New products highlight ambiguity of orphan drug law
Brian Reid
Alexandria, VA
When researchers, clinicians, and the US Food and Drug Administration (FDA; Rockville, MD) gather later this month to review two new products to treat Fabry disease, a rare and deadly liposomal storage disorder, the discussion will center on important scientific issues—whether the drugs offer a hope of improvement to a patient population that currently has few options. But investors are paying as much attention to the legal drama surrounding the drugs, Genzyme General's (Cambridge, MA) Fabrazyme and Transkaryotic Therapies' (Cambridge, MA) Replagal.
Under FDA law, both products are considered "orphan drugs," entitled to seven years of market exclusivity if they win approval. But the same rules hold that the exclusivity is a winner-take-all proposition—once the FDA approves one orphan drug, it is barred from approving the same chemical entity for the same disorder from a different company unless that second drug is shown to be "clinically superior."
The problem, say lawyers, analysts, and agency watchers, is that the standards used to judge superiority are less than clear. Although no one is calling for a review of the original orphan drug law—which is celebrated by patient advocates and lawmakers for encouraging the development of therapeutics for rare diseases—the way the FDA applies the regulations leaves the agency with "a lot of wiggle room," according to Scott Gottlieb, an agency critic who works at the American Enterprise Institute (Washington, DC), a conservative think tank. "I'm as perplexed as anyone else. I don't think they have a solid interpretation of the rules."
The two products, which were both approved in Europe in March 2001, are nearly identical—both are versions of the protein agalsidase—and the companies and investors are now carefully examining the two-decade-old orphan drug law for superiority standards to see whether the differences in how the drugs actually work in the body are great enough for the FDA to justify approving both drugs. "I think that's something that the FDA will have to struggle with once it makes its decision on the [approvability of the] two products," says Dennis Harp, a biotechnology analyst with Deutsche Bank (New York City), who says the similarity of the drugs "does put the FDA in a difficult box."
Adding to the uncertainty are concerns about the clinical trials. The FDA has already asked both companies repeatedly for additional data to show that the drugs work, and analysts say they expect much of the January meeting of the FDA's advisory panel to focus on whether the endpoints used in studies of Replagal and Fabrazyme are adequate to prove the drugs' effectiveness.
At stake are billions of dollars in potential revenue for both sides. Although the market for the drugs is small—the number of Fabry patients worldwide is about 5,000—the medications are expected to be expensive. (Genzyme's biggest drug, Cerezyme, is a case in point. It treats Gaucher disease, which also targets a small population of patients; a year's supply is priced at well over $100,000, and the drug brought the company more than $500 million in revenue in 2002.)
In one camp are those who believe that the FDA will assert it has the power to approve both products, although there is little chance that the United States will take the European Union's tack and declare the race to approval to be a draw, according to Transkaryotic's general counsel, Mike Astrue. Astrue says there's enough difference in safety profile between the two drugs to justify approving his company's product even if Genzyme's drug hits the market first. Astrue says differences in how the drugs were made—Genzyme's in Chinese hamster ovary cells, Trankaryotic's in a human cell line—make an immune reaction more likely in Fabrazyme patients. "That is enough, in my opinion, for Replagal to get approved regardless of whether Fabrazyme's been approved," Astrue says. "We are relatively unconcerned about ever being blocked by Genzyme."
But analysts say predicting the FDA's decision on orphan drug questions is fraught with uncertainty. The agency's decision last March to overturn the orphan exclusivity on Biogen's (Cambridge, MA) Avonex multiple sclerosis drug and allow Serono's (Geneva) Rebif onto the US market surprised both Biogen and some analysts. Although the two products are chemically identical, the agency agreed with a Serono-sponsored study that showed patients taking Rebif appeared less likely to see their disease relapse, sending Biogen shares into a four-month tailspin. It was the first time in the history of the orphan drug regulations that the FDA overturned one product's exclusivity on the grounds of efficacy; most other instances where a second product was allowed on the market were prompted by differences in safety. "The FDA gives itself enormous latitude," said Jonas Alsenas, a fund manager at ING Furman Selz Asset Management (New York), pointing to the Rebif decision. "There's a lot of squish."
