By Wayne Koberstein, Executive Editor, Life Science Leader magazine
Follow Me On Twitter @WayneKoberstein
Industry Explorers Blaze On: A series of stories of longtime leaders, still active in the industry, sharing their historical perspectives on life sciences industry innovation.
I was just a baby editor then. In my first months of being the editor of an industry trade journal, a momentous letter arrived. It was from a woman I had just mentioned in my monthly column, where I praised her organization and the legislation she had helped create, coaxing companies onto the path of orphan-drug development and making new treatments available for patients with rare diseases. Surprisingly, her letter took issue with my editorial, saying something like, “You know, Wayne, unless a drug is affordable, it is not truly available.”
At the time, before most U.S. insurers began to pay the premium for orphan drugs, patients and their families would bear the cost. Companies could and did take advantage of a key incentive built into the Orphan Drug Act (ODA) of 1983 — exclusivity — to fund new drug development for rare diseases but also to push the premium price levels upward. The ODA granted seven years of additional market exclusivity for the first product to gain approval for a rare disease, defined as any condition with 200,000 or fewer patients in the United States.
By the time Abbey Meyers, founder of the National Organization for Rare Disorders (NORD) and chief architect of the ODA, wrote her letter to me a few years later, the paradoxical conflict of orphan-drug availability versus price had become obvious. Almost from the beginning, Meyers was perplexed by the discord. For patients, the Act worked spectacularly well in stimulating development of raredisease therapies. But for the industry, or at least for some companies, a spotlight on the financial incentives often cast a shadow on the patient benefits.
Of course, a lot of new elements have come into the picture since the Act’s passing. Entering the scene are huge health-management, payer, and prescription benefit management groups. On one hand, patient-assistance programs for expensive orphan drugs have multiplied; on the other, the industry has shifted away from developing primary care medicines to greater reliance on narrowly focused drugs with premium prices. As often cited, more than half of the 45 NMEs (new molecular entities) the FDA approved in 2015 were for orphan indications.
Spiking co-pays, deductibles and other “cost-sharing” measures have once again placed an increasing burden on U.S. patients just as orphan-drug development reaches new heights. Payers initially adopted the cost-sharing measures for general circumstances, not only for orphan drugs, but the measures have fallen especially hard on patients with rare diseases for which drug prices are traditionally high.
In recent years, however, list prices for new orphan drugs have reached a new order of magnitude, up to the mid-six figures. So payers and PBMs (pharmacy benefit managers) are exercising even greater “management” of orphandrug spending, such as switching from co-pays to co-insurance and blocking some drugs with purchasing bans. If a large PBM refuses to pay the asking price, a particular orphan drug may even become unavailable for many patients, at least until a new, lower-cost supplier steps forward.
So it is now upon a new stage, a new world, that I once again connect with Abbey Meyers for this "Industry Explorers Blaze On" article. From the time of our first exchange, Meyers continued to lead NORD and help pass several amendments to "fine-tune" the ODA over several decades. All the while, she was observing and mixing with industry leaders, legislators, policymakers, and many other stakeholders in orphan drugs — above all, patients. It is the patient community that still concerns her the most, though long ago she learned how to speak with the industry and others in the halls of power.
The key facts in the story of how Meyers became an orphan-drug advocate have been well reported — her son had a rare disease but lost access to a helpful investigational drug when its clinical trial was canceled. She then rallied parents of rare-disease patients and others to establish NORD and push for the ODA, and she worked directly with Congress members to write and pass the bill. But all of those dry facts fail to convey the dramatic change and adversity that journey brought to her life. One of the problems was learning where new medicines originated: an industry made of profit-making companies that developed, produced, and sold them.
“It was a shock. I approached this all, truly, as a housewife,” says Meyers. “People can recall what a housewife was in the 1970s. You stayed home and raised the children — and don’t even think about a career! I had no thought about the pharmaceutical industry or where drugs came from or why they were developed until my son was diagnosed with Tourette's syndrome.”
The word "orphan" is not synonymous with the word "rare," though the two terms are often conflated. Even now, 33 years since the passing of the ODA, an estimated 95 percent of rare diseases still lack an effective drug treatment. A drug to treat a rare disease often already exists, at least on the bench, but it has no “parent,” no company sponsor to take it through development. Meyers’ story illustrates how drugs with the potential to treat rare diseases can become orphans.
