Protropin Classification Essay

The pharmaceutical products of recombinant DNA technology are broadly divided into the following three categories and briefly discussed with important examples:

1. Human protein replacements.

2. Therapeutic agents for human diseases.

3. Vaccines.

Some authors do not make such categorization and consider all of them together as pharma­ceutically important products of biotechnology.

Type # 1. Human Protein Replacements:

The synthesis of the cellular proteins is ultimately under the control of genes. Any defect in a gene produces an incorrect protein or no protein at all. Sometimes, the occurrence of a defective (i.e. functionally ineffective) or deficient protein may cause a disease. Thus, gene defects will result in inherited or genetically linked diseases.

Identification of defective or deficient proteins in the causation of inherited diseases is very important. The recombinant DNA technology can be fruitfully employed to produce human proteins that can be used for the treatment of genetically linked diseases. This is referred to as human protein replacement strategy in biotechnology.


The hormone insulin is produced by the (J-cells of islets of Langerhans of pancreas. Human insulin contains 51 amino acids, arranged in two polypeptide chains. The chain A has 21 amino acids while B has 30 amino acids. Both are held together by disulfide bonds.

Diabetes mellitus:

Diabetes mellitus affects about 2-3% of the general population. It is a genetically linked disease characterized by increased blood glucose concentration (hyperglycemia). The occurrence of diabetes is due to insufficient or inefficient (incompetent) insulin. Insulin facilitates the cellular uptake and utilization of glucose for the release of energy.

In the absence of insulin, glucose accumulates in the blood stream at higher concentration, usually when the blood glucose concentration exceeds about 180 mg/dl, glucose is excreted into urine. The patients of diabetes are weak and tired since the production of energy (i.e. ATP) is very much depressed.

The more serious complications of uncontrolled diabetes include kidney damage (nephropathy), eye damage (retinopathy), nerve diseases (neuropathy) and circulatory diseases (atherosclerosis, stroke). In fact, diabetes is the third leading cause of death (after heart disease and cancer) in many developed countries.

In the early years, insulin isolated and purified from the pancreases of pigs and cows was used for the treatment of diabetics. There is a slight difference (by one to three amino acids) in the structure of animal insulin compared to human insulin. This resulted in allergy in some of the diabetics when animal insulin was administered.

Another problem with animal insulin is that large number of animals have to be sacrificed for extracting insulin from their pancreases. For instance, about 70 pigs (giving about 5 kg pancreatic tissue) have to be killed to get insulin for treating a single diabetic patient just for one year!

Production of recombinant insulin:

Attempts to produce insulin by recombinant DNA technology started in late 1970s. The basic technique consisted of inserting human insulin gene and the promoter gene of lac operon on to the plasmids of E. coli. By this method human insulin was produced. It was in July 1980, seventeen human volunteers were, for the first time, administered recombinant insulin for treatment of diabetes at Guy’s Hospital, London.

And in fact, insulin was the first ever pharmaceutical product of recombinant DNA technology administered to humans. Recombinant insulin worked well, and this gave hope to scientists that DNA technology could be successfully employed to produce substances of medical and commercial importance. An approval, by the concerned authorities, for using recombinant insulin for the treatment of diabetes mellitus was given in 1982. And in 1986, Eli Lilly Company received approval to market human insulin under the trade name Humulin.

Technique for recombinant insulin production:

The original technique of insulin synthesis in E. coli has undergone several changes, for improving the yield, e.g. addition of signal peptide, synthesis of A and B chains separately etc. The procedure employed for the synthesis of two insulin chains A and B is illustrated in Fig. 15.1. The genes for insulin A chain and B chain are separately inserted to the plasmids of two different E. coli cultures.

The lac operon system (consisting of inducer gene, promoter gene, operator gene and structural gene Z for β-galactosidase) is used for expression of both the genes. The presence of lactose in the culture medium induces the synthesis of insulin A and B chains in separate cultures. The so formed insulin chains can be isolated, purified and joined together to give a full-pledged human insulin.

Second generation recombinant insulin’s:

After injecting the insulin, the plasma concentration of insulin rises slowly. And for this reason, insulin injection has to be done at last 15 minutes before a meal. Further, decrease in the insulin level is also slow, exposing the patients to a danger of hyper-insulinemia. All this is due to the existence of therapeutic insulin as a hexamer (six molecules associated), which dissociates slowly to the biologically active dimer or monomer.

Attempts have been made in recent years to produce second generation insulin by site- directed mutagenesis and protein engineering. The second generation recombinant proteins are termed as muteins. A large number of insulin muteins have been constructed with an objective of faster dissociation of hexamers to biologically active forms. Among these is insulin lispro, with modified amino acid residues of the B-chain of insulin. Insulin lispro can be injected immediately before a meal as it attains the pharmacologically efficient levels very fast.

Chemically altered porcin insulin:

As already stated, porcin (pig) insulin differs from human insulin just by one amino acid-alanine in place of threonine at the C-terminal and of B-chain of human insulin. Biotechnologists have developed methods to alter the chemical structure of porcin insulin to make it identical to human insulin. And this chemically modified porcin insulin can also be employed for the treatment diabetes mellitus.

Human Growth Hormone:

Growth hormone is produced by the pituitary gland. It regulates the growth and development. Growth hormone stimulates overall body growth by increasing the cellular uptake of amino acids, and protein synthesis, and promoting the use of fat as body fuel.

Insufficient human growth hormone (hGH) in young children results in retarded growth, clinically referred to as pituitary dwarfism. The child usually is less than four feet in height, and has chubby face and abundant fat around the waist.

Traditional treatment for dwarfism:

The children of pituitary dwarfism were treated with regular injections of growth hormone extracted from the brains of deceased humans. It may be noted that only human growth hormone is effective for treatment of dwarfism. (This is in contrast to diabetes where animal insulin’s are employed).

At least eight pituitary glands from cadavers must be extracted to get hGH adequate for treating a dwarf child just for one year! And such treatment has to be continued for 8-10 years!! Further, administration hGH isolated from human brains exposes the children to a great risk of transmitting the cadaver brain diseases (through virus or viral-like agents) e.g. Creuzfeldt- Jacob (CJ) syndrome characterized by convulsions, wasting of muscle etc.

Production of recombinant hGH:

Biotechnologists can now produce hGH by genetic engineering. The technique adopted is quite comparable with that of insulin production. The procedure essentially consists of inserting hGH gene into E. coli plasmid, culturing the cells and isolation of the hGH from the extracellular medium.

Limitation in hGH production:

The hGH is a protein comprised of 191 amino acids. During the course of its natural synthesis in the body, hGH is tagged with a single peptide (with 26 amino acids). The signal peptide is removed during secretion to release the active hGH for biological functions. The entire process of hGH synthesis goes on in an orderly fashion in the body.

However, signal peptide interrupts hGH production by recombinant technology. The complementary DNA (cDNA) synthesized from the mRNA encoding hGH is inserted into the plasmid. The plasmid containing E. coli when cultured, produces full length hGH along with signal peptide. But E. coli cannot remove the signal peptide.

Further, it is also quite difficult to get rid of signal peptide by various other means. Theoretically, cDNA encoding signal peptide can be cut to solve these problems. Unfortunately, there is no restriction endonuclease to do this job, hence this is not possible.

A novel approach for hGH production:

Bio­technologists have resolved the problem of signal peptide interruption by a novel approach (Fig. 15.2). The base sequence in cDNA encoding signal peptide (26 amino acids) plus the neighbouring 24 amino acids (i.e a. total 50 amino acids) is cut by restriction endonuclease ECoRI.

Now a gene (cDNA) for 24 amino acid sequence of hGH (that has been deleted) is freshly synthesized and ligated to the remaining hGH cDNA. The so constituted cDNA, attached to a vector, is inserted into a bacterium such as E. coli for culture and production of hGH. In this manner, the biologically functional hGH can be produced by DNA technology. Recombinant hGH was approved for human use in 1985. It is marketed as Protropin by Gene-tech Company and Humatrope by Eri Lilly Company.

Controversy over the use of hGH:

Recombinant hGH can be administered to children of very short stature. It has to be given daily for many years with an annual cost of about $ 20,000. Some workers have reported substantial increase in the height of growth retarded children.

One group of workers observed that the normal growth pattern in children was not restored on hGH administration, although there was an initial spurt. Another big question raised by the opponents of hGH therapy is whether it is necessary to consider short stature as a disorder at all for treatment!

Use of recombinant growth hormone for farm animals:

Recombinant GH is now available for adminis­tration to farm animals to promote early growth and development. Such farm animals yield linear meat, besides increased milk production. However, use of GH in farm animals is a controversial issue.

