[BioNOW] 'FDA Orphan Drug Designation'... Is It Really a Guarantee of Development Success?

Designation Targeting 'Target Disease' Not New Drug Value
About 68% of Applied Drugs Designated

Receive Many Benefits Such as Tax Credits and Exclusive Marketing Rights
But No Benefits Like Shortened Approval Period or Conditional Approval

U.S. Food and Drug Administration (FDA) Headquarters, Maryland, USA
Photo by Yonhap News

[Asia Economy Reporter Chunhee Lee] Many pharmaceutical and biotech companies challenge themselves in the new drug development process by applying for the U.S. Food and Drug Administration (FDA) 'Orphan Drug Designation (ODD)'. Thanks to the FDA and the word 'orphan,' it seems as if the FDA has recognized the value of this new drug. But is that really the case? Even if ODD is granted, it is known that the actual probability of the drug receiving approval is only about one in six. It’s as if they have received a certificate of guaranteed success, yet that’s not necessarily true.

68% Receive Designation Upon Application... Not a Guarantee of 'Drug Value'

First, ODD is a system that the FDA has established and enforces through legislation (The Orphan Drug Act) to encourage the development of treatments for rare diseases. To be designated, the drug’s target indication must be a 'rare disease.' Typically, this means a disease affecting fewer than 100,000 patients and having a high unmet medical need. When ODD is granted, the drug benefits from various supports and advantages during the development process and upon success.

During development, a tax credit of about 25% on clinical trial costs within the U.S. for the indication (ODTC) is provided. Because development costs are significantly reduced, it is estimated that without the ODTC system, one-third of existing orphan drugs would not have been developed. Additionally, the Orphan Drug Grant Program supports clinical trial costs for new therapies.

Furthermore, during the actual market launch process, application fees for approval are waived, and after marketing, the first drug approved in its class (first-in-class) is granted seven years of market exclusivity. This means no generic drugs can enter the market during this period, which is considered superior to traditional intellectual property patent protection or material incentives.

However, it is important to remember that ODD is designated for the 'disease,' not the 'drug.' The FDA recognizes the drug as a treatment for a rare disease but does not prove that the drug actually has the value to treat the disease. It is a means to expedite the approval process by simplifying the review procedure, not a guarantee of eventual product approval.

Moreover, by 2018, 7,183 products had applied for ODD, with a remarkable 67.5% (4,852 products) receiving designation. As the number of orphan drug designations rapidly increases, the FDA is reportedly considering making the designation criteria more stringent.

Not a 'Fast Approval' Target Either... Must Be Designated 'Priority Review'

There are other misunderstandings related to ODD. In Korea, it is often believed that receiving ODD allows for faster approval, such as through 'fast track' or conditional approval based on Phase 2 clinical trial results. However, ODD is not directly related to these systems. Fast track and conditional approval are related to the FDA's 'Expedited Review Programs.'

The FDA operates four expedited review programs to accelerate drug approval: ▲Fast Track ▲Breakthrough Therapy Designation (BTD) ▲Priority Review ▲Accelerated Approval.

Fast Track is designated for drugs that can treat serious conditions and have the potential to address unmet medical needs. The criteria for drugs addressing unmet medical needs include: ▲no existing treatment, ▲existing treatments are insufficiently effective, ▲effective in cases unresponsive to existing treatments, ▲effective when used in combination with existing treatments, ▲reducing toxicity or drug interactions compared to existing treatments, ▲improving medication adherence to improve serious conditions, or ▲resolving supply disruption issues.

However, ODD and Fast Track are not directly linked programs. Fast Track is not among the benefits granted to orphan drugs. Of course, among FDA-approved drugs from 2013 to 2018, 107 were orphan drugs, and 50 of these were simultaneously designated as Fast Track, so ODD may increase the possibility of Fast Track designation. But these drugs were simply designated under both programs; ODD does not guarantee Fast Track designation.

Moreover, Fast Track is not a program for faster approval. Because the term 'fast' is included, it is often misunderstood, but the program that shortens the approval period is Priority Review.

While the usual 'standard review' takes about 10 months after application, Priority Review shortens this period to 6 months. Considering that it can take up to 60 days for the review approval (filling) afterward, standard review takes about a year, whereas Priority Review takes about 8 months. Fast Track does not provide such benefits but allows closer communication with the FDA during each clinical development phase and offers the benefit of submitting applications in parts during the approval process, known as 'rolling review.'

Not Eligible for Conditional Approval Either... Must Receive 'Accelerated Approval'

It is also not possible to obtain conditional approval based solely on Phase 2 clinical trial results through ODD. Such support is not among the benefits granted by ODD; this system corresponds to Accelerated Approval. Accelerated Approval is granted to drugs that can treat serious diseases and show meaningful improvement over existing treatments based on surrogate clinical endpoints or intermediate clinical endpoints. Typically, approval is granted based on Phase 2 results, with the requirement to confirm efficacy through confirmatory trials within a specified period after approval.

Accelerated Approval is also unrelated to ODD. Not only is there no direct connection, but among the 107 FDA-approved orphan drugs from 2013 to 2018, only 14 (13%) received Accelerated Approval before final approval.

ODD is by no means easy to obtain, as 33% of all applications are rejected. However, it only provides various benefits because it targets rare diseases and does not prove the value of the drug itself. In fact, even if ODD is granted, only about one in six ultimately receive drug approval, and among those, only half receive new drug approval. Thus, 'Orphan Drug' designation does not guarantee new drug development success.