Since its inception, the application process for orphan drug designation in the U.S. has been relatively simple, and the rewards for these applications have been substantial. The rewards include tax credits comprising 50 percent of the clinical drug testing cost, research grants, a waiver of the NDA/BLA application fee, written recommendations upon request from the Food and Drug Administration (FDA) for the clinical and non-clinical testing necessary to obtain approval, and finally potent marketing exclusivity. 

For small companies seeking investment capital, there is also value in the increased visibility that comes with designation. Specifically, the FDA publicizes the sponsor’s name and address, the name of the drug, a description of the disease or condition for which the drug will be used, and the proposed indication. Although marketing approval with orphan drug exclusivity is targeted to the development of drugs for rare diseases or diseases in the U.S., it can also serve as a springboard to profit growth on a global scale. For this reason, implications of the recent court decision in Depomed vs. U.S. Dept. of Health and Human Services—along with the FDA’s reaction to the case—are worth understanding.

At issue in the Depomed case was whether the FDA’s regulations promulgated to implement the Orphan Drug Act required the regulator to grant “orphan” status for Gralise without proof of its clinical superiority. Gralise is a therapy developed to treat post-herpetic neuralgia, a rare complication associated with shingles. The court ultimately ruled that because Pfizer’s Neurontin, a “same drug” already on the market, did not have “orphan” status, Depomed did not have to prove clinical superiority in order to gain orphan “designation” secure marketing exclusivity for Gralise. Specifically, the court’s decision is instructive in situations where the drug in question is the “same drug” as one already approved for the same disease or condition, but is not designated as an orphan drug.

Orphan exclusivity
The Orphan Drug Act (the Act) provides procedures to encourage and facilitate the development of drugs for rare diseases or conditions namely those that affect fewer than 200,000 persons in the U.S., or for which there is no reasonable expectation, based on U.S. sales, that drug developers will recoup the considerable costs associated with developing a new drug. If the FDA has designated a drug for a rare disease or condition as an orphan drug and approved it for marketing to the public, orphan exclusivity prohibits approval of generic copies of the drug for the same rare disease or condition. Exclusivity also delays approval of a second company’s version of the orphan drug for seven years, even if that company submits a full new drug application (NDA) containing a new set of safety and effectiveness investigations. This exclusivity only applies to the disease or condition for which the approved drug was designated.

The FDA’s implementing regulations
Until Depomed, orphan drug exclusivity was automatic when the statutory criteria were met and if the FDA had not already approved and designated an orphan drug for the same use or indication. If such a drug did exist, the subsequent drug’s sponsor could pursue orphan designation by submitting a medically plausible hypothesis for clinical superiority.

Depomed’s claims in the case were centered on a set of key terms set forth in the implementing regulations that went into effect in 1992. 

By “clinically superior,” the FDA means that a drug has been shown to provide a significant therapeutic advantage over and above that which an approved orphan drug—otherwise the “same” drug—provides. The significant therapeutic advantage can be manifested in one or more of the following ways: (1) greater effectiveness than an approved orphan drug; (2) greater safety in a substantial portion of the target population; or (3) where neither has been shown, a demonstration that the drug otherwise makes a major contribution to patient care.

For small molecule drugs, the term “same drug” means a drug that contains the same active moiety—molecule or ion—as a previously approved drug and is intended for the same use as the previously approved drug, even if the particular ester or salt, or other noncovalent derivative has not been previously approved. To clarify, when we refer to the “molecule or ion,” we are excluding the appended portions of the molecule that cause the drug to be an ester, salt, or other noncovalent derivative responsible for the physiological or pharmacological action of the drug substance. For large molecule drugs, the term “same drug” means a drug that contains the same, but not necessarily all, principal molecular structural features, and is intended for the same use as a previously approved drug. In either case, if the subsequent drug was shown to be clinically superior, it would not be considered as the same drug. But what about instances where a new drug developed to treat a rare disease or condition was deemed the “same” as an existing drug with exclusivity but not “orphan” status?

In 1993, Pfizer’s Neurontin (gabapentin, [1-aminomethyl] cyclohexaneacetic acid), an Orange Book listed drug structurally related to the neurotransmitter gamma-aminobutyric acid (GABA), gained FDA approval as an adjunctive therapy in the treatment of partial seizures in patients with epilepsy. Nine years later, Neurontin won FDA approval for PHN in adults. Although PHN qualifies as a “rare disease or condition,” Neurontin never held orphan drug exclusivity nor has it been designated as an orphan drug. In fact, Gabapentin is manufactured and sold by several generic suppliers.

In 2006, Depomed submitted a request for orphan drug designation to the FDA for its own gabapentin product, Gralise. The FDA denied Depomed’s designation request on the ground that Depomed did not present a compelling enough case in its current application to bolster the contention that Gralise would deliver the potential beneficial effects the sponsor had hypothesized.

Fast forward four years: By 2010, Abbott Labs had acquired the rights to Gralise and renewed the previous request for orphan designation, arguing that while Neurontin is arguably the “same” drug as Gralise, it had never received exclusivity, and therefore Abbott was not required to provide a plausible hypothesis of clinical superiority in its renewed designation request. 

In June 2010, FDA rejected Abbot’s designation request due to lack of evidence of clinical superiority, since Gralise was the “same drug” as Neurontin. In doing so, it again asserted that in order to earn orphan drug designation, it had to present a plausible hypothesis regarding clinical superiority, notwithstanding the fact that Neurontin was not an orphan drug.