Clotting Factor VIII:

The clotting factor VIII is required for proper blood clotting process. A genetic defect in the synthesis of factor VIII results in the disorder hemophilia A. This is a sex-linked disease (incidence 1 in 10,000 males) transmitted by females affecting males. The victims have prolonged clotting time and suffer from internal bleeding.

Traditional treatment for hemophilia A:

Clotting factor VIII was isolated from the whole blood and administered to the patients of hemophilia A. This approach requires large quantities of blood. Another problem is the risk of transmission of certain diseases like AIDS to the hemophiliacs.

Production of recombinant factor VIII:

The gene for the formation of factor VIII is located on X chromosome. It is a complex gene of 186 kb (i.e., 186,000 base pairs) in size, organized into 26 exons of varying length. In between the exons, many introns are present. The introns vary in their size, starting from 200 base pairs to as high as 32,000 base pairs.

Biotechnologists were able to isolate mature mRNA (containing only exons and no introns) that is responsible for the synthesis of factor VIII. This mRNA contains 9,000 bases and synthesizes the protein, factor VIII. Factor VIII contains 2332 amino acids, with carbohydrate molecules attached at least at 25 sites.

DNA technologists synthesized the complementary DNA (cDNA) for mature mRNA of factor VIII. This cDNA can be inserted into mammalian cells or hamster kidney cells for the production of recombinant factor VIII. Since 1992, factor VIII is available in the market. It is produced by Genetics Institute in Cambridge, Massachusetts and sold as Recombinant while Miles Laboratories sell under the trade name Kogenate.

Type # 2. Therapeutic Agents for Human Diseases:

Biotechnology is very useful for the production of several therapeutic products for treating human diseases. A selected list of rDNA-derived therapeutic agents along with trade names and their uses in humans are given in Table 15.3.

Some of these are described above (under human protein replacements) while the remaining are discussed below:

Tissue Plasminogen Activator:

Tissue plasminogen activator (tPA) is a naturally occurring protease enzyme that helps to dissolve blood clots. tPA is a boon for patients suffering from thrombosis. The majority of natural deaths worldwide are due to a blockade of cerebral or coronary artery by a blood clot, technically called as thrombus. The phenomenon of thrombus blockage of blood vessels is referred to as thrombosis.

Chemically, thrombus consists of a network of fibrin, formed from the fibrinogen. In the normal circumstances, plasmin degrades fibrin and dissolves blood clots. This plasmin is actually produced by activation of plasminogen by tissue plasminogen activator (Fig. 15.3).

The natural biological systems is however, not that efficient to remove the blood clots through this machinery. Tissue plasminogen activator is very useful as a therapeutic agent in dissolving blood clots (thrombi) by activating plasminogen. By removing the arterial, thrombi, the possible damage caused by them on heart and brain could be reduced.

Production of recombinant tPA:

DNA technologists synthesized the complementary DNA (cDNA) molecule for tissue plasminogen activator. This cDNA was then attached to a synthetic plasmid and introduced into mammalian cells (Fig. 15.4). They were cultured and tPA-producing cells were selected by using methotrexate to the medium.

tPA-producing cells were transferred to an industrial tank (fermenter). tPA, secreted into the culture medium, is isolated for therapeutic purpose. It may be noted here that tPA was the first pharmaceutical product to be produced by mammalian cell culture.

Recombinant tPA has been in use since 1987 for treatment of patients with acute myocardial infarction or stroke. Gene-tech was the first to market tPA with a trade name Activase.

Alteplase and Reteplase:

These are the second generation recombinant tPAs. They have increased in vivo half-lives and are functionally more efficient. The general aspects of second generation recombinant proteins are given elsewhere.

Antibody-plasminogen activator conjugates:

An antibody against fibrin (anti-fibrin antibody) can be conjugated with tissue plasminogen activator. This conjugate is appropriately regarded as immunotherapeutic thrombolytic agent. It quickly and specifically binds to fibrin clots and locally increases the conversion of plasminogen to plasmin to dissolve fibrin (Fig. 15.5). In fact, anti-fibrin monoclonal antibodies have been synthesized, conjugated with tPA and tried for solubilizing blood clots.

Advantages of tPA as thrombolytic agent:

Tissue plasminogen activator acts on blood clots (solubilizes by degradation) without reducing the blood clotting capability elsewhere. This is in contrast to the action of urokinase or streptokinase which are more generalized in their action.

Further, tPA can be administered intravenously while urokinase and streptokinase have to be administered directly to the blocked blood vessel. Another merit of using tPA is that its action is much faster than other thrombolytic agents with much reduced side effects.


Interferon is an antiviral substance, and is the first line of defense against viral attacks. The term interferon has originated from the interference of this molecule on virus replication. It was originally discovered in 1957 by Alick Isaacs and Jean Lindemann and was considered to be a single substance.

It is now known that interferon actually consists of a group of more than twenty substances with molecular weights between 20,000-30,000 daltons. All the interferons are proteins in nature and many of them are glycoproteins. They are broadly categorized into three groups based on their structure and function

Interferon-α (IFN-α)

Interferon-β (IFN-β)

Interferon-ƴ (IFN-ƴ)

Mechanism of action of interferons:

Interferons are produced by mammalian cells when infected by viruses. As the virus releases its nucleic acid into cellular cytoplasm, it stimulates the host DNA to produce interferons. These interferons, secreted by the cells, bind to the adjacent cells. Here, they stimulate the cellular DNA to produce a series of antiviral enzymes.

The so formed proteins inhibit viral replication and protect the cells (Fig. 15.6). It is believed that the protective (enzymes) proteins bind to mRNA of viruses and block their protein synthesis. The action of interferons appears to be species specific. Thus, human interferons operate in humans. Other animal (dog, mouse) interferons are ineffective in man.

Isolation of interferons in the early years:

Blood was the only source of interferons earlier. The procedure was very tedious and the quantity of interferons isolated was very little. Thus, as much as 50,000 litres of human blood was required to get just 100 mg of interferons. Therefore, it was very difficult to conduct research or use interferons for therapeutic purposes.

Production of recombinant interferons:

The complementary DNA (cDNA) was synthe­sized from the mRNA of a specific interferon. This is inserted to a vector (say plasmid) which is introduced into E. coli or other cells. The interferon can be isolated from the culture medium. This is the basic mechanism of producing recombinant interferons.

The production of interferons is relatively less in bacterial hosts, although E. coli was the first to be used. This is mainly because most interferons are glycoproteins in nature and bacteria do not possess the machinery for glycosylation of proteins.

Production interferons by yeasts:

The yeast Saccharomyces cerevisiae is more suitable for the production of recombinant interferons. This is mainly because the yeast possess the mechanism to carry out glycosylation of proteins, similar to that occurs in mammalian cells. The DNA sequence coding for specific human interferon can be attached to the yeast alcohol dehydrogenase gene in a plasmid and introduced into 4 yeast cells. The yield of interferons is several fold higher compared to E. coli.

Production of hybrid interferons:

Several attempts have been made to produce hybrid interferons. This is advantageous since different interferons with different antiviral activities can be combined to produce a more efficient interferon. Further, the glycosylation step can be bypassed, and bacteria can be used to produce hybrid interferons. The hybrid interferons are more reactive in performing their function.

The creation of hybrid genes from the genes of IFN-α2 and IFN-α3 is illustrated in Fig. 15.7. These genes are digested by restriction endonucleases. The resulting fragments are ligated to generate hybrid genes. The appropriate hybrid genes can be selected and used for producing hybrid interferons. E. coli can be employed for this purpose.

Therapeutic applications of interferons:

Interferons-α, -β and -ƴ were respectively approved for therapeutic use in humans in the years 1986, 1993 and 1990. A Swiss biotechnology firm was the first to market interferon-α with a trade name Intron. Interferons are used for the treatment of a large number of viral diseases and cancers.

The cancers include leukemia, kaposis sarcoma, bladder cancer, head and neck cancer, renal cell carcinoma, skin cancer and multiple myeloma. The other diseases employing interferon therapy are AIDS, multiple sclerosis, genital warts, hepatitis C, herpes zoster etc.

Interferons are also employed in the treatment of common colds and influenza. For this purpose, interferons can be used as nasal sprays. The basic mechanism of action of interferons against viruses has already been described.

Interferons are found to cause the death of cancerous cells. This is brought out by stimulating the action of natural killer (NK) cells, a specialised form of lymphocytes that can destroy cancerous cells. Despite the widespread therapeutic applications of interferons, they are not within the reach of a large number of common people due to the cost factor (the cost of production being very high).


Erythropoietin is a hormone synthesized by the kidneys. It stimulates the stem cells of bone marrow to produce mature erythrocytes. Biotechnologists were successful in producing recombinant erythropoietin. An approval for its therapeutic use in humans was obtained in the year 1989. Amgen Inc. first marked erythropoietin with a trade name Epogen. It is useful in treating the patients with severe anemia that accompanies kidney disease.

