Orphan Drug Act Reform: Will the Loophole be Closed During the Biden Administration?

The U.S. House of Representatives generated buzz in November 2020 when it passed a bill aimed at removing a loophole in the Orphan Drug Act. Although the bill did not make it far in the Senate, the bipartisan legislative push has some hoping reform is on the horizon. In this series of posts, we will track the imminent efforts of Congress to reform the Orphan Drug Act.

Overview of the Orphan Drug Act

In a time defined by a hyper-focus on a single disease affecting millions of people across the country, it can be easy to lose sight of the many other diseases that affect far fewer Americans. And, unfortunately, for those that do suffer from them, it can be just as easy for biopharma companies to lose sight of rare diseases. Biopharma companies reasonably expect drugs for treating a rare disease or condition to generate small sales; thus many choose to invest elsewhere. This is devastating news for the millions of Americans who suffer from rare diseases.

Beginning in the 1970’s, activist groups such as the National Organization for Rare Disorders (NORD) responded to this ongoing crisis by calling on the Government to intervene.1 In the early 1980’s, the Department of Health and Human Services established the Orphan Products Board in a major first step toward helping to develop treatments for those suffering from rare diseases.2 The efforts of activist groups culminated in the enactment of the Orphan Drug Act of 1983 to foster the development and manufacture of medications to treat rare diseases, which had limited sales potential due to the small number of patients eligible for treatment.3

The Orphan Drug Act was designed to provide incentives: the potential for seven-year market exclusivity, tax credits, and federal grant money.4 Of these, the seven-year market exclusivity provision is the biggest incentive for drug manufacturers.5 When the FDA grants orphan designation to a drug “for a rare disease or condition,” once the drug is approved and granted orphan drug market exclusivity (ODE), the FDA is prohibited from approving any other application “for the same drug for the same disease” for a period of seven years.6


The Orphan Drug Act defines two alternatives to orphan designation. The term “rare disease or condition” means any disease or condition which either affects less than 200,000 persons in the United States, or affects more than 200,000 in the U.S. and for which there is no reasonable expectation that the cost of developing and making available in the U.S. a drug for such disease or condition will be recovered from sales in the U.S.7 For drugs that treat a disorder affecting more than 200,000 Americans, designation can be granted if companies demonstrate there is no reasonable expectation that U.S. sales will be sufficient to recoup development and production costs.8 Under the current law, however, if a drug is designated an orphan based on non-recoupable costs, the manufacturer’s seven-year market exclusivity can be extended to cover a new version of the drug without any need to re-establish unprofitability.9 This loophole has been the target of recent legislative reforms.10

A notable illustration of this problem is the drug buprenorphine, used to treat opioid addiction, highlighting the potential reach of the Orphan Drug Act’s loophole:

  • In 1994, well before opioid addiction became a national crisis, the FDA granted the drug developer’s requested orphan drug designation (ODD) of buprenorphine for treatment of opioid addiction under the cost recovery prong of the Orphan Drug Act.11
  • In 2002, the FDA granted the developer approval and seven-years of ODE for a new sublingual dosage form of the drug, Subutex®.12
  • In 2011, two years after the ODE expired, the drug developer discontinued marketing Subutex® due to its abuse potential.13
  • In 2017, the FDA approved the same developer’s new, extended-release subcutaneous injection formulation of buprenorphine, Sublocade®.14 By 2017, the opioid crisis was in full swing and, as a result, a drug treating opioid addiction was much more lucrative.  While the FDA was assessing whether Sublocade® was eligible for ODE, a Citizen Petition was filed, calling for the FDA to revoke the original cost-based ODD and refuse to grant the developer’s requested seven-year ODE for Sublocade®.15
  • In 2019, the FDA ultimately intervened by reversing the original orphan designation for buprenorphine and denying a seven-year ODE for Sublocade®, thus allowing approval and market entry of generics.16

The FDA attempted to address the loophole with regulation that defined a later formulation to be “the same drug” as a previously approved drug, and therefore not eligible for seven-year ODE, if the two have the same active ingredient, unless the new drug is “clinically superior.”17 This rule was intended to prevent serial exclusivity for the same drug, and is part of the FDA’s broader effort to avoid successive grants of ODE.18 In fact, the clinical superiority requirement has since been codified by Congress.19 Reform efforts have been curbed, however, by the courts’ interpretations of the Orphan Drug Act as not specifically defining a policy against serial exclusivity.20

New Bill

To address the issue of serial orphan drug exclusivities, a bipartisan group in the U.S. House of Representatives put forward a bill to legislatively close the loophole. Rep. Madeleine Dean (D-PA-4) and seven of her colleagues from both sides of the aisle sponsored the Fairness in Orphan Drug Exclusivity Act.21 The bill requires companies to demonstrate at the time of approval, or within 60 days of enactment if already approved, that there is no reasonable expectation that the cost of developing and making available the drug will be recovered within twelve years of first marketing the drug.22 Although the bill passed in the House in November 2020, it did not receive any attention in the Senate, being referred to the Committee on Health, Education, Labor, and Pensions with no subsequent action taken.23

With the Biden Administration and beginning of 117th Congress, the Fairness in Orphan Drug Exclusivity Act, or any similar legislation, will begin anew. Fortunately for those hoping for reform, all eight of the bill’s co-sponsors in the House have been re-elected. Even more promising, Rep. Dean, who authored the bill, has been appointed to the Democratic Steering and Policy Committee, which may add some heft to her personal legislative goals.24 With Democratic control of the White House, Senate, and House of Representatives, though, reforming the Orphan Drug Act may be subsumed by broader healthcare reform legislation. Regardless, we will certainly be keeping an eye on any new legislation.

