“Who can afford that?” said the 91-year-old, who lives in Rochester, Minnesota. (Her first name is pronounced LOR-ee.)

Wilkinson, like millions of other people with rare diseases nationwide, is caught up in an ongoing legal and political debate about how the U.S. supports pharmaceutical companies and their research. The FDA made its latest move in the tug of war by saying it would largely ignore a U.S. court ruling involving Firdapse, the drug Wilkinson needs.

Firdapse was approved in 2018 by the FDA as an “orphan drug,” a designation that rewards drug companies for developing treatments for rare diseases. When a drugmaker wins approval for an orphan drug, the company is entitled to seven years of exclusive rights to the marketplace, which means the FDA won’t approve another company’s application for a competitive drug for the same use during that period.

But after the 11th U.S. Circuit Court of Appeals in early 2022, the FDA stopped reviewing applications for certain drugs or handing out exclusivity, agency spokesperson April Grant said. The delay left drugmakers in limbo.

Often, drugs granted exclusivity are among the highest priced in the U.S. market. For example, Zolgensma, a one-time treatment for spinal muscular atrophy, carries a $2.25 million price tag. Mary Carmichael, a spokesperson for its manufacturer, Novartis, said Zolgensma has treated more than 3,000 patients globally and nearly all U.S. patients taking the drug as approved by the FDA are covered by commercial or government insurance.

The company also continues to invest in research and development as well as clinical studies for the drug to reach more patients, Carmichael said. Most drugs enter the U.S. market armed with a variety of patents and intellectual property protections that stave off competition and allow drugmakers to set prices as they see fit. For drugs that treat rare diseases, the seven years of market exclusivity is part of that armor.

A year’s supply of Catalyst Pharmaceuticals’ Firdapse, which Wilkinson takes to treat her Lambert-Eaton myasthenic syndrome, or LEMS, sells for about $375,000 after discounts, said Catalyst spokesperson David Schull. He said the company has financial assistance programs and donates to charitable foundations to help those in need. The goal, Schull said, “is that no LEMS patient is ever denied access to medication for financial reasons.”

Catalyst was granted exclusive market rights for Firdapse , which meant that Wilkinson and other LEMS patients could no longer get a similar drug from another company free of charge.

In 2019, amid a patient uproar about the cost, which Sen. Bernie Sanders , the FDA granted another company, Jacobus Pharmaceutical, the right to market a competitive product for a subset of pediatric patients.

Then Catalyst filed suit against the federal government, contending it had rights to be the exclusive provider for all LEMS patients, regardless of age. The case, Catalyst Pharmaceuticals Inc. v. Becerra, had potentially “far-reaching implications,” wrote Grant, the FDA spokesperson, in an email to KHN. The court’s decision also “raised several novel questions,” she said.

The 11th Circuit sided with Catalyst . But the FDA’s recent move to effectively disregard the court’s decision is “in the best interest of public health, rare disease patients and rare disease product development,” Grant wrote.

Still, the multiyear saga highlights lingering questions about orphan drug exclusivity and how the FDA’s policies may influence drug prices. At issue is the Orphan Drug Act, a 1980s-era law that incentivizes drug companies to research and develop rare-disease drugs. And it’s not the first time the orphan drug program has raised concerns.

For decades, the FDA has overseen a two-step process: A drug is first granted an orphan designation because it shows promise to treat a rare disease or condition. Then, once the pharmaceutical company studies and develops the rare-disease drug, the FDA approves its use and awards seven-year market exclusivity, preventing competition.

That final step, granting exclusivity, was in the spotlight in Catalyst’s lawsuit against the FDA. Since the Orphan Drug Act was created, the FDA’s staff routinely handed out exclusivity to companies for orphan drugs that treat a subset of patients, such as pediatrics. The goal was to make sure pharmaceutical companies didn’t get total market control for a drug after doing studies on only the “smallest, easiest-to-study populations,” the agency wrote on its website.

The Catalyst court decision could hurt children, agency officials wrote.

George O’Brien, a partner at Mayer Brown who represents companies regarding the FDA and regulatory practices, said he agreed with the FDA’s decision and its long-term strategy of parceling out exclusivity because a drug’s sales “should be limited to what you studied and got approved.”

“Most people think the way the FDA has done it for years is a very sensible way to do it,” O’Brien said. “Good for patients, good for pharma, and good for the FDA.”

The FDA said that it will comply with the court’s decision regarding Catalyst but that it doesn’t apply to other companies or drugs. In response to the FDA’s January announcement, it would not be affected. In July 2022, Catalyst bought the rights to Ruzurgi, the Jacobus drug.

Now, there is no competitive drug on the market that treats Wilkinson’s disease.

Jacobus had provided Wilkinson with the active ingredient of its drug free of charge from 2004 to 2018: “The only thing I paid was shipping.”

The FDA’s move to largely rebuke the Catalyst case will likely mean another company will sue the agency again, O’Brien said: “They are in a really tough spot.”

“My worry is there is just another lawsuit coming. And its uncertainty. Uncertainty is ultimately bad for patients,” O’Brien said.

Drugmakers have taken the FDA to court before over how the agency administers the Orphan Drug Act. In 2014, Depomedwon a suit an exclusivity label on its drug Gralise, which treated nerve pain.

The FDA had given Gralise an orphan designation and approval but declined to give it exclusivity because it said it was not clinically superior to another drug already on the market. Then-federal district court judge Ketanji Brown Jackson, who was appointed to the U.S. Supreme Court last year, to grant exclusivity, blocking a generic.

That case was focused on the clinical superiority of a drug, rather than the scope of exclusivity. After the Gralise decision, the FDA eventually persuaded Congress to , which may be needed now, O’Brien said. Rachel Sher, a former director of policy at the National Organization for Rare Disorders who is now at Manatt, Phelps, & Phillips, said companies that would benefit from a broader award of exclusivity will sue to force the agency for the same reading of the Orphan Drug Act.

“Congress will need to act at some point,” said Sher, who also spent a decade on Capitol Hill as the FDA counsel for the House Energy and Commerce Committee.

Congress almost passed an amendment last year when it reauthorized the user fees that help fund the FDA. Then-Sen. Richard Burr (R-N.C.) argued to take the committee-added amendment out of the package, saying drugmakers would otherwise lack the incentives needed to develop drugs for rare diseases, according to .

Wilkinson, the patient advocate, has her own advice for Congress. The Orphan Drug Act itself — not just the exclusivity provision — needs to be fixed, she said.

“They have to change the law,” she said. Pharmaceutical companies should only win orphan drug status and be given exclusivity when they develop “a really new medication, not just by changing one molecule.”

Until then, Wilkinson said, she and others are still waiting: “I’m an old lady, and I don’t know if it is going to get fixed.”

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After nearly 52 years of marriage, that was the hardest thing: being apart in this moment, too weak to care for each other, each alone with their anxiety and anguish.

“I worried about my husband a lot,” recalled Josie Taylor, 74, who fell ill a few days before George, 76. “Yes, I was concerned about me, but I was more concerned about what was going to happen to him.”

Despite their personal uncertainty, when a doctor approached the Taylors at their bedsides to ask if they would consent to join a study of an experimental drug to help experts learn to treat the devastating infection, each agreed.

“My answer was absolutely yes,” Josie said. “My feeling was anything I can do to help. Even if you’re stuck in an isolation room, this is affecting so many people and we have to do everything we can.”

In late March, the Taylors were discharged from EvergreenHealth medical center, heading home a few days apart. They returned to their tidy white house in Everett, tired, worn — and wondering if the clinical trial they had joined is the reason they survived the deadly disease.

The couple are among the first patients in the U.S. to recover from COVID-19 after agreeing to participate in a National Institutes of Health of remdesivir, an antiviral drug made by Gilead Sciences that once aimed to treat another infectious disease, Ebola.

