A handful of drug companies have cornered the market on medicines for rare diseases. You can thank the federal government for giving them the monopolies in the first place. Now you can thank President Bush and Vice President Quayle for interfering with an attempt to insert some much-needed competition into the market.
Since 1983, the Orphan Drug Act has granted monopolies to drug companies that develop and sell drugs to a limited clientele. The rationale in Congress was that a company might not go to the expense of developing a lifesaving drug if only a handful of people needed it. Drug companies needed incentives.
Under the Orphan Drug Act, the Food and Drug Administration approves only one drug for use against a rare disease. The company is given free rein in the market for seven years, plus tax breaks, and there are no price controls.
The law did its job well. Before 1983, there were only 10 drugs classified as "orphans" with limited demand. Today there are more than 300 such drugs because companies have a profit motive to develop them.
But a few of the orphans have abused the government's goodwill. Their parent companies are reaping millions of dollars and promoting the drugs to treat other conditions that are not so rare. The estimated annual sales of just one orphan drug total about $200 million.
The National Organization of Rare Disorders, which helped write the original law, now charges that some highly profitable drugs taking advantage of the monopoly don't need such protection.
To stop the abuses, Rep. Henry A. Waxman (D-Calif.), who sponsored the original orphan drug law, and Sen. Howard M. Metzenbaum (D-Ohio) drew up an amendment. It said that any time two or more companies were simultaneously developing an orphan drug in a race to be the first to win FDA approval, no monopoly would be granted. The competition was evidence that there was enough profit motive that the drug could stand on its own.
The House watered down the legislation to continue monopolies for orphan drugs that already have FDA approval or are approved by Aug. 15. Our associate Dean Boyd has learned that the White House put pressure on the House to can the changes. Bush has received substantial campaign money from Eli Lilly & Co. and Genentech Inc., two drug companies with monopolies on two forms of human growth hormone. In 1977, Bush was on Lilly's board of directors. In 1986, Quayle's Senate campaign got the largest single contribution given by Lilly that year, $8,500. Lilly is based in Quayle's home state of Indiana.
Quayle is chairman of the administration's Council on Competitiveness. In June, the council circulated a letter among drug makers opposing the revision of the Orphan Drug Act.
The House watered down the measure to continue the monopoly for existing orphan drugs and those in the approval pipeline. A tough battle is expected on the measure in the Senate, but for the moment, Quayle's Council on Competitiveness appears to have won a victory against competition.