On January 24, the Food and Drug Administration (FDA) made a long-awaited announcement with major implications for how the agency awards exclusivity for rare disease drugs under the Orphan Drug Act (ODA) (P.L. 97-414). Specifically, FDA issued a Federal Register notice describing how the agency will respond to an 11th Circuit ruling in Catalyst Pharmaceuticals, Inc. v. Becerra.
The ODA provides incentives to support research and development of drugs for rare diseases, including a seven-year term of “exclusivity,” or market protection from competition for the orphan drug, once it is approved and marketed. The law established a two-part process for obtaining orphan drug exclusivity. First, at an early stage in the drug development process and prior to seeking review by FDA, a company can request that FDA “designate” the drug as an orphan drug that, if approved, would prevent, diagnose, or treat a rare disease or condition. Once a drug receives this designation, the company can access other ODA incentives, including tax credits for the research and clinical testing of the drug. Second, after completing the necessary clinical studies and obtaining FDA approval, the drug is awarded exclusivity that protects the specific use of the drug. This system has been enshrined in FDA regulations that have been in effect for decades.
The Catalyst court rejected FDA’s long-standing interpretation of the ODA that the exclusivity protects the “use or indication” ultimately approved. The court instead held that the rare disease that is designated long before the drug is ever studied, reviewed and approved dictates the scope of the orphan drug exclusivity.
During the 2022 user fee reauthorization process, Congress considered legislation that would have codified the system set forth in current regulations limiting exclusivity to only the approved indication or use. Throughout last year, while awaiting Congress’s response, FDA delayed making exclusivity determinations on the many orphan drugs approved post-Catalyst. During that time, FDA also took the rare step of issuing a statement describing the impacts of the Catalyst decision. Among those impacts, according to the statement, was a concern that the Catalyst court’s interpretation of the ODA “could adversely affect children—particularly the youngest pediatric populations—and other populations that are typically studied later in drug development.”
As 2022 came to a close, it became clear that Congress would not adopt a legislative fix when the final user fee package included in the end-of-year Omnibus (the Food and Drug Omnibus Reform Act) failed to include this provision.
Without a legislative remedy, FDA and the administration were left to make a decision on how to respond to the Catalyst decision. Given the many pending exclusivity determinations, continued inaction in the hope that Congress would act was no longer an option. On January 24, 2023, FDA stated that it would apply the Catalyst decision only to the drug at issue in that case and stand by its “validly promulgated regulations.” As noted in the announcement, “FDA believes that its statutory interpretation embodied in its regulations best advances the Orphan Drug Act’s purposes, appropriately balancing the need to incentivize the development of drugs for rare diseases and conditions with the need to provide patient access to orphan drugs.”
Although clarity as to FDA’s intention with respect to awards of orphan drug exclusivity has finally arrived, it is likely to be short-lived. Without a statutory fix, further litigation can be expected by parties that would benefit from a broader award of exclusivity under the Catalyst court’s interpretation of the ODA. This issue will surely arrive at Congress’s doorstep again.