The study is part of a surge in efforts to beat back the virus that had sickened more than 337,000 people in the U.S. and led to more than 9,600 known deaths.

“You pray that you got the drug,” said Josie. “The fact that we both recovered so quickly? You hope that’s the reason why.”

But neither the Taylors nor Dr. Diego Lopez de Castilla, the 41-year-old physician heading the trial at the Kirkland, Washington, hospital, know now whether the couple received injections of remdesivir — or an identical-looking placebo.

Nor do they know whether the investigational drug, designed to stop the virus from replicating, is effective at halting the disease. There are in progress across the globe testing remdesivir as a COVID-19 treatment.

At the same time, more than two dozen Phase 3 clinical trials are recruiting participants to study interventions to prevent or treat COVID-19. They range from a being tested on health care workers to a that could prevent the deadly fluid buildup occurring in the lungs of COVID-19 patients.

Other drugs, including those used to treat and are being tested to see if they reduce the body’s inflammatory response to the infection. A few studies aim to confirm whether treatments , the antimalarial drugs chloroquine and hydroxychloroquine, are indeed effective against COVID-19.

If any of the trials show overwhelming evidence of benefit or harm, they could be called off, with the drug in question accelerated to general use or halted.

So far, no drug appears to be a certain treatment for COVID-19. Early results regarding remdesivir are expected in late April. Officials with the and many media accounts have suggested the treatment could hold promise. But it’s too soon to say, said Lopez de Castilla.

“I don’t think we have enough data to be commenting,” Lopez de Castilla said. “I think it’s very premature. We’re still enrolling patients in the trial.”

Lopez de Castilla is steering clear of the political turmoil that has surrounded remdesivir and Gilead. The firm in March sought and received federal Food and Drug Administration approval for , but then asked the agency to rescind the designation after critics accused company officials of unfairly seeking a lucrative monopoly for the drug.

Orphan drug designation gives a manufacturer seven years of market exclusivity, a period that essentially bars competition. Consumer advocates criticized the designation because orphan drug status is aimed at products that target rare diseases, those that affect 200,000 people or fewer. Gilead received the status when U.S. cases were still hovering near 40,000 but were expected to rise far higher.

In the past two weeks, Gilead officials announced that, because of the company would no longer provide the drug on an individual compassionate-use basis to patients not enrolled in clinical trials and was shifting to a broader-access program.

For now, Lopez de Castilla is focused on the science, working to follow strict protocols set by the National Institute of Allergy and Infectious Diseases study expected to enroll 440 patients across 75 sites.

The double-blind trial calls for participants to receive the active drug or placebo for 10 days, and then to evaluate how they do based on a scale that moves from fully recovered to death. The drugs are given free to hospitals and trial patients. In a public letter March 28, Gilead chief executive Daniel O’Day pledged that the company would work to “ensure affordability and access.”

Since Feb. 21, 40 U.S. sites have joined the , with Lopez de Castilla’s team enrolling among the most patients so far: at least 20 as of April 1.

“We are a community hospital,” he said. “Although we don’t have all the resources that bigger hospitals have, we do have amazing people here.”

Still, it hasn’t been easy. For weeks, EvergreenHealth was at the epicenter of the U.S. outbreak, treating dozens of patients from the Life Care Center nursing home in Kirkland, where nearly 40 patients have died. Overall, the hospital has treated nearly 300 COVID-19 patients since Feb. 28.

The patients enrolled in the trial are among the sickest, Lopez de Castilla said. They’re those who are moderately to critically ill, including some who are unconscious and on ventilators. Obtaining consent to participate in a clinical trial from patients or families grappling with an emergency has been “very challenging,” he said.

“One of the challenges is how to enroll a patient who is already intubated,” he said. “We do this through a family member, someone who can make medical decisions for the patient.”

It can take hours to explain the procedure, describe the side effects — which could include gastrointestinal problems or elevated liver enzymes — and provide detailed information so the patient or their legal representative can make an informed decision.

Patients must understand that they could receive an unproven therapy, he said. And they need to know that, because the trial calls for half of the patients to receive the drug and half to receive a placebo, there’s a 50% chance they won’t actually receive the active drug.

One barrier has been that the trial paperwork is available only in English, which is not the first language of some patients. EvergreenHealth is working with the NIH to create at least one translation in Spanish.

Overall, about half of the patients Lopez de Castilla approached have said no.

For Josie Taylor, a former second-grade teacher who volunteers for social causes, the decision to join the trial was easy. “It does have to be studied,” she said. “It can’t be a knee-jerk reaction of ‘Take any medication, without knowing what the results will be.’”

She and her husband, a retired banker, fell ill in early March, just weeks after moving from their home of 40 years to a new community 30 miles north of Seattle. Josie got sick first.

“I went to the grocery store and came out, loaded the stuff in the car and realized I was very short of breath — weirdly so,” she recalled.

She ran a fever that night, called her doctor and went to the emergency room the next morning, where she was quickly placed in isolation.

George Taylor is a Vietnam War veteran who was affected by the defoliant Agent Orange used in that war. He has multiple health problems, including prostate cancer, heart disease and Parkinson’s disease. Within a couple of days, he also fell ill.

George was sent to the ER and then to an isolation room — next to his wife’s. For more than a week, they were both seriously ill, on oxygen, uncertain about the future. “It was 10 or 11 days,” Josie said, adding wryly: “Honestly, you lose track when you’re having fun.”

Contracting the novel coronavirus has been scary. But they were heartened by the support of family, friends, even people they barely knew. “I came home to a brand-new place with brand-new neighbors and our yard had been mowed and edged,” Josie said.

Now that they’re both home, the Taylors are gradually getting back to normal. Josie still speaks slowly, pausing to catch her breath between words. She said she hopes her experience underscores the seriousness of the crisis.

“I’m hoping and praying that this drug helps a lot of people,” she said. “It’s not an old person’s issue. It’s an every person’s issue.”

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At a congressional hearing last month, Sen. Mike Enzi said an adviser had found “a foundation to import insulin for a number of people at lower cost.” The Wyoming Republican told the mother of a young man with Type 1 diabetes that his adviser “worked through a foundation so that it would be legal, and I will share that with you.”

Such a group could link patients to safe medicines while saving them hundreds or thousands of dollars a year. But it doesn’t appear to exist, leaving patients with diabetes to either pay sky-high U.S. prices or try to import cheap insulin on their own, which is technically illegal.

Enzi spokesman Max D’Onofrio said he was unable to identify the group. And neither the American Diabetes Association nor the Campaign for Personal Prescription Importation is aware of a foundation like the one Enzi described, officials at those groups said.

“I have no idea what Sen. Enzi was talking about, but I’d like to know,” said Gabriel Levitt, president of PharmacyChecker.com, which helps patients compare medicine prices and connect with foreign pharmacies.

Enzi spoke at a Jan. 29 hearing on drug prices held by the Senate finance committee. He was addressing Kathy Sego, whose son had skipped insulin doses to save the family money and was profiled by Kaiser Health News in 2017.

Sego said she wants more information but never heard back from Enzi’s office. “I have not heard of ANY foundation which helps people with insulin,” she said via email.

“Sen. Enzi talks to a number of informal advisers, constituents and stakeholders who are concerned about health care costs, including drug prices, and he was referring to an anecdotal conversation he had,” D’Onofrio said. Insulin list prices have risen as much as threefold in the past decade and even with insurance.

While insulin makers Sanofi, Eli Lilly and Novo Nordisk often rebate a portion of those increases back to insurance companies and pharmacy benefit managers, patients’ share of the cost is often based on the list price. Uninsured patients have to pay everything themselves.

Insulin brands sold in the United States can be bought for less than half as much in Canada and Mexico, prompting unknown numbers of people to the border or order insulin by mail.