“We worked with the drugs available on the market at that time, mostly sedatives, but they were not satisfactory,” she recalls. “My son would fall asleep in the classroom. Our doctor in New York, the guru of Tourette’s syndrome (TS) at that time, was using an experimental drug for the condition. The drug had initially come from Europe but wasn’t approved in the United States, and the company was reluctantly including a small number of TS patients in a clinical trial of the drug for a more common disease. But the doctor said if I was willing to put my son into the trial, he could go on this experimental drug. At that time, I didn’t even understand what a clinical trial was.”
Thus Meyers began her climb up a steep learning curve, with the clinical trial as her introduction to the pharmaceutical industry. She had many worries about the trial, but a major one was whether could she afford to pay for the monthly blood tests the trial required. “It was $45 per test in the 1970s and not covered by insurance,” she says. “It was a really tough struggle for us, so instead of going every month, we did the tests every six weeks. I found out years later the investigators were slapped by the FDA for allowing the longer test period. Of course, the FDA doesn’t think about who’s paying for the tests, either.”
When the company suddenly canceled the trial, Meyers went from reaction at a distance to close interaction with the industry. Rather than accept the loss of treatment as fate, she decided to seek continued supply of the drug that had obviously helped her son. She secured a meeting with company executives, who ultimately agreed to continue producing the drug for the patients it had benefitted. Meanwhile, however, Meyers began to learn about other rare disorders poorly served by the industry. In several cases she mentions, small labs in individual institutions, such as New York’s Mt. Sinai Hospital, would compound a drug for its own patients.
“These compounded drugs were all over the country. It was typically academic doctors who had discovered them but could not find any company willing to make them because the potential market for each drug was too small for the big manufacturers.” And thus Meyers extended her education in the ways of the industry and soon came to some practical conclusions.
“Our economy runs on profit and loss, and it’s OK to run a business entirely on that basis if you make tires or bicycles, but when you apply it to a medical field like drug manufacturing, it can step over the line of human need. Is there an ethical point where a company cannot just say no to developing a needed drug because it will not make enough profit? Back then, if someone had a great idea for a drug that would treat a rare disease, drug companies routinely rejected it based on a low profit projection and walked away. It was obvious we had to find a way to let decent, ethical people know what the situation was, so they would put pressure on the government and the industry to do the right thing.”
Meyers and NORD subsequently sought and found many ways to exert such pressure, but one in particular helped open the floodgates and turn on the power: Quincy, the 1980s TV series starring Jack Klugman as a coroner-detective. After reading about orphan drugs, Klugman’s brother convinced the actor to focus on the problem as the theme for two Quincy episodes.
“The Quincy programs really pushed the law through the House and actually got President Reagan to sign it,” Meyers says. “He wanted to veto it, so we had to do a lot of work in the last few days.”
Later, at a key Congressional hearing to write an amendment that would put a specific number on the Act’s vague use of “rare,” Meyers and the only other woman in the room, the FDA’s head of orphan drugs, Dr. Marion Finkel, found the otherwise empty women’s restroom the most private place to discuss the issue. Finkel’s preferred figure was 100,000. Meyers wanted twice that number, and after she cited several unserved conditions with patient counts hovering just above that number, they agreed to argue together for 200,000 as the defining figure for rare disease in the law, still a small population but big enough to qualify many diseases ignored by industry because of poor market-return potential. As evidenced in the existing law, their arguments won the day.
The reasoning Meyers and Finkel followed typifies the general, commonsense, and practical approach to the overall writing of the ODA and its amendments. They had combined statistical projections of the patient population, including the likely undiagnosed, with a realistic assessment of the breakpoint for the industry where it would start to undertake development. The other practical lesson from the exercise is political: If you can’t get everyone to agree on all the details before passing the law, get it passed first and settle on the details later.
But the core of the law was also boldly practical. “We knew orphan drugs were potential money-losers, so making them into profit-earners was very important,” says Meyers. A rival proposal in Congress would have set up a revolving pool of funding for orphan-drug development, with the government issuing development grants, and companies surrendering profits for approved drugs back to the government. To Meyers, the industry’s response could be summed up in one word: laughter.