Another firm Ortho-Biotech company produced Procrit, a genetically engineered erythropoietin in 1997. Procrit acts like the natural hormone and stimulates the production of erythrocytes. It is used in anemic patients undergoing non-cardiac, non­vascular surgery. Procrit administration before surgery serves as an alternative to blood transfusion. However, therapeutic use of procrit is quite expensive, hence not widely used.

Deoxyribonuclease I (DNase I):

The enzyme DNase I hydrolysis long DNA chains into shorter oligonucleotides. The biotechnology firm Genentech isolated and expressed the gene to produce recombinant DNase I. This enzyme is very useful in the treatment of common hereditary disease cystic fibrosis, as explained hereunder.

Cystic fibrosis (CF) is one of the most common (frequency 1: 25,000) genetic diseases. Patients of CF are highly susceptible to lung infections by bacteria. The presence of live or dead bacteria leads to the accumulation of thick mucus in the lungs making the breathing very difficult.

The major constituent of this mucus is the bacterial DNA (released on bacterial lysis). Administration of the enzyme DNase I to the lungs of CF patients decreases the viscosity of the mucus, and the breathing is made easier. It must be remembered that DNase I cannot cure cystic fibrosis. It can only relieve the severe symptoms of the disease in most patients.

Alginate Lyase:

Alginate lyase acts on a polysaccharide polymer namely alginate. Alginate is found in soil and marine bacteria. The occurrence of mucus in the lungs of cystic fibrosis patients is partly due to alginate, produced by the bacterium Pseudomonas aeruginosa. Therefore, administration of alginate lyase instead of or in addition to DNase I helps to clear lungs of CF patients.

Alginate lyase gene has been isolated from a Gram-negative soil bacterium, Flavobacterium sp. This gene was used to produce recombinant alginate lyase in E. coli. Trails are being conducted for therapeutic use of this enzyme in CF patients.

Second Generation Therapeutic Proteins (Muteins):

By employing site-directed mutagenesis, the amino acid sequence of a recombinant protein can be suitably modified as desired, by a technique referred to as protein engineering. The mutated proteins are collectively referred to as muteins.

Protein engineering is a rational approach to modify a protein with regard to its stability, solubility, specificity, substrate affinity, pharmacokinetics etc. The muteins obtained by protein engineering technique are considered as Second generation of therapeutic proteins. Selected examples of such proteins (e.g. insulin lispro, Alteplase) are already described.

Type # 3. Vaccines:

Vaccines are another important group of pharmaceutical products of recombinant DNA technology.

Is the Copy Better than the Original?

The Regulation of Orphan Drugs:

a US-EU Comparative Perspective

Antón Leis García

Licenciado en Derecho, Universidad Carlos III de Madrid, 2003

LL.M.´04 Harvard Law School

March 2004

This paper is submitted to satisfy both the academic requirements for the course “Food and Drug Law” of the Harvard Law School curriculum (Winter Semester 2004) and the Writing requireme of the LL.M. Program.


Today, more than 5,000 diseases are cataloged as “rare” by the scientific community, so long as they afflict small sections of population. Due to the lack of economic profitability, the pharmaceutical industry has been traditionally reluctant to invest time and money in developing and marketing drugs for these ailments, and such market failure had to be corrected by Government action in form of various incentives.

The US Orphan Drug Act of 1983 pioneered the regulation of this type of medicines, and its success encouraged other countries to enact similar legislation. Among these new orphan drug laws is the one that was drafted in the European Union in 2000. This paper attempts to scrutinize some of the key points of the initial American regulatory framework as well as the main criticisms that it received and to subsequently take a look at the responses that European authorities have devised to address such attacks to the American text. The overwhelming satisfaction surrounding US law may explain the great similarity with its European younger brother, even though the “copy” has tried to make some modest contributions from its own, for instance while addressing what perhaps is the most serious caveat of the law: the abuses by the industry that lead to high prices and “blockbuster orphans”. However, both jurisdictions still have some more aspects to ameliorate in order to create a more perfect set of incentives that may assure the availability of remedies for rare diseases striking a better balance between competition and innovation. Besides, some newly raised issues, like the necessity of international cooperation to address the challenges posed by a global pharmaceutical market and the need for extending the benefits of orphan drug legislation to so-called “third-world diseases”, are awaiting legal answers.

  1. Introduction.

Today, there are more than 5,000 diseases, about 10% of the total number of human ailments, which the medical community considers to qualify for the label of “rare diseases,” affecting between 45 and 55 million people in the United States and the European Union alone[1]. Despite the heterogeneity of this category, rare disorders present a common feature: they are so unusual and infrequent that in most cases an appropriate treatment is not available[2][3]. The possible remedies for rare diseases are usually called “orphan drugs”[4], since in normal market conditions no sponsor would show up as a parent to take them through the pre-market scrutiny by the regulatory agencies. Due to the small prevalence of rare diseases, the pharmaceutical industry is unwilling to “adopt” these treatments, so long as the foreseen sales and benefits are scarce, specially in view of the huge development costs required for getting a new drug into the market[5]. Confronting this problem, the governments of many countries have noticed the necessity of some form of public intervention that may assure orphan patients a remedy for their illnesses and act consequently. From a public policy perspective, the main action taken to assure the availability of these medicines has been the establishment of various publicly-sustained incentives in order for the pharmaceutical industry to market them in sufficient quantities. Roughly, these benefits may be classified in two groups. First, the hallmark incentive implemented by all the regulators in the various countries which have passed orphan drug laws has been the conferral of a so-called market exclusivity right to the “adopters” for a given number of years[6], which prevent others from commercializing the same drug during this period, therefore increasing substantially the prospects of reaping the investment previously made. Yet, there is a second main group of incentives used to spur the production and marketing of orphan medicinal products which encompasses, among others, grants and subsidies to finance the various clinical trials required to prove the safety and effectiveness of the drug, waivers of various administrative fees, tax credits and diverse means of support and administrative guidance by the public agencies through the whole process.

While approaching the regulation of orphan medicinal products, it should be noted that what the orphan drug rulemakers are dealing with is the intersection between market and health. Orphan legislation tries in essence to provide an equal access to health to all people that suffer from any disease, no matter its nature. Governments have recognized the limits of the market to supply society with a remedy for every single disease, and thus took a step forward to avoid an scenario where the access to health protection would depend on how many fellow citizens present the same problem, or, to put it in other terms, on how profitable is the drug a particular patient needs. Orphan legislation is thus a solution designed to address this very conflict between medicine and economics by pushing toward the right of all citizens to a certain level of health protection[7].

This paper tries to identify the main concerns and critiques that have arisen from the U.S. experience since the drafting of the Orphan Drug Act of 1983 and to examine the responses that its “younger brother” in the European Union has offered to tackle all these controversial points. Three main topics will be covered in different sections, in addition to a final set of conclusions. In the first place, section 2 deals with the historical background of the actual regulations on both sides of the Atlantic ocean, from the appearance of the first laws in the United States to the translation to legal terms of the European policy in 2000. It also encompasses a description of the main characteristics of the regulatory schemes implemented in the different countries, with special attention to both the US and the EU. Section 3 consists basically of a general assessment of the practical outcomes produced by these legal frameworks in each side of the Atlantic Ocean. Section 4 constitutes the core of this work, specifically addressing all the purported caveats and contentious points identified by commentators, industry and patients within the American system; and referring to how the European authorities have faced these challenges. Finally, Section 5 provides some conclusions in light of the comparative analysis of both jurisdictions described before.

  1. The Treatment of Rare Diseases and the Birth and Raise of orphan drug legislation.

The birth of the orphan drug laws took place in the United States during the early 80s. The US Orphan Drug Act of 1983[8]has been the model for other countries when addressing the regulation of orphan medicinal products. This piece of legislation has internationally been recognized as a “booster” for the introduction of orphan medicinal products[9], and happened to be widely used as a model for a sound orphan drug policy in many other countries. Today, nations like Japan, Korea and Australia have orphan drug legislation drawn in mostly from the American text[10]. However, the most important step taken towards a worldwide regulation on orphan medicinal products was the drafting of appropriate rules in the European Union via Regulations in 1999-2000. The US and the EU (without the 10 new countries entering as of May 1, 2004) account for nearly 75% of R&D for pharmaceuticals and biologics and represent two-thirds of the world pharmaceutical market[11]. In light of this data, the importance of both legal frameworks on orphan drugs seems obvious, and mutual feedback appears to be a necessity to enrich both systems and promote global cooperation.

The purpose of this section is to explore the historical development of orphan drug laws, from the US Orphan Drug Act to the recent implementation of the European Policy on the field.