Unauthorized importation of prescription medicine is technically illegal, but the Food and Drug Administration allows “entry of shipments when the quantity and purpose are clearly for personal use,” .

Insulin needs to be refrigerated, but to the United States, patients report.

Just over a year ago, FDA criminal investigation agents searched stores in Florida that help consumers order many kinds of drugs from Canada and elsewhere. That suggests that a foundation importing insulin in bulk might be subject to the same kind of scrutiny.

For Enzi’s part, he “continues to have concerns that importing prescription drugs from other countries will not solve the problem of rising drug prices,” said his spokesman, D’Onofrio. “He hopes Congress takes real action this year to lower health care costs.”

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The Government Accountability Office, which spent more than a year investigating the FDA’s orphan drug program, said “challenges continue” in the program that was created to spur development of drugs for diseases afflicting fewer than 200,000 patients.

The investigation began after a request from three high-profile Republican senators last year, in the wake of a KHN investigation. KHN found that the program was being manipulated by drugmakers to maximize profits and to protect niche markets for medicines being taken by millions.

The GAO uncovered inconsistent and often incomplete reviews early in the process of designating medicines as orphan drugs and recommended “executive action” to fix the system. In some cases, FDA reviewers failed to show they had checked how many patients could be treated by a drug being considered for orphan drug status; instead, they appeared to trust what drugmakers told them.

In response to GAO’s probe, the FDA issued a statement saying it agreed with the report recommendations regarding documentation and that the agency is “streamlining our processes.” The agency declined requests for interviews. In a comment included with the report, Matthew Bassett, assistant secretary for legislation at the Department of Health and Human Services, said HHS agreed with GAO’s recommendations.

John Dicken, director of the GAO’s health care team, said the focus of the report is “ensuring that the intent of the law is being met.”

The FDA’s rare-disease program began after Congress overwhelmingly passed the 1983 Orphan Drug Act to motivate pharmaceutical companies to develop drugs for people who lacked treatments for their conditions. Rare diseases had been ignored by drugmakers because treatments for them weren’t expected to be profitable. The law provides fee waivers, tax incentives for research and seven years of marketing exclusivity for any drug the FDA approves as an “orphan.”

The incentives, though, have proven to be more powerful and highly coveted than expected, said Avik Roy, president of the Foundation for Research on Equal Opportunity, a conservative think tank.

Many people are “starting to wonder whether or not the Orphan Drug Act over-corrected for the problem,” Roy said, noting that spending in the U.S. will be on so-called rare-disease medicines in 2020.

GAO analysts examined FDA records for 148 applications submitted by drugmakers for orphan drug approval in late 2017. FDA’s reviewers are supposed to apply two specific criteria — how many patients would be served and whether there is scientific evidence the drug will treat their disease.

In nearly 60 percent of the cases, the FDA reviewers did not capture regulatory history information, including “adverse actions” from other regulatory agencies. The FDA uses experienced reviewers, Dicken noted, who may already know the history of certain submitted drugs and not see the need to document it.

And 15 percent of the time FDA reviewers failed to independently verify patient estimates provided by the drugmaker.

Of the 148 records the GAO reviewed, 26 applications from manufacturers were granted orphan status even though the initial FDA staff review was missing information.

“It is tempting to think that perhaps those approvals were sort of granted routinely without sufficient scrutiny,” said Bernard Munos, senior fellow at FasterCures and the Milken Institute.

By contrast, early Orphan Drug Act advocate Abbey Meyers said she was not concerned about the lack of population estimates because many rare diseases lack population studies that show how common a disease is.

Rather, Meyers said, she’s “disappointed that there is no government-funded agency that is willing to finance” such research.

The GAO investigation began after Scott Gottlieb, who took over as FDA commissioner in May 2017, announced a “modernization” of the rare-disease program.

Critics have long complained that drugmakers game the FDA’s approval process for orphan drugs. In January 2017, the KHN investigation, which was co-, revealed that many orphan drugs aren’t entirely new and don’t always start as treatments for rare diseases.

The GAO report, while not analyzing the same years, found that 38.5 percent of orphan drug approvals from 2008 to 2017 were for drugs that had been previously approved either for mass-market or rare-disease use. About 71 percent of the drugs given orphan status were intended to treat diseases affecting fewer than 100,000 people.

KHN’s investigation found that popular mass-market drugs such as cholesterol blockbuster Crestor, Abilify for psychiatric conditions, cancer drug Herceptin and rheumatoid arthritis drug Humira, the best-selling medicine in the world, all won orphan approval yet were already on the market to treat common conditions.

In addition, more than 80 orphan drugs won FDA approval for more than one rare disease — or several — each one with its own bundle of rich incentives.

Genentech’s Avastin, a cancer treatment approved for mass-market use in 2004, won three more orphan-designated for the treatment of three rare forms of cancer. It now has 11 approved orphan uses in all, and exclusive protections that keep generics at bay won’t run out until 2025.

Sens. Orrin Hatch (R-Utah), Chuck Grassley (R-Iowa) and Tom Cotton (R-Ark.) sent a letter in March 2017 asking the GAO to investigate the program and find out whether Congress’ original intent for it was still being followed.

“Despite the success of the Orphan Drug Act, 95 percent of rare diseases still have no treatment options,” Hatch said in a statement Friday. “I hope that my colleagues will utilize this [GAO] report as they work to strengthen the accomplishments of the Orphan Drug Act and encourage developers to continue their investment in this patient population.” The GAO report also mentioned concerns about prices, noting that “the ability to command high prices” was one reason the rare-disease market was growing so rapidly.

The average cost per patient for an orphan drug was $147,308 in 2017 compared with $30,708 for a mass-market drug, according to a on the 100 top-selling drugs in the United States. Celgene’s chemotherapy drug Revlimid was the top-selling orphan with $5.4 billion in sales and $184,011 in revenue per patient.

“We have accepted culturally that it’s OK for a company to charge high prices for [orphan] drugs,” said Roy. “The end result is that a lot of these orphan drugs are $10 billion drugs, even though they are for rare diseases.”

From 2008 to 2017, more than half of the drugs granted orphan status were for cancer or blood disorders, according to the GAO report. And nearly two-thirds of drugs approved in the program were given expedited review processes, such as accelerated approval or fast-track designation.

Prior to announcing Gottlieb’s modernization plan, the FDA had a backlog of 138 drug applications for orphan status that had been waiting more than 120 days. The backlog was cleared in August 2017 after staff from across the agency stepped in to help.

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The twice-a-day medicine was a breakthrough because it supplanted an existing drug with debilitating side effects that had to be taken every six hours around the clock — a missed dose could permanently damage a child’s kidneys.

But the families’ elation dimmed when Raptor Pharmaceutical, which acquired the marketing rights and financed clinical trials for Procysbi, priced the drug: more than $300,000 a year for some patients.

“When I heard the number, I was like, holy … that’s incredible!” said Kevin Partington, the father of twins with cystinosis. “The first thought was, how do we pay for it and get this approved through insurance?”

Manufacturers selling precious, lifesaving medicines and patients share an uneasy alliance. They need each other but have clashing priorities, especially when it comes to drugs treating rare diseases such as cystinosis.

Cystinosis families say they are deeply grateful for Procysbi. The medicine would not be on the market without Raptor — which performed clinical trials — and Horizon Pharma, which acquired the rights two years ago, they acknowledge.

But they also feel they’ve been used. What began as a desperate search for life-extending medicine, cystinosis parents say, has become a story of corporations profiteering off their children.

What’s more, they say, even as they have tried to keep the companies at arm’s length, Horizon and Raptor have breached sensitive boundaries around their tightknit community to increase sales.

“I feel like it’s all about the bottom line,” said Denice Flerchinger, who has a daughter with cystinosis and helped raised some of the first research funds for the drug. “I don’t think any of us thought they could do this and get away with it.”