“That was a very good learning point, because we turned around and asked ourselves, ‘OK, what would satisfy these companies?’ Let’s say, ‘We’re going to give you a chance to make a profit and whatever profit you make, you’d be able to hold onto it yourself; you’ve earned it.’ And we came up with the idea of seven years’ exclusivity. Congressman Henry Waxman’s staff went out and did the research on it and found, most of the time, companies apply for a drug patent very early in the process, way before it is even in clinical trials. By the time a company can get a drug on the market, it usually has only a few years left on its patent. And the ODA’s seven years of exclusivity didn’t start when you applied for an orphan drug designation; it started on the day the FDA approved your drug.”
The Act also tied the exclusivity to indication, not chemical identity. The first FDA-approved drug for a rare disease has a monopoly on the indication for seven years. No “me-too” compounds, slightly altered from the original, can enter the market for the same condition during that period. Only entirely different molecules targeting the disease through a new approach can carry the same indication. Given those caveats, the Act would offer supersized exclusivity, and Pharma stopped laughing — instead, it merely yawned. Fatefully, the industry’s complacency led to an unexpected and overwhelming disruption.
“It took a long time for the industry to understand how important the ODA incentives are,” Meyers says in witness. “The big companies really ignored the orphan-drug opportunity for the first number of years after the Act, so a whole new segment of the industry grew up around orphan drugs, consisting of little companies, many of them biotech. They were the first to recognize the importance of the law and its incentives.”
She points to a particular incentive in the law that especially appealed to startups: tax credits. Pre-ODA, a company developing orphan drugs could use a tax credit only when it made a profit. If the company had lost money for its first years, it couldn’t use the tax credit. “So years later we went back and passed another amendment saying the tax credits could be brought forward or brought back several years. A company could then apply them to a year when it is profitable. A mountain of small companies came into orphan drug development because of that change.”
To Police Or Be Policed
You can’t legislate everything. Even the best laws have loopholes, which is one good reason we are always left with plenty of moral decisions to make. But people of goodwill can come together to solve technical or tactical problems in applying the law, finding a balance of their multiple, sometimes conflicting interests they can all accept. Or one party or another can take off on its own and turn the law’s gaps into open wounds.
Almost from the beginning, the ODA faced minor problems, most of which the later amendments mended. But one large unknown and uncontrolled factor in the incentives it offered was price and affordability. Although drugs developed from small patient populations had always cost more than large-market, primary care products, no one knew how a long period of orphan-drug exclusivity would affect the normal price parameters. NORD played a key role in helping companies and patients work through the initial challenges in both personal and practical ways, such as creating the first medication assistance program with Sandoz to ensure access to Sandimmune (cyclosporine), a critical drug for kidney-transplant patients.
I asked Meyers about the current row over drug pricing in the United States. Pharma companies respond to criticism of their pricing by saying it’s the insurance companies’ fault for not covering — and vice versa, the mega-sized private payers and PBMs blame the pharma companies for price gouging. So far, it is the drug industry coming across as the bad guy in the public eye, arguably aggravated by the self-serving tactics and outright bad manners of some new upstarts in public view.
“The scenario you just described really makes me so upset,” she replies. “The pharmaceutical industry needs to police itself so it doesn’t continuously get itself into these ridiculous circumstances that spur negative public relations. Who is being punished in the end? It’s the patient. Pharmaceutical CEOs need a support group. They need to talk to each other, but not as a ‘good ’ol boys’ club,’ not as a fraternity meeting, but as a group of people who have to face reality. One CEO should be saying to another CEO, ‘You shouldn’t charge a half-million dollars a year because most middle-class people in the United States can’t afford to buy a half-million dollar house in their entire lifetime.’ And the insurance companies have to do something or they’re going to go broke, so they put their foot down and say they won’t pay.”
Meyers offers a suggestion for how the industry can “fix itself.” By the existing tenets of the ODA, price-lowering competition among orphan drugs is still possible. When essentially the same or closely similar drugs can be used for more than one orphan disease, one of them may win first approval for a single rare condition, but another may win approval for a second rare indication, putting both drugs on the market at the same time. Once that happens, doctors are free to prescribe either drug for either indication. And the process is iterative — multiple drugs, all “me-too” molecules, each one approved for a single orphan disease, can thus enter the market simultaneously and compete with the other based on price. But the incentives for developing drugs for truly rare diseases that share no common mechanisms with any other remain intact.