  1. The Beginning: the US Orphan Drug Act of 1983 and its History.

This story begins in the early 80s, when American public opinion became increasingly concerned about the situation of millions of fellow citizens suffering from rare diseases. Congress began to consider taking action to resolve the orphan drug problem, holding hearings starting in 1980, in the midst of strong advocacy efforts by patient organizations like NORD, the support of the medical profession, stark opposition by the pharmaceutical industry and the reluctance of the FDA itself, which preferred to deal with the problem through a more flexible application of the general administrative requirements[12]. The Act was finally enacted in December 1982[13], laying out the basics of the first specific orphan drug policy ever adopted in the world.

The 1983 Act defined orphan drug by referring to the concept of “rare disease or condition” in the United States, which in turn was defined as any ailment which is so uncommon that “there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales in the United States of such drug”[14]. The only criteria for designation used in the original version of the Act was therefore the economic viability of the drug represented by the expected revenues from sales not covering the costs. Besides, any orphan drug which deserved this denomination under the original text had to be unpatented or unpatentable under the patent laws, since Congress believed that these norms afforded enough protection for the investment to be made and consequently there was no need for further legal shield. Once these requisites were met, the Act provided that FDA should confer the product a designation as “orphan drug”, immediately benefiting from all the incentives laid down. Although we will revisit this issue later on when discussing the practical outcome of the law and its alleged flaws, a brief account of the advantages embodied in the Orphan Drug Act for all designated products were as follows[15]:

  • Seven years of market exclusivity for the designated orphan indication of the product. During this time, no identical and competing product will receive marketing authorization from FDA[16];
  • Federal grants to fund clinical trials of designated orphan products and protocol assistance by the FDA[17];
  • Tax credits for such clinical trials.

During the first year after the Act came into effect, it became apparent that the response of the industry was not what the legislators initially expected[18], particularly due to the heavy burden that producers faced to demonstrate the costs of the intended orphan drugs to show that market conditions would render them unprofitable[19]. The legislative response was the 1984 Amendment to the Act, which modified the text to add a presumption of unprofitability when the disease or condition has a patent population of less than 200,000 in the United States, which remains today in the text of Section 526 of the actual version of the Act[20].

In 1985, the second main amendment of the Act took place. Congress changed the text to apply market exclusivity protection to patented and patentable drugs, in an attempt to increase protection to products with a patent life about to be over[21]. Besides, determining whether a particular drug was patentable or not lead in fact to delays in the designation of orphan drugs, provided that in some cases assistance by the Patent and Trademark Office was required[22].

Despite many further attempts that will be discussed in the fourth section of this paper, the last amendment to the Orphan Drug Act occurred in 1988. Congress had then to repair various errors and to reauthorize some provisions that where close to expiring (e.g. grant appropriations). Some other minor rules of administrative nature were introduced, for instance the one that requires sponsors to notify the FDA any interruption in the manufacturing of any approved orphan product at least one year in advance[23].

The regulatory scheme was not complete until January 1993, when the FDA approved and put into effect the definitive version of the so-called Orphan Drug Regulations[24], which established express rules on the administrative procedures for obtaining an orphan drug designation and clarified some traditional problems regarding the wording of the Act, in particular those related to the criteria used to consider a drug “different” from another with regard to market exclusivity right, and to the meaning of “clinical superiority” as an exception to such a right[25]. These issues will be reviewed in depth in Subsection 4.2., while discussing some of the controversies arising from certain ambiguities of the law.

The three main amendments of the Orphan Drug Act described above (1984, 1985 and 1988) are only a few of the proposed modifications of the statute that have come under public scrutiny during the last twenty years. There have been other several different attempts to change the letter of the law that have triggered no tangible results[26]. These proposals will be discussed below when dealing with the various critiques received by the actual system, so long as they tried to correct some of the alleged deficiencies detected in the 1983 Act.

  1. The International Spread of Orphan Regulations.

The tremendous success that the American orphan drug legislation experienced specially once the initial reluctance of the industry was overcome after the 1984 amendments induced other governments to put in place similar programs that may enable the industry to produce and market drugs for the treatment and diagnosis of rare diseases[27]. Different governments began to adopt different and sometimes isolated measures[28], and later embarked on comprehensive legislative initiatives.

Japan kicked off its orphan drug program in October 1993 by amending the Pharmaceutical Affairs Law and other ancillary regulations and setting up a complete system for orphan products designation and a full catalog of incentives for their development and marketing[29]. Orphan products are initially reviewed by the Pharmaceuticals and Medical Devices Evaluation Center and the Central Pharmaceutical Affairs Council and later designated by the Minister of Health and Welfare. The designation criteria is not only based exclusively on prevalence (less than 50,000 patients in Japan, <0.04% of the population[30]), but also on the high probability of development as shown by data provided by the sponsor and the inexistence of equivalent alternative, i.e. with the same or superior efficacy or safety[31]. The Japanese program provides for a 10-year period of market exclusivity, coupled with some other incentives (e.g. grants, tax deductions, consultations with the agency and fast track review of approval)[32]. So far, Japanese authorities have designated 167 orphan drugs and 10 devices, as published in the web page of the Japanese Organization for Pharmaceutical Safety and Research[33].

Australia has also implemented a “robust but still incipient” orphan drugs program[34]. The Australian Government has recently introduced via an interagency agreement an automatic recognition mechanism that allows the orphan products designated as such in the United States by the FDA to reach the Australian market almost inmediately. In 1997, a comprehensive Orphan Drug Policy was drafted and implemented[35].

  1. The Orphan Laws Cross the Atlantic: the European Union Approach to Orphan Drug Regulation.

Some member States of the European Union had been active during the 90s taking some actions towards a broad regulation on orphan medicinal products, even before any initiative was promoted at the Community level[36]. A public debate within the European institutions ensued regarding the convenience of following in US footsteps on the field through a comprehensive regulation covering the Common Market as a whole.

Rare diseases have been a focus of attention for the European Commission since 1994, when the BIOMED 2 program, within the context of the 4th Framework Program for research and technological development (1994-1998) provided funding for 23 research projects up to a total appropriation of €8.65 million[37]. Moreover, rare conditions were further classified as a “priority area” for Community action in the context of the Framework for action in the field of public health[38], after the Commission presented a proposal of Decision of the European Parliament and the Council adopting a program of community action for the period 1999-2003 on rare diseases[39].

On July 27 1998, the European Commission published its proposal for a European Parliament and Council Regulation on orphan medicinal products[40]. At the European Parliament, the Committee on the Environment, Public Health and Consumer Protection issued a report amending in first reading proposal in terms that were not accepted by the Commission[41]. The second proposal was approved by the Parliament in a plenary session held in December 1999 and by the Council. That was the birth of Regulation (EC) No 141/2000 of the European Parliament and the Council of 16 December 1999 on orphan medicinal products[42](hereinafter “Regulation 141/2000”), the basic norm outlining the European policy on the field of rare diseases and orphan drugs, which entered into force on April 28th 2000. Commission Regulation (EC) No 847/2000, of 27 April 2000, laying down the provisions for implementation of the criteria for designation of a medicinal product as an orphan medicinal product and definitions of the concepts “similar medicinal product” and “clinical superiority”[43](hereinafter “Regulation 847/2000), followed to precise some procedures and concepts advanced in Regulation 141/2000. The aim of the initiative was clear: to provide, in similar fashion to the US Orphan Drug Act, an attractive environment for the pharmaceutical industry to develop and market drugs for rare diseases in the European Union[44]. The obvious ties to the American regulation were expressly recognized throughout the entire drafting process[45].

The scope of Regulation 141/2000 is limited to “medicinal products for human use” within the meaning of Directive 65/65/EEC[46], which refers in turn to any substance or combination of substances which may be administered to human beings with a view to making a medical diagnosis or for treating or preventing a disease”. From this wording, it is important to note that while vaccines fall squarely within breath of the regulation, medical devices and nutrition supplements are not covered, similarly to the initial version US regulation[47].

Article 3.1 of the Regulation establishes the criteria for designation of orphan medicinal products, which combine a epidemiological feature (prevalence figure in the total Community population of less than 5 per 10,000)[48]with an economic test (alleged economic unviability). Either element must be established by the sponsor, who is also obligated to show that there is no “satisfactory” method of diagnosis, prevention or treatment of the condition in question or, if such method exists, that the medicinal product will provide patients with “significant benefit”[49]. Importantly, the condition targeted by the drug must be a “life-threatening, seriously debilitating or serious and chronic” ailment, and the indication of the drug must be medically plausible.

Article 4 cope with the institutional design of the European orphan drug policy. A new body within the European Agency for the Evaluation of Medicinal Products (EMEA)[50]was created: the Committee of Orphan Medicinal Products (COMP), whose two main missions are the examination of any application for the designation of a medicinal product as an orphan drug, and the assistance to the Commission on any matter in relation with the Community policy on orphan drugs. One of the interesting features of this new organization is that among its members, three (from a total of 21 plus a Chairperson) are designated by the European Commission to represent patients´ organizations, which warmly welcome this attempt to provide those who are the final recipients of the regulation the with a voice on their own to offer their positions during the rulemaking and administration of the whole program[51][52].

