concentration of carbon dioxide (CO2) in Earth’s atmosphere is approximately 390 ppm by volume as of 2010, and rising by about 1.9 ppm/yr. The present level is higher than at any time during the last 800 thousand years (as measured by arctic ice core samples)

    Obviously not, nor should you. Correlation does not equal causation, and you’d be right to be skeptical.

  • [Avatar for David Koepsell]
    David Koepsell
    July 23, 2010 02:45 am

    Here is some very helpful discussion from the UK commission’s report at page 22, if you read the whole thing, which is linked to my name on this comment, you’ll see they provide a long list of citations and references (which appear as numbers following each statement of fact or conclusion below). The study as conducted by gathering and synthesizing evidence.

    “There is more evidence about the impact of patent protection in developed countries. It appears to
    indicate that large firms consider patent protection of considerable importance in particular sectors
    (for example pharmaceuticals) but that in many sectors they are not considered important
    determinants of innovation.40 Moreover, patents seem to be hardly used by small and medium
    enterprises in most sectors in many developed countries, as a means of promoting their innovation,
    or as a source of useful technical information. An important exception is the biopharmaceutical
    sector where companies often view their patent portfolios as their most important business asset.41
    A recent large study in the UK concluded that “formal IP regimes are applicable only to a small
    proportion of business activity, such as large manufacturing companies.” Other informal methods
    of protection, and of obtaining technical information, were generally more effective for SMEs.42
    The crucial question from our point of view is to what extent IPRs promote growth. The evidence
    we have reviewed does not suggest strong direct effects on economic growth in developing
    countries.43 One recent study found that the more open (to trade) an economy, the more likely it
    was that patent rights would affect growth. According to this calculation in an open economy,
    stronger patent rights might increase growth rates by 0.66% per annum.44 But there is some debate
    about causation because both openness to trade and the strength of the IPR regime tend to
    increase in any case with per capita income.
    Other evidence suggests that the strength of patent protection increases with economic
    development, but that this does not occur until quite high levels of per capita income. Indeed, prior
    to the recent global strengthening of IP laws, there was a reasonably consistent observed
    relationship between the strength of IP rights and per capita income. At low levels of income,
    protection is quite high (reflecting past colonial influences) but then falls to a low point of weak
    protection at an income of about $2000 (at 1985 prices) per capita. This low point is maintained
    until a per capita income of nearly $8000 when the strength of protection begins to increase again.
    This association is not necessarily causal but it does indicate that until relatively high levels of per
    capita income, IPR protection is not a high priority in developing country policy.45
    Maybe the simplest evidence of the impact of the IP system is how much it is used, particularly by
    nationals. The propensity to take out patents will reflect some judgement as to the benefits, albeit
    private rather than social benefits. In sub-Saharan Africa in 1998 (excluding South Africa), 35
    patents were granted to residents compared to 741 for non-residents. By contrast in Korea, 35900
    patents were issued to residents, compared to 16990 to non-residents. In the US, the corresponding
    figures were 80292 and 67228.46
    The main conclusion seems to be that for those developing countries that have acquired significant
    technological and innovative capabilities, there has generally been an association with “weak”
    rather than “strong” forms of IP protection in the formative period of their economic development.
    We conclude therefore that in most low income countries, with a weak scientific and technological
    infrastructure, IP protection at the levels mandated by TRIPS is not a significant determinant of
    growth. On the contrary, rapid growth is more often associated with weaker IP protection.
    In technologically advanced developing countries, there is some evidence that IP protection
    becomes important at a stage of development, but that stage is not until a country is well into the
    category of upper middle income developing countries.47”

  • [Avatar for David Koepsell]
    David Koepsell
    July 23, 2010 02:01 am

    Gene, the evidence is in the studies I cite, which are lengthy, detailed, and well-referenced. That they might be too long for the comments section of a blog, or for your attention span, is not my fault. Read the full reports and be bathed in evidence. As Bonby and others have pointed our, your “facts” are not evidence of causation, and as the studies done by the academics you so disdain show, the influx of wealth you think has occured thanks to the cancerous spread of IP, has not benifitted the dveloping world, only the developed.

