TL/DR –
The One Big Beautiful Bill Act expands the orphan drug exclusion, which previously allowed rare disease drug and biologic manufacturers to be excluded from Medicare drug price negotiations. The bill now includes drugs that treat multiple rare diseases in the exemption, provided they haven’t been approved for non-orphan uses. The changes delay the price negotiation timeline until the drug is approved for a non-orphan indication, thus offering biotechnology companies an incentive to continue rare disease research and development, and possibly encouraging more private investment in rare disease research.
“`html
The One Big Beautiful Bill Act Spearheads Innovation in Rare Disease Sector
Through the expansion of the ‘orphan drug exclusion,’ the One Big Beautiful Bill Act is taking notable strides in the field of rare diseases. This once limited exemption allowed manufacturers of drugs and biologics for rare diseases to be exempted from consideration in Medicare drug price negotiations. The Act redefines the eligibility criteria for negotiation, with the aim of fostering innovation in the development of orphan drugs.
Orphan Drug Exemption Beyond the Original Scope
In its initial form, the Inflation Reduction Act (IRA) provided drugs with a solitary rare-disease, or orphan, indication exemption from the Medicare Drug Price Negotiation Program. This was only if the drug’s sole approved indication was for that single rare disease – this was termed as the ‘orphan drug exclusion.’ However, if a drug carried an orphan designation for more than one rare disease or condition, it did not fall under the orphan drug exclusion, regardless of whether the drug was approved for any non-orphan uses or not.
In a significant move, the US Congress has broadened the orphan drug exclusion to cover orphan drugs with one or more orphan designations. Henceforth, orphan drugs catering to multiple rare conditions will be granted full exemption from price negotiations, provided the drug has not been approved for any non-orphan uses.
Postponing the Onset of Negotiation Countdown
Not only did the bill broaden the category of drugs shielded by the orphan drug exclusion, but it also pushed back the timelines for when a qualified orphan drug may be eligible for price negotiations.
Earlier, the negotiation eligibility would start seven years after the first approval for drug products or 11 years after the initial licensure for biological products. This was irrespective of whether the drug was first approved or licensed for an orphan indication. The bill now postpones the negotiation timeline to only commence once the drug is approved for a non-orphan use. As a consequence, drugs expanding from a single rare disease to multiple rare diseases will have their negotiation countdown delayed until they venture into broader markets.
Encouraging Innovation: The Implications
For pharmaceutical manufacturers, the changes brought about by the bill to the negotiation program are a welcome restriction to the IRA’s sphere. Earlier, there was a deterrent to developing additional rare disease designations following an initial orphan approval, leading to a suppressed orphan drug market. The expansion of the orphan drug exclusion, with its pro-innovation incentives, is likely to trigger higher expenditure for clinical trials for additional orphan designations and boost the value of pharmaceutical manufacturers in the orphan drug market.
A Synopsis
At its core, the bill considerably expands and extends the orphan drug exclusion by enhancing negotiation protections for drugs with multiple rare disease indications and postponing price negotiations until the drug attains a non-orphan approval. The revised framework provides a strategic incentive to the biotechnology industry to continue research and development targeting rare diseases.
Moreover, the wider exclusion is expected to stimulate more private investment in the rare disease sector and increase the asset value with multiple potential rare disease indications. However, these alterations are likely to reignite the ongoing debate over balancing innovation incentives and the government’s cost containment objectives.
“`
—
Read More US Economic News