The designation procedure laid out in Article 5 is purportedly “rapid and flexible”[53]. Applications should be addressed to the Agency Secretariat, which, in coordination with a rapporteur, processes the file. The COMP has to deliver its opinion in 90 days from the Secretariat´s validation of the application. EMEA then forwards the opinion to the European Commission and the sponsor, who in the event of a negative decision may fill an appeal before the COMP[54]. The European Commission shall take all final decisions 30 days after its reception, but they rarely differ from the initial opinions by the COMP[55]. With a favorable decision by the Commission, the candidate product shall be entered in the Community Register of Orphan Medicinal Products, thereby acquiring all the benefits and privileges inherent to the condition of “designated orphan medicinal product”[56].

The set of incentives and benefits accruing to designated orphan medicinal products in the European Union are established in Articles 6 through 9 of the Regulation 141/2000. Some of them are parallel to similar measures in the US regulatory framework, such as the scientific advice provided via “protocol assistance,” the fee waivers, and most notably the market exclusivity rights.

Protocol assistance in the Regulation 141/2000 tries to tackle the several specific problems that rare diseases and orphan drugs pose in relation with the viability of accurate trials and research. The Scientific Advice Working Group (SAWG) within EMEA is the body in charge of providing such assistance through a continuous feedback between the sponsors, a full network of external experts and the SAWG itself[57]. This assistance goes on between designation and marketing approval and indeed continues after the orphan drug is introduced into the market[58][59].

Designated orphan medicinal products are also eligible for fee reductions for all charges payable under Community rules on drug marketing authorization[60]. This includes fees for both pre-authorization activities such as protocol assistance and for all actions under the market centralized procedure, i.e., application for marketing authorization before the EMEA (as distinguished from the marketing authorization obtained from one Member State authority, which allows commercialization all across the EU territory due to the principle of mutual recognition), post-authorization activities (e.g. annual fees) and the like[61][62].

Finally, the EU law also included market exclusivity as the North star in the constellation of incentives for orphan medicinal products, the crucial element to assure availability of orphan drugs[63]. Although this particular issue will be examined deeply throughout Section 4, it is possible to suggest that the protection is only granted when the drug has been designated as orphan medicinal product by the Commission, and when marketing authorization has been issued by either the Community or all the 15 states (Article 8.1). This “shield” prevents EU and national authorities from granting a marketing authorization for the “same product” defined in terms of the same active substance and for the same indication within the following 10 years[64]. The duration of the protection may however be reduced to 6 years in the event that the criteria used for designation no longer apply. Indeed, exclusive rights may be interrupted in two cases: when the holder of those rights is unable to meet the demand of the product with enough quantities thereof, and when another applicant is able to establish that this own version of the drug is “safer, more effective or otherwise clinically superior”[65]. Regulation 847/2000 elaborates a bit on this vague concepts, solving (or attempting to do so) some huge practical problems, as Section 4 of this essay describes in more detail.

Two main incentives provided in the United States, specific grants funding clinical and nonclinical trials and tax credits, are lacking in the European regulatory scheme. The explanation for the absence of the latter is straightforward: the European institutions have no power on taxation regulations other than on those related to indirect levies and customs duties[66]. The application of tax benefits to orphan drug sponsors is deferred therefore to the member States, among which some have decided to do so[67]. With regard to grant programs, the approach taken in Europe has been different from the one in the US. Instead of funding clinical and nonclinical trials of designated drugs, the European authorities have included rare diseases as one of the priorities of broader programs on research and development programs that frequently encompass different kinds of subsidies and funding. The above-mentioned 4th Framework Program initiated a path carried on today by the 6th edition of the same initiative (applied since the beginning of 2004), which support investigational activities on rare diseases within the thematic priority “Life, science, genomics and biotechnology for health”[68]. Therefore, neither the EMEA nor any other entity within the Community provides sponsors with specific grants for orphan drug R&D. Nevertheless, Article 9 of the Regulation 141/2000 makes clear that designated medicinal products shall be “eligible for incentives made available by the Community [...] to support research into, and the development and availability of, orphan medicinal products and in particular aid for research for small- and medium-sized undertakings provided for in framework programs for research and technological development”. Summing up, orphan drug research has a priority consideration by general EU R&D funding plans, but lacks any equivalent, at least at the Community level, to the FDA comprehensive grant program.

The European regulators decided to include among the set of incentives trying to promote the availability of orphan medicinal products an expedited access to the centralized marketing authorization procedure[69]. However, this purported “fast track” approval has not been able to keep the system from suffering what commentators term “regulatory lag”, that is, the existence of a significant lapse of time between designation and market approval.

The EU regulatory framework is complemented by the initiatives implemented by the 15 member States, which have been appearing since Regulation 141/2000 and even before[70]. Most of these measures have been for the most part either the above-mentioned tax credits or the reduction of fees required through various administrative procedures. Some countries have also adopted rapid authorization mechanisms similar to those set out at the Community level (e.g. Germany). In 2001, the Direction General Enterprise of the European Commission published an Inventory with all the measures adopted at both European and national levels on orphan medicinal products, thereby fulfilling the requirement of Article 9.3, which required the Commission to take such action[71].

  1. How Well Is the System Working? The Need for Avoiding Self-indulgence.

The US Orphan Drug Act has 20 years of successful experience. Since it came into force in 1983, 1305 designations have been issued, from which 250 resulted in final marketing authorizations by the FDA[72]. This data may be compared with the 58 drugs that would have qualified for orphan status in the 17 years before the Act was passed[73]. Moreover, not less than 9 million American patients have benefited from the availability of these remedies throughout the period of implementation of the orphan drug laws[74]. All these numbers have triggered a highly positive opinion amongst patient organizations, professionals and legislators. Indeed, the pharmaceutical industry progressively abandoned its initial lack of enthusiasm from the moment the 1984 Amendments were passed[75].

The American experience also produced some indirect benefits. The set of incentives laid down in the Orphan Drug Act has proven to be specially advantageous for the biotechnology industry in general and research and development in particular. Biotechs often resort to venture capitalists in order to finance their investment, and the monopoly profits coupled with market exclusivity rights appear to provide great incentives for such a financing, particularly in view of the fact that patent protection for biotechnological products is cloaked in uncertainty[76]. In fact, from 1983 to 1992 19% of all orphan drug approvals went to biotech companies, and by 2001 this numbers had increased to 41%[77]. Indeed, most of these sponsors are small or medium-size companies that pop up into the market precisely because of the public incentives of the Orphan Drug legislation.

A major second indirect effect of the orphan drug incentives is the introduction into the market of certain medicinal products designed for rare diseases but also working on some other common ailments. For instance, the controversial human growth hormone (hGH)[78]developed by Genentech to treat an specific growth disorder on children, hypopituitary dwarfism, has proven to be also effective in treating other growth problems[79].

The overwhelmingly optimistic assessment of orphan drug legislation is also present on the other side of the ocean. Despite the short period of implementation of the European legal framework, almost four years[80], the considerable amount of work EMEA and COMP have had to tackle during this period is a good indicator of initial success of the EU policy on the field of orphan medicinal products. Today, the number of designated products is 185, according to the Community Register of Orphan Medicinal Products for Human Use[81]. Close to 250 applications had been received by April 2003 (two-thirds successful), and 32 marketing authorizations had been requested by then, of which 8 resulted in a marketing authorization[82]. Even though the data on final availability to the patients are still scarce, authorized voices have expressed their satisfaction with how the system is working[83].

All active substances approved to be marketed in the US by the FDA were reviewed by the Community authorities in order to determine the possible pre-existence of a marketing authorization in the EU territory even before orphan status became available. The results revealed that 85% of orphan products available in the United States due to the incentives offered by the orphan drugs had also been marketed within the Community via either the EU centralized procedure or, in most cases, the national authorities and the mutual recognition system[84]. Indeed, up to five applications for marketing authorization through the centralized procedure were withdrawn during the evaluation phase. Nevertheless, these numbers may be misleading: only a quarter of the products subject to mutual recognition have received market authorization in all of the 15 member states, and thus the orphan medicinal products available in practice to all EU patients amount approximately to 50% of the total number of drugs from which their American counterparts benefit[85]. Therefore, the orphan drug laws in Europe have a long way to go, even if some progress had been made before they came into force.