Procysbi is an “orphan drug,” under FDA rules, giving its makers an extended monopoly and the opportunity for big profits because it treats a disease affecting only about 500 Americans.

Its price has risen five times in the past five years, first by Raptor and later through its current owner, Horizon. For some patients, it now costs more than $1 million annually.

Procysbi’s high cost is needed to finance research for a range of medicines, said Matt Flesch, a spokesman for Horizon, which bought Raptor in late 2016 and has raised the drug’s list price 21 percent since then, according to data from Connecture, an information-technology firm. “If rare diseases don’t have a higher price, then companies aren’t going to bring new medicines forward,” he said.

After rebates and discounts, Horizon’s average annual revenue per patient is about $486,000, Flesch said. No patient needing Procysbi lacks it, due to a Horizon program that covers deductibles and copays or the entire cost if insurance is lacking, he added.

Cystinosis is an inherited disease that keeps children from processing a protein component called cystine, slowly weakening organs and tissues. Without treatment, patients can go blind and develop end-stage renal disease by their 10th birthday.

Treatment can be brutal. Before Procysbi, the only medicine prolonging life — typically into a patient’s 20s, when a kidney transplant is often needed — tasted like sulfur, induced vomiting, made an embarrassing odor and had to be taken every six hours. Even one missed 3 a.m. dose meant rising cystine levels for a baby or toddler and the possibility of permanent organ damage.

In 2003, Nancy Stack’s daughter Natalie made a wish on a napkin in purple crayon on her 12th birthday: “To make my disease go away forever.”

Years ago, “you were handed a pamphlet, ‘When Your Child Has a Terminal Illness,’ dot, dot, dot,” Stack said. “It never sat well with us. But when our own daughter at 12 understood that if there was no cure it meant she was doing to die, then we realized, wow, this is a big life event for us.”

Through friends, relatives and her husband’s contacts in real estate, the Stacks raised money for research and founded a nonprofit now called the Cystinosis Research Foundation. At the same time, they began building a network of families who were coping with a frightful illness.

“It was so encouraging to see this community doing all these amazing things,” said Nicole Manz, who learned about CRF in a hospital room where doctors diagnosed her son with cystinosis. “It was really empowering for our family.”

CRF’s ultimate goal was a cure, but one early, promising idea was to make the existing treatment easier to take. Scientists at the University of California-San Diego, a longtime center of cystinosis research, theorized that a time-release coating on the medicine could reduce side effects and the need for frequent doses.

With multiple CRF grants totaling $1.6 million funding early investigation, researchers found their hypothesis was correct. Now the foundation needed a corporate partner to finance more trials required for FDA approval.

Raptor, a company with about a dozen employees and no revenue, had acquired the rights to what would become Procysbi in 2007 and agreed to finance clinical trials to get it to market.

Raptor executives were quick to acknowledge how much they relied on the foundation and UC-San Diego, not only for the preliminary research but also for the patients’ contact information, which would save millions in marketing costs.

“We’re kind of coming in at the eleventh hour” in developing Procysbi, Raptor’s then-CEO, Christopher Starr, told the San Francisco Business Times in 2012, shortly before the drug’s launch.

Raptor’s research-and-development expense leading to Procysbi’s launch in June 2013 came to about $80 million, financial statements show. Most of that went toward getting Procysbi approved for cystinosis, although some was spent on investigating other drugs or diseases.

As Procysbi moved closer to approval, families knew it would be expensive. That’s not unusual for a rare-disease drug with a small market. Cystagon, the older, non-coated version of the medicine, cost about $9,000 a year at the time.

But nothing prepared those families for what happened. The $300,000 launch price was so high that Raptor CEO Starr objected, said Dr. Patrice Rioux, who was the company’s chief medical officer and also opposed the pricing.

Starr “was a scientist who wanted to provide the drug at a relatively good price,” Rioux said in an interview. “The board was not of this opinion” and overruled him, he said.

Starr did not respond to requests for an interview. In 2014, a year after Procysbi’s approval, the company announced his resignation as CEO, although he stayed on Raptor’s board. Rioux said he resigned at the same time.

“At the time of Procysbi’s approval, there was full agreement about its price within management,” Julie Anne Smith, who replaced Starr as CEO, said in an email. “I am proud to have been part of the Raptor team who worked with the cystinosis community” to get the drug approved, she said.

Stack wrote an angry note shortly after learning about the price.

“I feel awful about all this and personally accountable,” she said in an email to Raptor executives. “It is so disheartening — the community will suffer from the high cost of Procysbi.”

The drug quickly brought in far more money than Raptor spent developing it, a result of its acceptance by patients and insurers, plus the steep price increases.

Procysbi’s list price is 48 percent higher than it was in 2013. The drug has generated revenue totaling about $500 million through June 2018 for both Raptor and Horizon, financial statements show. At the time of the Horizon buyout, Raptor revenue of $1.5 billion from 2019 through 2026.

That cash stream prompted Horizon to buy Raptor for $800 million in 2016, enriching Starr, who still held shares and options worth $8.7 million, and Smith, his replacement CEO, who got $7.5 million in merger-related payments, according to an analysis of regulatory filings by Andy Restaino, CEO of Technical Compensation Advisors, an executive pay consultancy.

UC-San Diego, which licensed the rights to market Procysbi, has collected $20.9 million in royalties from Horizon and Raptor through 2017, according to data obtained under public information laws. The university “does not play a role in setting the market price for any drug,” UCSD said via a spokesman. Royalties help finance new research, it said.

Meanwhile the nonprofit organization started by families to develop the medicine, which held no business rights, got nothing.

“Those early grants were just [a] letter form and a handshake with the doctors,” Stack said. “We really didn’t understand how complex the system is, and how universities typically own all the … rights. We didn’t see dollar signs in our children.”

Procysbi proceeds have financed new research including continuing cystinosis studies as well as potential drugs for thyroid eye disease, rheumatological illness and other ailments, said Horizon spokesman Flesch. Last year, Horizon spent $225 million on research and development, according to financial statements.

“We’re really transforming ourselves into a research-focused company, and a primary focus there is orphan diseases,” Flesch said.

About three-fourths of U.S. cystinosis patients now take Procysbi, but Horizon continues to work aggressively to .

The company’s strategy for growth relies on building tight relationships with patients and advocacy groups, a typical marketing approach for companies selling orphan drugs, said Annabel Samimy, who follows pharma stocks for Stifel Financial.

But for some, the personal touch is intrusive. CRF had to ban Raptor reps from emotional family meetings that broached topics such as bed-wetting, Stack said. Tearful Raptor employees once joined patients in making posters about cystinosis hopes and fears, which seemed inappropriate, she said.

Horizon pays for travel and lodging to where intense discussions among patients and families can feel like therapy. The company makes audio recordings of the sessions to use in market research, which some patients find deceptive, said Shannon Keizer, a cystinosis patient in her 20s.

The company also hosts where families speak to physicians and one of eight Horizon “ambassadors” — patients and their family members who receive a $500 honorarium for each event

“Instead of wining and dining and paying out stipends, they need to lower the price of the drug,” said Flerchinger. “It’s our money they’re spending.”

Horizon’s Facebook page, branded as “Cystinosis United,” resembles the private Facebook groups where cystinosis families console and encourage one another, with pictures of smiling patients and slick, touching videos. The company added its logo to the banner photo after parents complained, according to a company email.

In conversations with Horizon, Stack refers to this hands-on approach as “overreach.” But she said she lies awake at night worried that her outspoken criticism could cut off access to her daughter’s life-sustaining drug. Horizon could stop manufacturing it.

“I think that’s the risk of doing all this. Speaking out so forcefully about the drug price,” Stack said. “What if they say this is really a pain so we’re just going to drop this drug? I would never forgive myself, because we discovered” it.

