WASHINGTON -- At a contentious Senate hearing on Tuesday,FDA Commissioner David Kessler expressed opposition toproposed amendments to the Orphan Drug Act that wouldwithdraw orphan status from drugs that exceed $200 million insales.
"A sales cap provision is both bad policy andunadministerable," Kessler told the Senate Committee on Laborand Human Resources. "I don't think we know enough aboutthe market forces to be certain that whatever adjustments wemake will not have a negative effect on the program."
The Orphan Drug Act Amendments of 1991 (S2060) wereintroduced last year by co-sponsors Sens. Howard Metzenbaum,D-Ohio, and Nancy Kassebaum, R-Kan. Rep. Gary Studds, D-Mass., has introduced similar legislation in the House (HR3930)that would cap orphan status when sales exceed $150 million.The Studds bill would allow an additional $50 million in saleswhen drug development costs exceed $100 million.
Metzenbaum said the purpose of the bill is to remove orphandrug protection from companies that can easily recoup theirresearch and development costs from large profits on thedrugs, which are targeted under the Act to rare diseases.
Both Kessler and Sen. Orin Hatch, R-Utah, said the Bushadministration strongly opposes the legislation and that Healthand Human Services Secretary Louis Sullivan wouldrecommend a veto.
Hatch predicted a sales cap "will put biotechnology companiesout of business" because it will not allow them to recoup theR&D costs of failed attempts to develop drugs.
But Metzenbaum said only a few companies would be affected,noting that only five orphan drugs have had "blockbuster" salesso far, and only eight more are currently projected to becomeblockbusters. "We are only after the 3 percent of companiesthat are exploiting the Act," he said.
Metzenbaum also charged: "It is clear that companies likeGenentech did not rely on the Orphan Drug Act to develop theirblockbusters. Genentech began work on hGH in 1979 andreceived approval in October 1985. But it wasn't until the Actwas amended in October 1985 to include patentable drugs thathGH even became eligible for the orphan drug program. Thatwas only two months before hGH was approved by the FDA.Clearly, Genentech never relied on the Orphan Drug Act'sprotection to bring its blockbuster to market."
Forrest Anthony, Association of Biotechnology Companiespresident, testified in support of the legislation. "The cap on netsales has the advantage of simplicity, and we support thislegislation in the absence of any more workable proposal,"Anthony said. A cap also would encourage innovation in newdrugs and biologics, he said.
But Industrial Biotechnology Association Chairman StephenDuzan, who is chairman and CEO of Immunex Corp., said the bill"could deny orphan drugs to the people who need them andfinancially cripple the companies that produce the small-market, specialized pharmaceuticals."
Because purified human proteins are not always patentable,Duzan said orphan drug exclusivity offers the only meaningfulprotection against "me too" companies jumping into the marketafter another company has taken the risk of proving that adrug actually works.
Hatch argued that the seven-year market exclusivity grantedby the Act is, like patent rights, a "property" that cannot berescinded without just compensation under due protectionrights of the Fifth Amendment.
Metzenbaum called the private property argument "an illusoryconcept" that was "humbug."
"Well spoken by someone who reminds me of 'The Grinch WhoStole Christmas,' " Hatch responded. "It takes one to know one,"Metzenbaum shot back.
-- Kris Herbst BioWorld Washington Bureau
(c) 1997 American Health Consultants. All rights reserved.