Similarly, the EU orphan drug laws are considered to have a special impact on the biotechnological industry and small and medium-sized companies with a limited portfolio of products[86]. However, assessing the effects of orphan drug regulations on R&D activities and the development of the European industry generally seems to be a pending task. Yet, the biotech sector in Europe has grown considerably during the last decade, and this trend became accentuated in the period 2000-2001 (first year of implementation of the European orphan drug regulations), where the biopharmaceutical R&D expenditure shifted from €4,977 million to €8,354[87]. Despite these encouraging results, again it seems that Europe has a lot of work to do in order to catch up with its American competitor (€17,522 in 2001)[88].

In conclusion, the empirical data point out that the orphan drug policies have proved to be an important boost for the treatment of rare diseases and, more generally, for the economic and scientific development of the pharmaceutical industry. However, it is necessary to avoid any and all forms of self indulgence. Since the initial steps of such policies in the US during the early 80s, sharp attacks have arisen from many sectors criticizing certain points embodied in the Orphan Drug Act and its ancillary regulations. These viewpoints have been reflected in the many attempts for reform that have taken place and also in the passage of the European legal architecture. A good global assessment of the American orphan drug policy, consistent with the thesis proposed in this paper, was made in 1995:

“The cumulative effect of these provisions is that the Orphan Drug Act has been a clear, although not unqualified success. Only ten orphan drugs had reached the market in the ten years prior to its enactment. Comparatively, in the ten years following passage of the Act, eighty-seven orphans reached commercialization. [...]In 1990, PMA member companies spent $543 million on orphan drug research. Thus, the evidence indicates that the Act has succeeded in stimulating substantial commercial investment”[89].

In conclusion, there is empirical data which points to both an overwhelmingly positive evaluation of the American long-standing experience and a hopeful kick off for the recently-born European initiative. However, it may not be denied that there is a widespread feeling that present provisions can be ameliorated to correct some of the deficiencies detected throughout the last twenty years, curbing some stunning abuses, clarifying a few obscure provisions and providing solutions for some challenges which have not been paid enough attention to.

  1. Addressing Critiques. Main Concerns in Light of the American Experience and their Responses in the European legislation.

Despite the widely-shared positive assessment on the role played by Orphan Drug regulations towards a greater availability of this category of drugs, even during the Congressional hearings that preceded the Orphan Drug Act of 1983 and repeatedly since then many voices criticizing some points of the letter of the law and several of its practical outcomes have been heard. The myriad of Congressional attempts for reform that have been taking place since 1983, whether successful or not, are direct evidence of this dissatisfaction. Pharmaceutical manufacturers have insisted on the argument that the Act does not provide the degree of certainty required to achieve its full potential for innovation (e.g. about the definition of “sameness” as applied to competing products)[90]. On the other side of the arena , patients and their advocates sharply criticize the effect of the Orphan Drug Act on prices and industry profits[91].

This Section will discuss the most notorious points of controversy. Indeed, there are other issues raised by interested parties and scholars[92], but this paper will concentrate only on those which have been object of serious public debate and which had some impact in Europe when the 2000 Regulations were enacted. The purpose is to scrutinize each criticism and its repercussion in the United States, analyzing the normative solutions that have been proposed, and finally, to take note of what European authorities have done.

  1. The Risk of Abuse: Orphan Blockbusters.

Without a doubt, the largest concern by far that commentators and legislators have detected in the American orphan drug regulatory framework arises from the factual evidence that some medicinal products designated as “orphans” and therefore benefiting from the incentives embodied in the orphan drug laws (most notably, from market exclusivity rights), have produced such enormous benefits for their sponsors that they have called into question their own status as orphan drugs and the entire legal architecture[93]. These drugs fulfilled all the statutory requirements under the Orphan Drug Act, obtained a designation and subsequently a marketing authorization; but their sponsors have reaped considerable benefits in some cases recovering the development costs in the first couple of years since initial access to the market. Think for example on orphan drugs that must be administered to chronic patients during a prolonged lapse of time or even their entire lives, or on remedies for infectious ailments that are spreading rapidly.

The influence of market exclusivity rights on the existence of these “blockbuster drugs” is evident: the 7-period protection curbs any actual or potential competition for the designated drug, enabling the sponsor to charge monopoly prices for the drug. However, it must be noted that this is precisely the very intent of the Act: to offer a monopolistic position to encourage the industry to develop products that would not be otherwise manufactured[94]. Therefore, these cases can be defined as “abuses” of the actual statutory protection, as situations where the letter of the law goes beyond its purpose by affording protection to orphans that already have parents willing to take care of them. A good example, cited by many authors, is Ceredase, a remedy for Glaucher´s disease, which afflicts around 2,000 Americans[95]. Genzyme, the biotech sponsor has been accused of taking advantage of the monopoly position in the US under the orphan drug legislation to earn close to half a billion dollars a year by charging patients between $100,000 and $400,000 annually for their treatment, depending on whether the person is a child or an adult[96].

The core objective here is striking a balance between encouraging innovation and avoiding monopoly prices during the temporary protection afforded by market exclusivity rights. Some have argued that this a is an “all or nothing” debate, a flat choice between having expensive drugs or not having them at all and therefore letting patients down[97]. However, the problem happens to be a little more complex, as the many attempts for statutory reform specifically addressing this issue plainly show; and today there exists a wide-spread consensus favoring a legislative reform that may curb these scarce (about 10% of the total number of orphan drugs approach this blockbuster status[98]) but nevertheless disturbing abuses.

A main second problem associated with the phenomenon of profitable orphans is the situation of firms racing each other for obtaining designation and thus a monopoly position in the market. Pulsinelli has detected two main difficulties arising from this observable fact. First, the very idea of a race questions the “orphan status” of these products, provided that “true orphans” hardly ever may attract the attention of more than one parent. As Pulsinelli puts it, “the fact that firms are fighting over these drugs suggests that in fact they are likely to be profitable, and hence it is an abuse of the orphan drug incentives if they are applied to these drugs”[99]. Second, such a race does not produce anything but a waste of resources, specially on the part of the loser, since its investment will not receive any sort of reward[100].

But the so-called “orphan blockbuster” is not only explained by the monopoly conferred by market exclusivity. Experts have also pointed to “expanding orphan diseases” as the other leading cause of profitable orphan drugs[101], that is, to indications that affect less than 200,000 people in the US at the time the drug is designated, but that later on surpass that population. Undoubtedly, the paradigm here is AIDS. Many of the initial remedies for HIV infection and the diseases related to it were awarded protection under the orphan drug law, but have subsequently happened to be extremely profitable, as the infection has spread out and the potential market has grown[102]. Full-blown AIDS surpassed the 200,000 patients cap in 1993 and many of the opportunistic diseases can no longer be considered for orphan designation[103], but the same problem might arise with any other illness. In other cases, orphan drugs have become blockbusters through their use for off-label indications, i.e. indications other than those studied under the clinical trials and laid down in the FDA approval[104]. This phenomenon occurs because physicians are authorized under their discretion to prescribe medicines for conditions not included in the label of the product, therefore expanding the possible uses of the particular drug and, as a consequence, also its profit margins[105].

Once the problem of blockbuster drugs has been described, it is time to examine the actual and prospective solutions that may address it[106]. It must be noted that several amendments to the Orphan Drug Act can well be explained by the overwhelming concerns with the above-mentioned abuses, and that none of these reforms achieved significant success.

The first of the initiatives that have been proposed to curb abuses, and perhaps the most popular, is the so called “shared exclusivity.” This proposal was underlying the reform initiatives presented in 1986, 1987 and 1990[107], and it basically consists on an authorization for sharing market exclusivity between two or more sponsors that have developed their products “simultaneously,” i.e., during an approximately coincident period of time. Obviously, this sort of proposals have been strongly opposed by the industry, since successful companies would be forced to divide up the benefits reaped once the products are on the market, and that allegedly would disturb the initial financial risk assessment that producers make when deciding whether to begin to develop a drug or not[108]. However, cross-licensing agreements, joint ventures and other sorts of collaborative schemes have been used by industry members to minimize the risk of the investment[109]. In fact, joint efforts seem to be a good option for supporting innovation in the field of orphan drugs, since they would help to solve some of the structural difficulties that sponsors face when dealing with orphan drugs (limited patient population and the like), thus increasing efficiency all across the industry[110].

The second main initiative proposed in the United States has been the reduction of the market exclusivity term[111]. Actually, this period is seven years, but some proposals for statutory amendments have tried to abbreviate this period substantially. For instance, the 1992 Amendments established a sales cap of $200 million. The exclusivity right was awarded for two years and after that time and over the next seven years, the exclusivity term could be revoked if the sales threshold was surpassed. In a parallel fashion, the 1994 Amendments put forward a new period of four years, extendable for three extra years if the sponsor was able to show that it was a drug of “limited commercial potential”[112]. The problems that commentators have found with these limitations are analogous to those arising from the initial version of the statute, which asked producers to provide certain sensitive and often unverifiable data[113]. However, note that the data here refer to the past (actual sales volume) and not to the future (expected benefits).