  • [Avatar for Bobby]
    Bobby
    July 22, 2010 07:08 pm

    @Gene
    “Copyrights are an extremely weak sister form of protection and simply do not apply to innovations”
    I understand that their scope is different, but they do have some overlap. They use the same kind of exclusive rights mechanism to protect authors and inventors, and in the US, draw their constitutional basis from the same clause. Also, the statement I was replying to was about IP, not patents specifically, so I don’t see a problem with providing an example that counters your claim on IP using one specific section of IP.

    “The US dominates the entertainment industry because this is where the overwhelming majority of the world’s wealth is located. ”
    That’s an interesting argument. Perhaps the same is true with inventions. Separating the momentum of the existing industry from national policies is one thing that makes getting solid evidence on these issues tough, but that applies to arguments coming from both sides. Also, many of the musical movements originating in the US during the 20th century, such as jazz , blues, rock, and hip hop sprung up largely from poor communities with many artists having rather poor protections even for the US, so money is clearly not the only important factor, at least among those who innovate within copyrighted works. Perhaps the business end and copyright did bring the volume of works up, but these genres originated in environments with lots of unrestricted modification of existing works going on and fuzzy accreditation, and the creation of these genres was arguably the most valuable thing.

    “You keep thinking that the treatments for rare diseases were better prior to the Orphan Drug Act. That type of head in the sand approach is to be expected.”
    I said nothing of the sort. However, the Orphan Drug Act was more than just patent legislation, and those other parts probably played a significant role, as well as general growth of the pharmaceutical industry. If you don’t want to acknowledge the other factors to get a more realistic scope, then it’s you who has his head in the sand.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 22, 2010 06:11 pm

    David-

    Conveniently you post only conclusions and none of the hard, empirical evidence that you claim exists. On the other hand, whenever I post I provide hard evidence.

    You do realize you have NEVER even addressed the truth I raise about those countries that adopt an intellectual property regime. You ignore it as if it will go away. Your silence is telling.

    You also are ignoring the evidence relating to Orphan Drugs, which is overwhelming.

    So history IS evidence David, whether you like that reality or not.

    -Gene

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 22, 2010 06:08 pm

    Bobby-

    Comparing apples and orange, or more accurately apples and elephants. The Berne Convention relates to copyrights, not inventions, so whatever evidence you think you have about copyrights doesn’t translate whatsoever. Copyrights are an extremely weak sister form of protection and simply do not apply to innovations. The US dominates the entertainment industry because this is where the overwhelming majority of the world’s wealth is located.

    You keep thinking that the treatments for rare diseases were better prior to the Orphan Drug Act. That type of head in the sand approach is to be expected.

    -Gene

  • [Avatar for Bobby]
    Bobby
    July 22, 2010 04:24 pm

    “Correlation that repeatedly occurs every single time simply cannot be ignored and you are being intellectual dishonesty. ”
    I’ve explained a related factor to adoption of these laws is trade relations, which are likely to improve when you join WIPO or a predecessor. International trade is very important to an economy, and having a better economy can help you innovate. This doesn’t show evidence either way of the effects of patents, but it does provide a significant factor that can distort results. The best case study I can think of would be the US resisting the Berne Convention during much of the 20th century, and despite weaker copyright protections the US was not only competitive, but dominant in the field of copyrighted works during that period. There are of course other factors that came into play, but it’s a much better comparison than comparing fully industrialized nations to developing nations who are also lacking many other important infrastructures needed for economic progress. Yes, the US did still have protections, but it’s decent evidence that more protection does not inherently equal better results, and besides, changes of degree are much more likely to happen than an outright end of these protections.

    “Again, dishonest and not true. More drugs means more treatment. Some treatment compared with no treatment is necessarily better treatment.”
    But not all drugs are of equal utility. The smallpox and polio vaccines have probably had more of an impact on humanity than a thousand other randomly selected drugs have. One effective drug can easily be more useful than 13 fairly ineffective drugs. That said, the situation probably did improve, but greater context of the degree of improvement would provide more meaningful data, and number of drugs produced is far from the most meaningful metric. If you don’t have that data, that’s fine, but the picture is less complete that way. Who knows, maybe the average quality of these drugs is much better, meaning that the improvement in these areas is far greater than 1300%. If that’s true, you would certainly want to include that as further evidence.