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The 40-year-old Georgia resident lives with Cushing’s syndrome, a potentially deadly condition that causes high levels of the hormone cortisol to wreak havoc on a body. When first diagnosed, she said, she gained about 100 pounds, her blood sugars were “out of control,” and she suffered acne, the inability to sleep and constant anxiety.

“I wouldn’t leave the house,” Edwin said of her first bout with the condition. “I quit my job after a certain point. I just couldn’t keep being in front of people.”

That’s when Edwin endured surgeries, including one to remove her pituitary gland. She went into remission, but then, in 2016, her weight shot up 30 pounds and the anxious feelings returned. Her doctors prescribed Korlym.

The drug’s active ingredient is mifepristone, once called RU-486 and better known as the abortion pill because it causes a miscarriage when taken early in a pregnancy. Nearly two decades ago, Danco Laboratories won approval to market Mifeprex in the U.S. as the abortion drug, with tight restrictions on use. Corcept Therapeutics, a Silicon Valley-based drug company, began marketing Korlym six years ago as a specialty drug for about 10,000 rare-disease patients such as Edwin.

The difference in price between Korlym and Mifeprex is striking, even though the ingredients are the same: One 200-milligram pill to prompt an abortion costs about $80. In contrast, a 300-milligram pill prescribed for Cushing’s runs about $550 before discounts. Patients wanting an abortion take only one pill. People with Cushing’s often take up to three pills a day for months or years.

Dr. Joseph Belanoff, chief executive of the drug’s maker, Corcept, said Korlym’s average cost per patient is $180,000 annually and concedes that “we have an expensive drug. There’s no getting around that.”

The story of Korlym highlights how America’s drug development system can turn an old drug into a new one that treats relatively few — but often very desperate — patients.

When the Food and Drug Administration approved Korlym in 2012, it was designated as an orphan drug, giving Corcept seven years of market exclusivity as well as other economic incentives. Congress approved orphan drug incentives to encourage the development of medicines for rare diseases that affect fewer than 200,000 patients. Since the drug’s approval, Korlym’s price has risen about 150 percent, and last year the company’s revenue nearly doubled to $159.2 million. (Korlym is the company’s only product and treats about 1,000 patients in the U.S.)

“You can hike that drug [price] 50 percent or 80 percent, and if there is backlash you can walk it back,” said Dr. Joshua Liao, an associate medical director at University of Washington Medicine.

Corcept has steadily increased the price with little backlash.

Belanoff said the profits from Korlym pay for the company’s past spending on the drug’s research and development as well as its effort to create new drugs. The company last month reported an encouraging Phase 2 trial update on Korlym’s successor, relacorilant, a drug that could treat Cushing’s without the side effects for some women of endometrial thickening and possible vaginal bleeding.

The company’s pipeline is also full of potential oncology drugs that hold the promise of using molecules to influence the cortisol receptors, with wide-ranging effects in the body. Korlym in combination with another drug is being tested for the treatment of metastatic triple-negative breast cancer, which tends to be more aggressive than other types of breast cancer. And relacorilant is in the very early stages of testing to treat castration-resistant prostate cancer.

While many of the second-generation drugs are not related to Korlym structurally, Korlym did “provide the funding. … If there had not been orphan-drug pricing and the [Orphan Drug] Act, you would have to look for a different way to develop those drugs,” Belanoff said.

Korlym came to market in 2012 with an average wholesale price of $223.20 per pill before discounts, according to the health care technology firm Connecture. Corcept boosted the price $20 to $50 each year. By December 2017, each pill had an average wholesale price of $549.60 before any discounts or rebates were negotiated for patients.

Alan Leong, senior research analyst and owner of BioWatch, who follows Corcept, said he thought the company might fail at one point but noted that Belanoff “played the odds” with Korlym and won.

So far, incrementally increasing Korlym’s price while adding patients has paid off. Corcept’s stock soared 27.4 percent in January before Teva Pharmaceutical Industries announced it had filed an application for a generic version on the drug. Teva declined to comment for this story.

Belanoff said he would like to know where Teva obtained enough doses of Korlym to successfully test a generic: “We have a single pharmacy and a single manufacturer and the medicine has to be [FedEx’ed] to the patient.”

Talking to analysts last month, Corcept Chief Financial Officer Charlie Robb said the impact of Teva’s generic filing for the next few years is “nothing but litigation, which we can comfortably afford.”

Corcept’s executives expect revenues to keep climbing, reaching $275 million to $300 million in 2018 — an expectation that has not changed despite Teva’s announcement.

A ‘Pioneering Substance’

Cushing’s syndrome happens when the body produces too much of the powerful hormone cortisol, which normally helps keep the cardiovascular system functioning well and allows the body to turn proteins, carbohydrates and fats into energy. But too much cortisol can be destructive. It can cause cognitive difficulties, depression, fatigue, high blood pressure, bone loss and, in some cases, Type 2 diabetes. Those affected by the syndrome can develop a fatty hump between their shoulders and a rounded face. Without treatment, patients can die of a variety of complications, including sepsis after the hormone compromises the immune system.

Mifepristone, the active ingredient in Korlym, helps Cushing’s patients by blocking the body’s ability to process cortisol. It induces an abortion by blocking the body’s receptor for progesterone, which causes the uterine wall to break down.

When the FDA approved Korlym for a specific set of Cushing’s patients, the agency required a “TERMINATION OF PREGNANCY” warning box at the top of the label.

Dr. Constantine Stratakis, a senior investigator and scientific director at the National Institute of Child Health and Human Development who specializes in treating people with Cushing’s syndrome, calls mifepristone a “pioneering substance” because it “has a lot of crossover” to other receptors in the body.

That means the drug has a lot of potential uses. Belanoff and Dr. Alan Schatzberg, a Stanford University psychiatrist and scientist, co-founded Corcept in 1998 to explore whether mifepristone could help treat major depression. In 2002, Schatzberg said the drug “may be the equivalent .”

But clinical trials didn’t back up the claim. Schatzberg rotated off the board and left the company in 2007, saying the company “went in a different direction.” A whether Schatzberg had conflicts of interest as the government’s principal investigator overseeing clinical trials and a co-founder of Corcept, which had awarded him stock options.

In response to the congressional investigation, Stanford said Schatzberg was fully compliant with its internal conflict-of-interest policy.

Leong of BioWatch recalls the transition to Cushing’s research as a difficult time for Corcept. But after the “psychiatric depression program shut down, [Belanoff] stuck to it,” Leong said.

Social Contract

Corcept’s “Hail Mary” moment came in 2007. The company filed an application to see whether mifepristone might work for Cushing’s patients. (Cushing’s affects about 20,000 people in the U.S., but Corcept executives say the condition often goes undiagnosed.)

Developing the drug cost about $300 million, Belanoff estimates, and involved long-term toxicology tests to ensure that patients could safely take higher doses for months or years. As an orphan drug, a portion of Korlym’s research and development costs could be written off. For example, Corcept reported in 2013 that it had $19.7 million in federal tax credits.

And while Korlym’s annual costs pale against other specialty drugs, which run as high as $750,000 a year, the climbing price tag and increasing number of patients do affect the health care system.

“It’s like an unseen cost and then down the road this is a huge cost burden,” said the University of Washington’s Liao.

Most patients are covered by private insurance, Belanoff said, but Medicare and Medicaid are paying for the drug as well. According to , 52 Korlym patients cost Medicare $2.6 million in 2013. Two years later in 2015, 115 beneficiaries filed claims of $11.4 million.

In Georgia, Leslie Edwin is on private insurance and describes herself as being in “a really high tax bracket” yet she never paid more than $25 a month through Corcept’s patient assistance program called SPARK (the Support Program for Access and Reimbursement for Korlym).