Later that year, Abbott submitted an amended designation request providing a clinical superiority hypothesis—because Gralise required only one dose per day as opposed to Neurontin’s three, it might help patient compliance to their medication regime and would also lessen potential side effects. And, in November 2010, FDA granted Abbott’s request for orphan designation of Gralise, explicitly noting that should it obtain marketing approval, it would still have to prove clinical superiority based on improved safety to obtain seven years of orphan drug marketing exclusivity.

The FDA ultimately granted Abbott marketing approval for Gralise, but maintained that Gralise was not entitled to the seven-year period of orphan drug exclusivity because Abbott had not proven that Gralise was clinically superior to Neurontin.

After reacquiring the rights to Gralise in 2011, Depomed sent the FDA a letter in which it argued that, in plain language, the exclusivity provision of the Act required recognition of exclusivity for any designated orphan drug that had been granted marketing approval; that the FDA had erred in requiring proof of clinical superiority before it would grant Gralise orphan designation the first place; and that, in any event, the FDA had sufficient evidence of clinical superiority. Depomed sued FDA in the U.S. District Court for District of Columbia in 2012, and moved for summary judgment in January 2013 based on these same arguments. 

During proceedings, the FDA argued that the Act is silent on whether exclusivity must be recognized when a “same drug” is designated as an orphan drug and approved for marketing. The court found that the Act’s plain language generally prohibits the FDA from approving orphan drugs for the same indications that have previously been approved and designated. It also found that the Act provides two specifically enumerated exceptions under which the seven-year exclusivity shall not apply. These exceptions include instances where the holder of the exclusivity cannot assure the availability of sufficient quantities of the drug to meet the needs of persons with the disease or condition for which the drug was designated, or where the holder provides consent for approval of other applications before expiration of the seven-year period.  But neither of these exceptions includes the fact that a prior, non-designated drug for the same disease or condition and with the same active ingredients might already be on the market. Since Gralise was designated as an “orphan drug” and was subsequently approved for marketing, the court found that the FDA could not refuse to grant Gralise marketing exclusivity under the Orphan Drug Act and its implementing regulations.

The court also addressed the FDA’s argument that granting exclusivity whenever a drug has obtained designation and approval could incentivize sponsors with exclusivity for a particular drug to simply tweak their formulation, and resubmit applications for designation and approval after the initial exclusivity period has expired. The court noted in dicta that such a serial exclusivity scenario would not arise if the FDA fashioned regulations to prevent such abuse. For example, the FDA could require designation applicants to show clinical superiority before granting their products orphan drug designation. Such a change in the regulations would allow the FDA to maintain the benefits of its clinical superiority requirement and also forestall the hypothetical “serial exclusivity” problem. At the same time it would avoid any conflict with the plain language of the Act’s exclusivity provision.

After the Depomed complaint was filed, and while the case was pending, the FDA indeed amended the implementing regulations consistent with its litigation position in Depomed. The final rule became effective August 12, 2013 and signaled the FDA’s intention to apply the clinical superiority requirement to not only already-designated  orphan drugs, but to any approved drug. Specifically, the regulations replaced the term “an approved orphan drug” with the term “an approved drug” in the definition of “clinically superior” and in the regulation governing content and format of a request for orphan-drug designation.

In amending the wording of its guidelines, the FDA also said that the clinical superiority requirements for orphan-drug designation and orphan-drug exclusivity are intentionally different in order to encourage the development of improved versions of existing drugs while protecting any applicable exclusivity. More specifically, designation, which is liberally granted, merely requires a plausible hypothesis of clinical superiority, while the FDA more clearly reserves exclusivity for a subsequent orphan drug that have proven to be clinically superior.

After the Depomed decision, the FDA announced it would abide by the court ruling, but that it does not intend to extend the same benefit to any other drugmaker under the same circumstances. Its handling of Eagle Pharmaceuticals’ Ryanodex is a case in point and an indicator that the FDA is committed to its de-coupling of orphan drug status and exclusivity. Eagle Pharmaceutical’s Ryanodex (dantrolene sodium, injectable suspension) was designated August 16, 2013 as an orphan drug for treatment of malignant hyperthermia, based on a plausible hypothesis of greater safety than the same drug, Par’s dantrolene sodium (Dantrium). In 2015, FDA approved Ryanodex and ultimately granted exclusivity based on proof of clinical superiority.

The FDA’s experience with Depomed led to a clarification and expansion of the parameters under which proof of clinical superiority would be required to obtain exclusivity for orphan drugs. The resulting two-step process—orphan designation upon a hypothesis of superiority and exclusivity upon proof—is somewhat of a mixed bag for small companies in pursuit of orphan drug exclusivity. While they will face increased costs and their investors will assume greater risk, the payoff potential is significant for those that can bag the biggest prize by successfully proving clinical superiority. Specifically, these developers will enjoy an increased degree of protection as their competitors will also have to prove clinical superiority if they are to gain marketing exclusivity for subsequent drugs. 

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Beverly W. Lubit, Ph.D., a member of the firm Chiesa Shahinian & Giantomasi (CSG) in the firm’s intellectual property group, advises clients on complex intellectual property matters, focusing on the pharma, biotechnology and medical device and energy industries. She has experience in Hatch-Waxman (small molecule drugs) and BPCI Act (biosimilar drugs) issues relating to litigation and transactional matters, patent litigation, IP due diligence evaluations, opinion letters, licensing, patent prosecution and regulatory issues with a particular emphasis on life sciences. In addition, Beverly works closely with emerging companies, venture capitalists and company boards to develop practical IP strategies to help bring new companies to market.