  • [Avatar for David Koepsell]
    David Koepsell
    July 22, 2010 04:24 pm

    The pesky thing about academic studies is that they rely on empirical evidence. It’s so much easier to just cite “history” and be done with it, even if the history cited isn’t quite what you think it is.

    Here’s what an independent commission established by the UK govt. recently found re: IP and development:

    ” A call to improve intellectual property rights of developing countries. The Commission on Intellectual Property Rights Independent commission finds intellectual property rights impose costs on most developing countries
    and do not help to reduce poverty

    In presenting its final report to the British government, the Commission on Intellectual Property Rights declared the internationally-mandated expansion of intellectual property (IP) rights unlikely to generate significant benefits for most developing countries and likely to impose costs, such as higher priced medicines or seeds. This makes poverty reduction more difficult.

    The Commission also called on developed nations, the World Trade Organisation (WTO) and the World Intellectual Property Organisation (WIPO) to take the circumstances of poor countries and their development needs properly into account when seeking to develop international IP systems….”

    These aren’t ideological zealots, they are looking at actual economic data. Or see the Drahos article linked from my name above. But then, it’s only evidence. Stick to “history” if you prefer to believe your hype.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 22, 2010 03:26 pm

    Bobby-

    You say: “Correlation does not equal causation.”

    Quite frankly, I am sick and tired of this nonsense argument that allows those who want to ignore facts to feel justified in their intellectual dishonest. Correlation that repeatedly occurs every single time simply cannot be ignored and you are being intellectual dishonesty. Why? Please explain your need and please disclose your bias.

    You say: “more drugs doesn’t inherently equate to better treatment…”

    Again, dishonest and not true. More drugs means more treatment. Some treatment compared with no treatment is necessarily better treatment.

    As for your taking issue with me saying we don’t need studies, you twist the meaning of what I say, which is typical with those who chose to ignore reality. There is nothing wrong with study, but the point is we don’t need thought experiments. We have cold, hard facts over and over. You and others who don’t like truth say it is about random correlation and nothing to do about causation, but you NEVER provide any evidence of that. You rely on the thought experiments of economists who quite clearly don’t understand human nature, incentives, science, business or law.

    So what exactly are your biases and why do historical facts trouble you so much?

    -Gene

  • [Avatar for Bobby]
    Bobby
    July 22, 2010 03:13 pm

    “n this space we really don’t need to be doing any Studies.”
    I would heartily disagree. Advances in various fields and other factors can change the costs and incentives of making progress and our understanding of these incentives, so what the ideal system is is going to change with time, and failure to adapt to these changes could lead to problems. In other words, we need to be innovative about our policies on innovation.

    “We just need to observe history. Wherever countries have gone from no intellectual property system to having an intellectual property system an economy has developed and foreign investment floods in.”
    Correlation does not equal causation. Joining WIPO, which is probably what you are most likely to cite, is not an act that stands alone, and it probably has a large effect on trade relations, which are very important to an economy. I know the Special 301 report greatly impacts US trade relations, which can have a significant effect on a nation’s economy.

    Regarding the Orphan Drug Act, it would seem that several other important factors aren’t taken into consideration. It seems that regulations on clinical trials seem to be somewhat relaxed and that some tax incentives exist as well, so the cost of developing these drugs would be brought down. Also worth considering is the average period of protection for orphan drugs prior to this legislation and the degree of growth for the rest of the pharmaceutical industry. Finally, more drugs doesn’t inherently equate to better treatment, so the change in quality of life for those afflicted with the diseases in question would be a nice thing to report on.

  • [Avatar for JD]
    JD
    July 22, 2010 01:50 pm

    Interesting article, as usual.

    Just out of curiosity, what’s the difference is between the ODA’s 7-year exclusivity and the 20 (or so)-year exclusivity granted by a patent for (what would manifestly be) the same drug? I mean, as you note above, the ODA system is clearly working — the massive upswing in the production of orphan drugs since the passage of the ODA is pretty obvious — but what makes the shorter period of exclusivity more appealing to a pharmaceutical firm than a longer patent monopoly?

    Thanks!