The third recognized initiative that should be examined is the revocation of exclusivity rights once a generating event takes place. In normal conditions, this “event” is the achievement of a certain level of sales or profits, and normally the former option is preferred, so long as sales numbers are more easy to ascertain and less awkward for the industry[114]. On the other hand, they are also “much less accurate”[115], since the development costs and other factors influencing the final result from an investment vary widely across the industry. Nevertheless, the 1992 Amendments followed the path of establishing a sales level of $200 million as the situation that would automatically lead to a revocation of the exclusivity status. An alternative for this “trigger” event is an increase in the number of patients that surpasses the cap of 200,000 Americans, and this was the option taken by the 1990 Amendments[116]. From all the solutions to address the issue of orphan profitability, revocation of exclusive marketing rights appears to be the one with a wider consensus in its support[117], so long as it is perhaps the less aggressive initiative and the one that happens to respect the initial structure of incentives to a higher degree. In any event, the bright-line rule based on the prevalence of the disease is called into question and suffers criticism for being an inadequate proxy for unprofitability. Revocation appears then as a sound mechanism for relaxing the rule and bringing it closer to reality.

Fourth and last, authors tend to mention among the measures that have been often proposed during the 20 years of orphan drug regulatory experience in the United States the creation of a windfall profit tax on all profits accruing from the marketing of orphan drugs above a given threshold[118]. Through different versions, the same scheme has been presented in Congress in 1990, 1991 and 1993 by Representative Stark from California[119]. The main idea is to tax benefits from an amount of revenues equal to the production costs plus, in some cases, a certain volume. Again, the main alleged pitfall of the proposal is the disclosure obligations that imposes to the industry[120]; but it seems hard to distinguish these duties from other imposed under various other tax laws.

From what was described so far, one conclusion appears to be clear: it is necessary to strike a new balance between innovation encouragement and industry profit and pricing, between incentives and competition. Both over- and underprotection are equally bad for patients and society as a whole, which should be the primary beneficiaries of the law. Even though the cases of abuse are not numerous, action should be taken to address this particular issue amending the Orphan Drug Act to include some of the measures described above. In particular, the revocation mechanism may be a very useful tool to curb abuse by the industry, and this is what the European legislators seem to had in mind when they enacted Regulation 141/2000.

In the European Union, the concern about possible abusive practices by the industry was present since the initial steps of the EU orphan medicinal product legislation[121], and this concern was echoed in some provisions of the Regulation 1441/2000 cited above. First, the Regulation finally chose a epidemiological criterion to define the concept of “orphan drug”, by setting up a prevalence ratio of less than 5/10,000 people, lower than the one established in the US (approximately 7.5/10,000). Thus, the same controversy that has taken place in the United States about the accurateness of a bright rule as a proxy for nonprofitability are likely to occur in Europe. However, this numerical cap is combined with a more flexible economic test: an orphan medicinal product may also be designated as such provided the sponsor can show that, without the incentives provided by this status, development of these medicinal products would not be undertaken. In sum, the designation criteria open the door to exactly the same source of problems as the US system witnessed.

As for the duration of the exclusivity privilege, European regulators chose a longer term (10 years, versus 7 in the US), but also included a revocation clause in Article 8 of the Regulation. Under that provision, the exclusivity period may be reduced to 6 years in the event that, at the end of the fifth year it is established that the designation criteria (i.e. nonprofitability, prevalence of the disease) are no longer met. Consequently, EU law has been clearly influenced by the various proposals presented in the US favoring the limitation of the market exclusivity benefit in certain cases[122]. In any event, this progress may be offset by the longer duration of the legal monopoly, and it is still too early to figure out how it is going to work in practice (will companies be required to provide COMP or EMEA with data?). So far, the Communication from the Commission on Regulation 141/2000 vaguely states that “the Commission will put in place the necessary procedures and systems in order to monitor the prices of orphan medicinal products [...]”, as well as profitability[123]. The Communication also recommends that at the end of the fifth year of market exclusivity the competent authorities “systematically check whether or not the criteria on which basis market exclusivity was granted are no longer met”[124].

As for what was termed above “shared exclusivity”, the EU law has not included any similar provision to those included in the various unsuccessful Amendments to the US Orphan Drug Law. The wording of article 8.1 of the Regulation is straightforward: neither the Community nor the Member States shall “[...] grant a marketing authorization for the same therapeutic indication in respect of a similar medicinal product” unless any of the derogations set out in article 8.3 apply[125]. Therefore, after one of the products receives marketing authorization by either procedure, in most cases other applications will be refused unless the new applicants may prove that the second product is safer, more effective or “otherwise clinically superior”, in parallel to what happens in the US. This issue will be revisited in Subsection 4.2.

Finally, the alternative of the windfall profit tax was not even considered under the EU regulations, due to the fact that, as we described in Section 3, the Community is barred from establishing any tax system under the current versions of the Treaties. Again, this topic will be considered in Subsection 4.7 when referring to some particular features and limitations of the European legal framework.

As a brief conclusion, the European orphan drug law has made some progress in light of the experience gained in the US during the last 20 years and the criticisms raised in this country. However, the innovation has not been substantial and how the revocation clause will be applied by the Community authorities remains uncertain. Therefore, some of the debates that are actually going on in the US are likely to be echoed on the other side of the Atlantic in the near future.

  1. Clarifying Ambiguities: the “Same Versus Different” and “Clinical Superiority” Problems.

The second of the main problems revealed by the American experience with the regulation of orphan drugs consists of the ambiguities that the Orphan Drug Act presents in defining the boundaries of the market exclusivity protection. This issue was traditionally termed as the “same versus different” problem[126]. Initially, neither the Act nor other regulations encompassed any provision establishing when a posterior drug was the “same” as the pioneer drug and hence barred form being introduced into the market to compete with the initial remedy[127]. Once a designated orphan drug was awarded marketing approval, all “same” medicinal products were not eligible to be commercialized. However, the lack of definition for “sameness” lead to important controversies, among which the case of the human growth hormone (hGH) is frequently cited as an illustration by commentators[128]. Genentech Inc. had developed Protropin, a recombinant human growth hormone to treat the deficiency of such hormones, receiving marketing authorization by the FDA in October 1985[129]. Subsequently, Eli Lilly & Co. requested approval for introducing its own hGH product, Humatrope, in the market in June 1986. Genentech went to the court seeking temporary injunctive relief to prevent its competitor from getting FDA approval, claiming that Humatrope was the “same product” as Protropin. The District Court refused to decide the case, setting no general rule for determining when two drugs must be considered to be the “same” product or “different” ones under the Orphan Drug Act, and instead declared that such duty is statutorily imposed on the FDA[130]. However, FDA subsequently granted marketing approval for Humatrope, and from that moment and until the 1993 Regulations, has decided this type of incidents on a case-by-case basis.

The remedy to the lack of legal standards came with the 1993 Regulations. The final option adopted by FDA was based on the so-called “structural similarity” criterion, distinguishing between macro- and micromolecular drugs. For the former, if both compounds have only “minor” differences in aminoacid sequence, there are considered to be the same product[131]. The latter drugs are presumed to be the same if the “active moiety” is identical between both[132]. In both cases, the presumption can be rebutted if the second sponsor effectively demonstrates that its orphan is “clinically superior”, which entitles the drug to receive marketing authorization as well. The definitions laid down in the Regulations refer to “clinical superiority” as the situation where “a drug is shown to provide a significant therapeutic advantage over and above that provided by an approved orphan drug (...)”. This advantage may consist on greater effectiveness, higher levels of safety or any other “major contribution to patient care”[133], and the burden of proving it is borne by the second sponsor[134]. The “same versus different” problem was therefore at least partially solved by the significant certainty added to the statutory framework by the FDA regulations and the risk of “free riding” (purportedly caused by one firm introducing cosmetic changes in the structure of a previously marketed drug and claiming that the new compound is a “different” one) was ruled out as well[135]. However, a recent publication criticized the fact that “the standards used [in the US] to judge superiority are less than clear”, leaving the agency with too much discretion to make such finding[136].