Please contact the authors with any questions and stay tuned for updates regarding this important topic.


1 History of Leadership, Nat’l Org. for Rare Disorders, Inc. (last visited Jan. 27, 2021), https://rarediseases.org/about/what-we-do/history-leadership/.

2 See Presidential Statement on Signing the Orphan Drug Act, 1 PUB. PAPERS 9 (Jan. 4, 1983).

3 See 21 U.S.C. §§ 360aa-360ee (2018).

4 See id.

5 See U.S. Dept. of Health & Human Servs., Off. of Inspector Gen., The Orphan Drug Act: Implementation and Impact, OEI-09-00-00380 (2001).

6 See 21 U.S.C. § 360cc(a).

7 See id. § 360bb(a)(2).

8 See id. § 526(a)(2)(B); see also 21 C.F.R. § 316.

9 See H.R. REP. No. 116-572, at 3-5 (2020).

10 Id.

11 See Letter from U.S. Dept. of Health & Human Servs. To Charles O’Keeffe, Exec. Vice Pres., Reckitt & Colman Pharms., Inc. (June 15, 1994), https://www.fdalawblog.net/wp-content/uploads/archives/docs/subutex---cost-recovery.pdf.

12 See U.S. FOOD & DRUG ADMIN., FDA-Approved Drugs: Subutex, https://www.accessdata.fda.gov/scripts/cder/daf/index.cfm?event=BasicSearch.process (last visited Jan. 27, 2021); see also Letter from U.S. Food & Drug Admin. to Lassman Law+Policy, Counsel to Braeburn, Inc. (Nov. 7, 2019); U.S. Food & Drug Admin., FDA-Approved Drugs: Subutex, https://www.accessdata.fda.gov/scripts/cder/daf/index.cfm?event=BasicSearch.process.

13 See, e.g., Determination That SUBUTEX (Buprenorphine Hydrochloride) Sublingual Tablets, Equivalent 2 Milligrams Base and Equivalent 8 Milligrams Base, Were Not Withdrawn From Sale for Reasons of Safety or Effectiveness, 80 Fed. Reg. 8088 (Feb. 13, 2015), www.federalregister.gov/documents/2015/02/13/2015-03001/determination-that-subutex-buprenorphine-hydrochloride-sublingual-tablets-equivalent-2-milligrams.

14 See U.S. Food & Drug Admin., FDA approves first once-monthly buprenorphine injection, a medication-assisted treatment option for opioid use disorder (Nov. 30, 2017), https://www.fda.gov/news-events/press-announcements/fda-approves-first-once-monthly-buprenorphine-injection-medication-assisted-treatment-option-opioid; see also https://www.accessdata.fda.gov/scripts/cder/daf/index.cfm?event=BasicSearch.process.

15 See Letter from Scott M. Lassman, Counsel to Braeburn, Inc. to U.S. Dept. of Health & Human Servs. (Apr. 5, 2019).

16 See Letter from U.S. Food & Drug Admin. to Lassman Law+Policy, Counsel to Braeburn, Inc. (Nov. 7, 2019); see also U.S. Food & Drug Admin., Orphan Drug Designations and Approvals: Subutex, https://www.accessdata.fda.gov/scripts/opdlisting/oopd/detailedIndex.cfm?cfgridkey=75293.

17 21 C.F.R § 316.3(b)(14).

18 See id. §§ 316.20(b)(5), 316.25(a)(3), 316.34(c).

19 See FDA Reauthorization Act of 2017, Pub. L. No. 115-52, sec. 607(a), § 527(c)-(d), 131 Stat. 1005, 1049-50 (amending 21 U.S.C. § 360cc).

20 See, e.g., Eagle Pharms., Inc. v. Azar, No. 16-790 (TJK), 2018 WL 3838265 (D.D.C. June 8, 2018), aff’d, 952 F.3d 323, reh’g en banc denied (2020).

21 H.R. 4712, 116th Cong. (2020).

22 Id.

23 Id.

24 Press Release, Rep. Madeleine Dean, Rep. Dean Elected as Regional Whip and Appointed to the Democratic Steering and Policy Committee (Dec. 11, 2020), https://dean.house.gov/media/press-releases/rep-dean-appointed-serve-house-democratic-steering-and-policy-committee.

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