“Across the board, it would be very difficult to find any patient that pays the full price,” said Edwin, who volunteers as president of the nonprofit patient advocacy group Cushing’s Support and Research Foundation. The small organization, which reported $50,000 in contributions and grants in 2015, notesÌýthat Corcept as well as Novartis Oncology provide financial support to the organization. Edwin is not paid, and the group’s federal tax filing details that the majority of its expenses go to distributing a quarterly newsletter, contacting members and patients “to promote mission,” and providing referrals to doctors.

Belanoff said he believes Corcept has a “social contract” to take care of patients and pledged that any patient who is prescribed Korlym will get it regardless of insurance coverage or costs.

“We were starting with a notorious drug, and the growth has been steady from a very low base over time,” Belanoff said, emphasizing that the “single most important thing” is that the drug works very well.

Dr. Sherwin D’Souza at St. Luke’s Boise Medical Center in Idaho prescribed Korlym for the first time last year to Vonda Huddleston, knowing the company would provide financial assistance until Huddleston could get insurance to pay for surgery.

Huddleston, though, recalled being concerned about the price and what it would cost her out-of-pocket. The company provided her first two months’ worth for free and asked her to call back when she was enrolled for insurance.

“They were so eager to get me on this medication,” she said.

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In an interview this week, the FDA’s Scott Gottlieb said the Orphan Drug Act of 1983 has provided “an enormous amount of public health value” over the years, but the “market has changed.”

Gottlieb said it’s time to ask the question:Ìý“Do we have the right incentives in place?”

The nearly 35-year-old law created incentives for companies to develop “orphan drugs” because they treat rare diseases affecting fewer than 200,000 people. Those incentives include a waive on millions of dollars in fees, seven years of market exclusivity and a tax break for research and development expenses.

The law proved successful — in the decade before it passed, only 10 industry-supported rare-disease drugs had been brought to market, .

Today, orphan drugs often carry six-figure price tags and pharmaceutical companies readily develop them. In 2016, of the new drugs approved by the FDA were orphans. And is on track to be a record year.

In the past year, rare-disease drugs commanded attention through numerous pricing controversies. Examples include Marathon Pharmaceuticals, which sold its $89,000 drug for Duchenne muscular dystrophy after public outcry, and Strongbridge Biopharma, which relaunched a glaucoma drug this year after winning to treat a rare neuromuscular condition. The drug’s annual price tag is at least $109,500.

“Clearly, [the Orphan Drug Act] has delivered,” said Bernard Munos, a former corporate strategy adviser at drug giant Eli Lilly who is now a senior fellow at FasterCures. “In that same vein, I think a problem that we didn’t anticipate some 30 years ago is the pricing crisis.”

The top 100 orphan drugs in the U.S. cost an average of $140,442 per patient last year, .

Gottlieb’s comments come after a year of scrutiny around orphan drugs.

An investigation by Kaiser Health News that NPR in January found that many drugs with orphan status weren’t entirely new when approved. Of about 450 drugs that have won orphan approval since 1983, more than 70 were drugs first greenlighted by the FDA for mass-market uses. Those include the cholesterol blockbuster Crestor, Abilify for psychiatric disorders, and the rheumatoid arthritis drug Humira, the world’s best-selling drug.

More than 80 other orphan drugs won FDA approval for more than one rare disease, and in some cases, multiple rare diseases. For each approval, the drugmaker qualified for a fresh batch of incentives. Altogether, KHN’s investigation found that about a third of drugs given the FDA’s orphan status have either been repurposed mass-market drugs or drugs that received multiple orphan approvals.

Gottlieb and other industry experts have said that repurposing common drugs to treat rare diseases is scientifically sound and good for patients. But Gottlieb has also said high drug prices are a , and in the phone interview Wednesday he questioned whether the financial incentives should be different for drugs that receive “secondary approvals.”

“It could very well be that you need to think differently about how you would create a framework around the secondary indication and the primary indication,” Gottlieb said, adding that he doesn’t have an answer but the agency has been asking the question.

At the same time, Gottlieb pointed to rare diseases without treatments, even under the current incentive system: “You have to ask why various uses of drugs aren’t getting studied.”

Paul Melmeyer, director of federal policy at the National Organization for Rare Disorders, said there is a lot of unmet need since nearly 7,000 diseases lack treatments for .

While Gottlieb can change agency guidelines, any change to the Orphan Drug Act’s incentives would require congressional action. And there may be an appetite for such a change.

Gottlieb became commissioner in May, a few months after three key Republican senators called for a federal investigation into potential abuses of the Orphan Drug Act. The Government Accountability Office began an investigation last month.

Congress included changes to orphan drug incentives in its sweeping tax legislation, reducing the orphan drug tax credit from 50 percent of research and development costs to 25 percent — a move that will save the government $32.5 billion from 2018 to 2027. Earlier versions of the bill included transparency requirements and an elimination of credits for repurposed drugs — both of which were struck from the final version.

Gottlieb, though, has not waited for the GAO or Congress before doing what he can to revamp the program. In late June, he announced a modernization plan that included closing a loophole that allows manufacturers to skip pediatric testing requirements when developing a mass-market drug for treating rare diseases in children.

When asked about the coming year, Gottlieb said: “We are going to look for other ways to make sure the program is achieving its public health goals.”

Sydney Lupkin contributed to this report.

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“Drugs that are not affordable are of little value and drugs that do not exist are of no value,” said Norman Augustine, chair of the National Academies of Sciences, Engineering and Medicine’s committee on drug pricing and former CEO of Lockheed Martin Corp.

The report, “Making Medicines Affordable: A National Imperative,” identifies eight steps to cut drug prices. It also provides a list of specific “implementation actions” for various federal agencies, including Congress, the Federal Trade Commission and the U.S. Departments of Justice and Health and Human Services.

Tuesday’s hearing, which is the third in a series by the Senate Health, Education, Labor and Pensions Committee, comes as Americans across the political spectrumÌýÌýis a top priority. Nationwide, dozens of cities, counties and school districts have turned to as a solution to high prices. And legislators from both parties have also supported Ìýimportation of drugs from countries where list prices are cheaper.Ìý While individualÌýÌýfor more transparency and price controls and President Donald Trump has publicly called for lower drug prices, Congress has stalled.

Ìý

So, will the committee’s recommendations spur action? Kaiser Health News takes the political temperature, talks to experts and rates their chances:

Recommendation No. 1: Allow the federal government to negotiate drug prices

Current law prohibits the U.S. Health and Human Services secretary from directly negotiating drug prices, and the committee says that’s ridiculous.

The committee recommends Medicare and other agencies negotiate which drugs are placed on a list of covered drugs and, when necessary, exclude some drugs. This is not a new idea.

Some states are already restricting high-priced drugs in Medicaid, the state-federal insurance program for low-income Americans. But federal efforts to change Medicare are more complicated.

Just two months ago, top House Democrats introduced . But don’t hold your breath, Trump hasn’t responded to multiple letters sent from Rep. Elijah Cummings (D-Md.) — including one after the most recent bill was introduced in late October. That bill hasn’t moved past .

Recommendation No. 2: Speed approvals of safe and effective generics and biosimilars

This recommendation has a strong ally at the Food and Drug Administration.

Commissioner Scott Gottlieb announced a “” in June and followed it up two months ago with aimed at speeding the drug approval process for complex generics. More changes are expected, too, as Gottlieb wrote in his blog post: “If consumers are priced out of the drugs they need, that’s a public health concern that FDA should address.”

But the pharmaceutical world knows which games to play to keep competition at bay. The committee specifically recommends the U.S. Department of Justice and the Federal Trade Commission should watch for anti-competitive tactics, such as pay-for-delay and extending exclusivity protections. The U.S. Supreme Court weighed in on pay-for-delay, saying warranted antitrust review. The total number of these deals .