The marketing exclusivity rights that any orphan drug enjoys may therefore only be disturbed by an identical product (defined in terms of their composition) if the latter triggers some kind of benefit that the former lacked. The approach taken in Europe resembles this model substantially. As described above, article 8.3(c) of the Regulation 141/2000 makes an exception to market exclusivity when a second similar medicinal product may be shown to be “safer, more effective or otherwise clinically superior”. The parallelism with the FDA Regulations is obvious. The concepts of “similar medicinal product” and “clinical superiority” are detailed by Regulation 847/2000, which encompasses definitions strikingly similar to those of the American orphan drug law. “Similarity” is defined by the existence of a “similar active substance”[137]in both products, that is, “an identical active substance, or an active substance with the same principal molecular structural features (but not necessarily all of the same molecular structural features) and which acts via the same mechanism”, according to the relevant statutory provisions[138]. The imitation of the wording of its American counterpart continues when Regulation 847/2000 addresses the characterization of clinical superiority. As article 8.3(d) provides, a medicinal product is clinically superior when it offers “a significant therapeutic or diagnostic advantage over and above that provided by an authorized orphan medicinal product”, i.e., greater efficiency, greater safety or any other “major contribution to diagnosis or to patient care”[139]. In sum, if there is an area in which the European orphan drug law can be deemed as a mere copy of its American elder brother, it will be that involving the so called “similar versus different” problem. Therefore, the same issues of vagueness described above apply in both jurisdictions, although great progress was made when the 1993 FDA Regulations were issued.

  1. Salami Slicing: “Creative” Subsets and their Remedy.

The term “salami slicing” refers to the practice used by many applicants trying to define one stage or manifestation of a particular disease as a differentiated condition entitled to protection under the orphan drug laws so long as the designation criteria (most significantly, the prevalence threshold) are met[140]. This sort of “trick” takes advantage from the fact that the FDA permits sponsors to parse diseases into “medically plausible subsets”[141], and often involves complicated debates within the scientific community over terminology and the bounds of medical definitions. Through this tool, companies could obtain market exclusivity and all the other statutory benefits and incentives for multiple indications that together may exceed 200,000 people, getting rid of the bright-line rule based on prevalence.

The “salami slicing” problem was specifically addressed by the 1993 Regulations[142]. Under these norms, the Office of Orphan Products Development (OPD) at the FDA must examine each orphan drug application in order to make clear that the declared patient population is not an “arbitrary subset” of the actual number of people afflicted by the disease at the time the request for designation is made. The test laid down in §316.21(b) ofthe Regulations is based on the concept of “medical plausibility”: any targeted population that happens to be medically implausible would be automatically considered as an “arbitrary subset” of the real condition and the application would be rejected on these grounds[143]. For instance, using the example put forward by Haffner, “arbitrarily defining end-stage cancer as a subgroup would not be acceptable if the drug can be used in a broader cross-section of patients”[144].

The OPD has outlined a set of principles to be applied when assessing patient population claims under the “medical plausibility” standard. Hence, the OPD will consider the basic pathologic process as the condition entity, unless there are special circumstances playing against this rule (location, age group or special regulatory requirements), and chronic diseases that evolve with time will be deemed to be the same ailment for designation purposes[145]. It must be noted that even Marlene Haffner (Director of the OPD) acknowledges that “any system used to define ´medically plausible´ will appear subjective to some observers, since the process is not clearly defined by law”[146]. However, this situation can be considered to be unavoidable, since the distinctions on the boundaries may be blurred and indeed there may exist scientific controversy on how to define a particular disease or condition. Notwithstanding, regulators should try to set up clear and unambiguous rules that at the same time may promote certainty and contribute to curb any abuse by industry. Both the 1993 Regulations in the United States and the EU Commission Regulation 847/2000 point in this direction.

In the European Union, the Regulation 141/2000 deferred the implementation of the designation criteria laid down in article 3.1 to the subsequent Commission Regulation 847/2000, which in turn establishes specific rules to assure that the prevalence claims are accurate and in check with reality. Article 2 of Regulation 847/2000 forces sponsors to provide documentation that include “appended authoritative references which demonstrate that the disease or condition for which the medicinal product would be administered, affects not more than five in 10,000 persons in the Community at the time at which the application for designation is submitted, where these are available”. The text continues requiring that such documentation must encompass or refer to “relevant scientific literature” and “relevant databases” existing in the Community or third countries. This wording may be interpreted to call for sufficient explanation of the medical plausibility of the patient population targeted, and of course COMP will exert a complete review of the application, obviously including the rightfulness of the disease definition. The EMEA Report cited in Chapter 3.3[147]mentions a document produced by COMP entitled “Points to Consider on the Calculation and Reporting of Prevalence of a Condition for Orphan Designation”, where the issue of preventing “salami slicing” is addressed. However, the EMEA Report itself recommends a deeper definition of what would constitute a “valid subset” “with valid and unambiguous examples that may help sponsors to prepare their applications and bring more objectivity into the procedure[148].

  1. High Prices: the Undesired Effects of Monopoly on Reimbursement Policies.

The pricing problem described in Subsection 4.1. has immediate repercussions on the cost of public and private health care systems all over the world. Since the actual letter of the law does not effectively curb any abuse by companies, high prices severely harm families that lack health insurance or that have lower lifetime caps or unaffordably high premiums in their plans[149]. Besides, the problem concerns public budgetary appropriations in public health coverage programs such as Medicare and Medicaid in the US or other more extensive Social Security systems, like those operating in most of the EU members. For instance, Medicare spent only in Epogen under its renal dialysis program around $100 million in 1990[150]. Also countries with price controls over medicinal products (almost all western countries with the only exception of the United States), face serious challenges as a consequence of highly-priced drugs, since their negotiation position is seriously compromised by having to deal with a legal monopoly[151].

Apart from the initiatives devised to avoid excessively profitable orphans, described above, this problem is only part of the more general pharmaceutical cost dilemma, and must be solved by legislatures and governments beyond the bounds of specific orphan drug regulations[152]. Neither FDA nor EMEA have any authority over price control. However, some modest contributions can be made from the orphan drug field. NORD, for instance, proposed, among a variety of cost-containment measures, establishing a separate fund under Medicare to finance purchase of orphan drugs and mandating the currently voluntary free drug giveaway programs of pharmaceutical manufacturers[153]. However, it should be kept in mind that the very purpose of the US Orphan Drug Act and its market incentives is antithetical with any attempt to control drug prices. This causes two main dilemmas. First, countries which implement pricing control over medicines are free riding those which try to promote development by providing, among other incentives, monopoly profits. This could have been the case of the US, which, as some commentators argue, bears the overwhelming majority of the drug development costs worldwide because of the lack of government-imposed price caps[154]. Second, jurisdictions such as the EU, where both schemes (orphan drug incentives and price limitations) are put in place might face a deep contradiction, whose solution is not obvious.

The problem of the clash between orphan legislation and pharmaceutical cost containment is considerably larger in the European Union, since each individual member State has its own Social Security and reimbursement policies, as well as a price control scheme of its own. In this context, two proposals tending to harmonization have been suggested. First, EMEA put forward the establishment of some harmonized form of assessment of therapeutic value and pharmacoeconomic evaluation of each authorized orphan medicinal product[155], which has not been implemented so far. Second and last, Directive 89/105[156]attempts to achieve a greater degree of transparency by requiring national governments to rationally explain any price, profitability or reimbursement limits[157]. However, the above-cited EMEA Report includes in its Annex 5 a study on the availability and pricing of designated orphan medicinal products in the Community, and its results show a “wide heterogeneity” of prices amongst the 15 countries[158]. It appears as evident that the actual efforts towards homogeneous costs are not enough to achieve the purported goal. Of course, a Community policy on health care is still far from being even considered by the Union in the short term, but however, a better coordination and transparency of national policies must be encouraged.

  1. The True Orphans: Neglected and Tropical Diseases[159].

The pharmaceutical and biotechnological research developments that have taken place over the last three decades have been basically addressed to cure diseases and conditions whose patients are mostly located in developed countries, while communicable diseases that are still the main cause of mortality and morbidity in the tropical countries received only marginal attention[160]. The causes happen to be pretty obvious: most efforts by the pharmaceutical industry have been and actually are geared toward diseases that may be able to generate economic profits (i.e. cardiovascular disorders, cancer and neuro-degenerative disease, basically)[161]. However, orphan drug initiatives might arguably constitute an opportunity for these tropical and neglected diseases to obtain an effective cure through research efforts carried in developed countries and for the mentioned imbalance to be solved[162]. As, Trouiller puts it, “the present profit-driven system is unable to keep pace with current and evolving needs in tropical medicine and policies such as those used for orphan drugs could turn out to be the acceptable dace of disease-driven commerce [...]. When the market does not provide such treatments, it is the role of society to take appropriate steps”[163].

Both the US and the EU regulatory frameworks allow for medicines intended to cure third-world diseases to qualify for orphan status by limiting the scope of prevalence required among the designation criteria to either a given ratio or a global number of patients in the United States or in the Community. Thus, ailments which are uncommon in those territories (below the statutory thresholds to gain orphan designation), but extremely frequent in other regions of the world, may be eligible for protection under the Orphan Drug Act or the European Regulations[164]. Hence, the fact that patient population caps refer only to these areas opens the door for widespread conditions to be considered “rare diseases” and thereby receive attention by orphan drug laws[165]

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