She remains confident in the ODA’s integrity and in the value of its accomplishments. “I believe the situation with orphan drugs is all very hopeful. I look back on 30 years and think, this is really extraordinary — the medical breakthroughs have come one right after another on diseases people can’t even pronounce. There are a lot of kids alive today who would’ve been dead in infancy without orphan drugs, and no one is losing money developing an orphan drug anymore. Everybody makes money; it’s a matter of making too much money that’s causing the problems.”
An Opening Horizon
What’s next for Abbey Meyers? A book just published, “Orphan Drugs — A Global Crusade,” and continuing advocacy for rare-disease patients and orphan drugs will surely fill her days. She is passionate about seeing the principles of the ODA expand further internationally, as they have already in Europe, Japan, and beyond. Regulatory authorities in many countries now have their own orphan-drug offices, and even numerous nations with no equivalent of the ODA legally expedite imports of orphan drugs for their own use.
Meyers does not seek legislative remedies that would imperil industry or orphan-drug development. She fiercely opposes attempts to amend the ODA, whether intended to stimulate more innovation or prevent price gouging. “To anybody who says the Orphan Drug Act needs to be changed, you have to ask one question: 'Why do you want to change something that works?' It works beautifully. Leave it alone. The major breakthroughs in medicine will continue to come through the Orphan Drug Act.”
After all the years since that first letter I received from Meyers, I can see now that her approach has always remained the same: She accepts and works within the economic system and with the industry that has proved itself capable of producing orphan drugs, given the right incentives. At the same time, she has consistently nudged the industry’s conscience with a positive spirit that reminds companies of their moral obligation to patients with rare diseases. For that, and for the entire sector she helped spawn, the industry owes her lasting recognition — and continued interaction.
Friends In All Places
Abbey Meyers says two of her key industry mentors “in the formative years” were Max Link, chairman, and Craig Burrell, executive VP, of the pre-Novartis Sandoz. “Max and Craig were extremely supportive and went out of their way to introduce me to people in the industry so I could fully understand the corporate structure and how companies made decisions about drug development.” But Sandoz also created one of the first challenges to the Orphan Drug Act’s practical application, introducing the first drug to make kidney transplants possible for patients, Sandimmune (cyclosporine) — at $8,000 per year. It was a tremendous breakthrough, says Meyers, but its unprecedented price caused a shock wave. “It might as well have been $1 million a year, because $8,000 per year was way more than anybody could afford in the late 70’s, early 80’s.”
At the time, insurance companies generally had no special provisions for orphan drugs, but they had limits to drug coverage, and they would likely have precluded payment for a four-figure yearly price tag. But then as now, U.S. kidney-disease patients had a special insurance status — Medicare paid for all kidney dialysis — though the new drug presented them with a conundrum. Medicare at first refused to pay at all for Sandimmune, then later changed its policy to pay only for the first year of its use.
“What good would that do?” says Meyers. “People who had transplants no longer had to do dialysis three times a week; they were feeling a lot better, and they were independent so they didn’t have to live close to a dialysis clinic. But if Medicare would pay for the drug for only one year, after one year, what could they do? They couldn’t get private insurance because they had kidney disease. They would stop taking the drug and they would reject their transplanted kidneys.”
Meyers’ phone rang. It was Craig Burrell. Sandoz was in a quandary over Sandimmune’s payment problem in the United States and could not decide how to deal with it. Would NORD help?
“Craig said the company was eager to find a methodology for ensuring all patients would have perpetual access to the drug and thus avoid rejection of precious kidney transplants. He said the marketing people at Sandoz shouldn’t be making the decision about which patients will receive or not receive the medicine. So, we went to work and created the first medication assistance program, which included cyclosporine and eventually more than a half-dozen other Sandoz drugs.”
NORD actually ran the program; patients applied to the organization and, if eligible, were required to reapply and requalify annually in exchange for a free supply of the medicine. Medicare had assumed transplant patients would become healthy enough after a year on Sandimmune to go back to work and support themselves enough to pay for the drug. But NORD found the folly in that belief; even though patients felt much better, the rigors of transplant and drug side effects kept them far from normal health, physical or financial.