To further encourage generic approvals, Congress could include several proposed bills, such as the so-called , in a final year-end package, said Chip Davis, president of the generics and biosimilars lobby Association for Accessible Medicines.

“People are starting to pay more attention” to anti-competitive patent tactics, Davis said.

Recommendation No. 3: Transparency

The committee takes direct aim at drug prices by saying that Congress should make manufacturers and insurers disclose drug prices, as well as the rebates and discounts they negotiate. It also asks that HHS curate and publicly report the information.

States have with Vermont the first to pass a law, which requires an annual report on up to 15 drugs that cost the state a lot of money and have seen price spikes. In Congress, Sen. Ron Wyden (D-Ore.), introduced in June that would impose price-reporting requirements on some drugs. It now sits in the Senate Finance Committee. The pharmaceutical industry has most price disclosure efforts in the past.

Notably, the committee also recommends that nonprofits in the pharmaceutical sector — such as patient groups — disclose all sources of income in their tax filings. That’s a move that would reveal exactly how much the pharmaceutical companies are supporting advocacy groups.

Recommendation No. 4:Ìý Discourage the pharmaceuticual industry’s direct-to-consumer advertisingÌý

The U.S. is only one of two developed countries in the world to allow direct-to-consumer pharmaceutical advertising (the other is New Zealand, and ). And U.S. taxpayers support the tax breaks with a deduction that in the past.

Now, the committee recommends Congress eliminate the tax deduction pharmaceutical companies are allowed to take on direct-to-consumer advertising.

This is an idea that should have wide support. Polls show that most Americans and federal lawmakers have tried to change the rules on so-called DTC for years. The American Medical Association (AMA)Ìý on pharmaceutical advertising directly to patients in 2015, saying there were concerns that the ads were driving up demand for expensive drugs. The FDA provides guidance for the advertising and, in August, FDA Commissioner Gottlieb said he may of risks manufacturers must reveal when advertising a medicine.

In a sign of just how entrenched the tax break is in D.C. politics, Sen. Dick Durbin (D- Ill.)Ìý last month that doesn’t eliminate the break but takes a step to rein in the advertising. Durbin’s bill would require manufacturers to provide the wholesale price of a drug in their advertisements.

Recommendation No. 5: Limit what Medicare enrollees pay for drugs

The committee ticks off a to-do list for Congress when it comes to what older Americans and those with disabilities are paying for drugs.

Their recommendations include asking Congress to establish limits on total annual out-of-pocket costs for Medicare Part D enrollees and telling Congress to make sure the Centers for Medicare & Medicaid Services efforts to guarantee enrollee cost sharing is based on the real price of the drug as well as how well the drug works.

Turns out, there is already some limited movement on this one.

Medicare allows negotiations between the corporate insurers and pharmacy benefit managers who help administer the Part D program. CMS announced last month that it is exploring how to pass on the behind-the-scenes manufacturer rebates to patients, though it warns premiums may rise if they make this move.

Recommendation No. 6: Increasing oversight of a very specific federal drug discount program

The committee is stepping into by recommending increased transparency and oversight of a program that Congress created in 1992.

The program, known as 340B, requires pharmaceutical companies to sell drugs at steep discounts to hospitals and clinics that serve high volumes of low-income patients. Congress held two hearings this year, questioning who is benefiting from the discounts, and CMSÌý it was slashing Medicare reimbursement to some hospitals enrolled in the program.

Hospitals are fighting back, filing a lawsuit over the reimbursement cut. The committee, echoing concerns from House Republicans, recommends making sure the program helps “aid vulnerable populations.”

Recommendation No. 7: Revise the Orphan Drug Act

The committee wants to make sure the 1983 Orphan Drug Act helps patients with rare diseases.

The law, intended to spur development of medicines for rare diseases, provides financial incentives for drugmakers such as seven years of market exclusivity for drugs that treat a specific condition that affects fewer than 200,000 people.

The program has been under fire this year after Kaiser Health News, whose investigation is cited by the committee, reported that approved drugs often gamed this system and won blockbuster sales for more common diseases. The Government Accountability Office has begun an investigation into the program after receiving a request from top Republican senators and FDA’s announced “” plan for the agency this summer.

The committee’s requests include limiting the number of exclusivity periods a drug can receive and making sure drugs that win the financial incentives really do treat rare disease. Finally, the committee says HHS should “obtain favorable concessions on launch prices, annual price increases,” and more.

Recommendation No. 8: Make sure doctors prescribe drugs for the right reasons

Medical practices, hospitals and doctors should “substantially” tighten restrictions on office visits by pharma employees, and the acceptance of free samples, the committee recommends.

This isn’t the first time the national group has recommended controlling drug samples and visits. In 2009, the then Institute of Medicine and medical schools should stop taking free drug samples. It may have worked — to some extent. A study this year found that academic medical centers that limited visits in prescribing patterns.

Now, the National Academies committee says doctors in private practice should also stop taking free samples and welcoming pharmaceutical visits. The AMA, which is the nation’s largest membership group of doctors, supports physicians using samples on a voluntary basis, particularly for uninsured patients.

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Here are five big ways the tax bill could affect health policy:

1. Repeal the requirement for most people to have health insurance or pay a tax penalty.

Republicans tried and failed to end the so-called individual mandate this year when they attempted to advance their health overhaul legislation. Now the idea is back, at least in the Senate’s version of the tax bill. The measure would not technically remove the requirement for people to have insurance, but it would eliminate the fine people would face if they choose to remain uninsured.

The Congressional Budget Office has estimated that dropping the requirement would result in 13 million fewer people having insurance over 10 years.

It also estimates that premiums would rise 10 percent more per year than they would without this change. That is because healthier people would be most likely to drop insurance in the absence of a fine, so insurers would have to raise premiums to compensate for a sicker group of customers. Those consumers, in turn, would be left with fewer affordable choices, according to the CBO.

State insurance officials are concerned that insurers will drop out of the individual market entirely if there is no requirement for healthy people to sign up, but they still have to sell to people who know they will need medical care.

Ironically, the states most likely to see this kind of insurance-market disruption are those that are reliably Republican. An analysis by the Los Angeles Times suggested that the states with the fewest insurers and the highest premiums — including Alaska, Iowa, Missouri, Nebraska, Nevada, and Wyoming — would be the ones left with either no coverage options or options too expensive for most consumers in the individual market.

2. Repeal the medical expense deduction.

The House-passed tax bill, although not the Senate’s, would eliminate taxpayers’ ability to deduct medical expenses that exceed 10 percent of their adjusted gross income.

The medical expense deduction is not widely used — just under 9 million tax filers took it on their 2015 tax returns, according to the Internal Revenue Service. But those who do use it generally have very high medical expenses, often for a disabled child, a serious chronic illness or expensive long-term care not covered by health insurance.

Among those most vehemently against getting rid of the deduction is the senior advocacy group AARP. Eliminating the deduction, the group said in a statement, “amounts to a health tax on millions of Americans with high medical costs — especially middle income seniors.”

3. Trigger major cuts to the Medicare program.

The tax bills include no specific Medicare changes, but budget analysts point out that passing it in its current form would trigger another law to kick in. That measure requires cuts to federal programs if the federal budget deficit is increased.

Because the tax bills in both the House and Senate would add an additional $1.5 trillion to the deficit over the next 10 years, both would result in automatic cuts under the Statutory Pay-As-You-Go Act of 2010, known as PAYGO. According to the CBO, if Congress passes the tax bill and does not waive the PAYGO law, federal officials “would be required to issue a sequestration order within 15 days of the end of the session of Congress to reduce spending in fiscal year 2018 by the resultant total of $136 billion.”

Cuts to Medicare are limited under the PAYGO law, so the Medicare reduction would be limited to 4 percent of program spending, which is roughly $25 billion of that total. Cuts of a similar size would be required in future years. Most of that would likely come from payments to providers.

4. Change tax treatment for graduate students and those paying back student loans.

The House bill, though not the Senate’s, would for the first time require graduate students to pay tax on the value of tuition that universities do not require them to pay.

Currently, graduate students in many fields, including science, often are paid a small stipend for teaching while they pursue advanced degrees. Many are technically charged tuition, but it is “waived” as long as they are working for the university.

The House tax bill would eliminate that waiver and require them to pay taxes on the full value of the tuition they don’t have to pay, which would result in many students with fairly low incomes seeing very large tax bills.

At the same time, the House tax bill would eliminate the deduction for interest paid on student loans. This would disproportionately affect young doctors.

According to the Association of American Medical Colleges, 75 percent of the medical school class of 2017 graduated with student loan debt, with nearly half owing $200,000 or more.

5. Change or eliminate the tax credit that encourages pharmaceutical companies to develop drugs for rare diseases.

Congress created the so-called Orphan Drug Credit in 1983, as part of a package of incentives intended to entice drugmakers to study and develop drugs to treat rare diseases, defined as those affecting fewer than 200,000 people. With such a small potential market, it does not otherwise make financial sense for the companies to spend the millions of dollars necessary to develop treatments for such ailments. To date, about 500 drugs have come to market using the incentives, although in some cases drugmakers have manipulated the credit for extra financial gain.

The House tax bill would eliminate the tax credit; the Senate bill would scale it back. Sen. Orrin Hatch (R-Utah), chairman of the tax-writing Finance Committee, is one of the original sponsors of the orphan drug law.

The drug industry has been relatively quiet about the potential loss of the credit, but the National Organization for Rare Disorders called the change “wholly unacceptable” and said it “would directly result in 33 percent fewer orphan drugs coming to market.“

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Taking the credit away, Taylor said, “eliminates the possibility for my child to have a bright and happy future.”

Taylor, whose 9-year-old son, Aiden, has a rare connective tissue disorder, spoke as part of a small rally thrown together this week by the National Organization for Rare Disorders (NORD) — the nation’s largest advocacy group for patients with rare diseases.

Earlier this month, House Republicans proposed eliminating the orphan drug tax credits, which Congress passed as part of a basket of financial incentives for drugmakers in the 1983 Orphan Drug Act. The law, intended to spur development of medicines for rare diseases, also gives seven years of market exclusivity for drugs that treat a specific condition that affects fewer than 200,000 people.

The Senate Finance Committee, led by Sen. Orrin Hatch (R-Utah), put the tax credit back into the tax legislation. After some negotiations, the committee settled on reducing the credit to 27.5 percent of the costs of preapproved clinical research, compared with the current 50 percent. The committee also restored a provision that would have eliminated any credits for drugmakers who repurpose a mass-market drug as an orphan.

“As with any major reform, tough choices have to be made,” a Hatch spokesperson wrote in an emailed statement, adding that the senator will continue to work “to make the appropriate policy decisions” to deliver a comprehensive tax overhaul.

Hatch, a member of a rare-disease congressional caucus, received $102,600 in campaign contributions from pharmaceutical and related trade group political action committees in the first half of 2017, making him the top recipient of pharmaceutical cash in the Senate.

If the Senate provision remains untouched, reducing the tax credit would save the federal government nearly $30 billion over a decade, according to released late last week.

Orphan drug development has become big business in recent years and advocates as well as critics of the industry say tax credits have been an important motivation for companies. Orphan drugs accounted for 7.9 percent of total U.S. drug sales last year, according to a released by QuintilesIMS and NORD.

Because patient populations for rare-disease drugs are relatively small, companies often charge premium prices for the medicines. EvaluatePharma, a company that analyzes the drug industry, estimates that among the top 100 drugs in the U.S. the average annual cost per patient for an orphan drug last year was $140,443. Giant pharmaceutical companies such as Celgene, Roche, Novartis, AbbVie and Johnson & Johnson have led worldwide sales in the orphan market, according to EvaluatePharma’s .

Jonathan Gardner, the U.S. news editor for EvaluatePharma, said the orphan drug tax credit is “probably the most important incentive for developing an orphan drug.” Cutting the credit will force even the large companies to question development of drugs for rare diseases, Gardner said.

Dr. Aaron Kesselheim, an associate professor of medicine at Harvard Medical School, has been critical of the Orphan Drug Act’s incentives and of companies taking advantage of the law’s financial incentives for profit. But he warned against rushing to eliminate the tax credit.

“We need to think about ways we can improve the Orphan Drug Act and stop people from gaming the system and exploiting it,” Kesselheim said. But there “are a lot of rare diseases that don’t have treatments. So, we need to be careful in making changes.”

The battle over the tax credit is the latest controversy for the Food and Drug Administration’s orphan drug program. FDA Commissioner Scott Gottlieb announced a “” plan for the agency this summer, closing a pediatric testing loophole and eliminating a backlog of corporate applications for orphan drug status. And, this week, the agency confirmed that Dr. Gayatri Rao, director for the Office of Orphan Products Development, is leaving.

Meanwhile, the Government Accountability Office confirmed this month that it recently launched an investigation of the orphan drug program. The GAO’s review was sparked by a letter from top Republican Sens. Hatch, Chuck Grassley (R-Iowa) and Tom Cotton (R-Ark.), asking the agency to investigate whether drugmakers “might be taking advantage” of the drug approval process.

When the 1983 Orphan Drug Act was passed, described an orphan drug as one that affects so few people that drugmakers might lose money after covering the cost of developing a drug. Congress added the 200,000- limit in 1984.

Today, many orphan medicines treat more than one condition and often come with astronomical prices. Many of the medicines aren’t entirely new, either. A Kaiser Health News investigation, which was also aired and published by NPR, found that more than 70 of the roughly 450 individual drugs given orphan status were first approved for mass-market use, including cholesterol blockbuster Crestor, Abilify for psychiatric conditions, cancer drug Herceptin and rheumatoid arthritis drug Humira, which for years was the best-selling medicine in the world.

More than 80 other orphans won FDA approval for more than one rare disease and, in some cases, multiple rare diseases, the KHN investigation showed.

The pharmaceutical industry has had a muted response to the tax bill, which includes . The powerful industry lobbying group PhRMA said it is pleased Congress is looking at overhauling the tax code but “encourages policymakers to maintain incentives” for rare diseases. BIO, the Biotechnology Innovation Organization that represents biomedical companies, said it was “gratified” the Senate committee chose to partially retain the credit but would prefer to keep the existing incentive.

The group that rallied Tuesday — wearing bright-orange shirts that read “Save the Orphan Drug Tax Credit” — planned to meet with a couple of dozen lawmakers, including Grassley, who is a member of the Senate Finance Committee.

NORD, like many patient advocacy groups, receives funding from pharmaceutical companies, but the organization’s leaders say the industry does not have members on the board and does not dictate how general donations are spent.

On Tuesday, NORD leaders said they are open to discussions about the tax credit and whether the overall law is working as intended.

“We’re here to have that conversation, we’re ready to have that conversation,” said Paul Melmeyer, director of federal policy for NORD. “Sadly, that’s not the conversation we are having today.”

Abbey Meyers, a founder of NORD and the leading advocate behind passing the initial 1983 law, said she fears the high cost of the drugs will make it impossible to sustain the orphan drug program. Now retired, Meyers said she has followed the law’s success over the years and believes the tax credit should not be changed.

“There are other things that have happened since the law was passed where there wasn’t any logic to what they did,” Meyers said, adding “because somebody went to a senator and they put into the law.”

KHN’s coverage of prescription drug development, costs and pricing is supported by theÌý. Kesselheim’s work is also supported by the foundation.

ºÚÁϳԹÏÍø News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about .

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