How Patents and Orphan Drug Status may Impede the Accessibility of SARS-CoV-2 Treatments

Access to a vaccine for the corona virus SARS-CoV-2 is essential. IP or other proprietary rights should not block the access to medicines or vaccines.

The coronavirus SARS-CoV-2 pandemic gives grave cause for concern. It has claimed the lives of over 48,500 people and counting. No vaccines are (as of now) available. No new or pre-existing medicines are approved to treat this type of corona virus. Nevertheless, several existing pharmaceuticals are entering the clinical trial phase. Indeed, some of these drugs have been around for some time, developed previously to treat other viruses such as HIV and Ebola. One of these drugs, ‘Remdesivir’, is reportedly showing great promise for treating covid-19 patients who currently rely on intensive care and ventilators. If this drug proved even partially effective, it could be a major breakthrough in treatment methods, save lives and pave the way for businesses to resume trading.

The role of Gilead Sciences Inc.

Gilead, the IP rightsholder for Remdesivir, applied and received an orphan drug designation (explained below) for this medication by the US Food and Drug Administration (FDA) on the 23rd of March 2020.

It should be acknowledged that, following a huge public backlash, Gilead applied just two days later, on the 25th of March, to rescind Remdesivir’s orphan status. Yet the status currently remains in place, as does the patent for the drug. The fact that the FDA will rescind the status does not alter the fact that it should not have been granted in the first place. Nor does it negate the risk that another equally, or even more, effective drug may also be accorded orphan status in the coming weeks. This post outlines what orphan drug designations and patents may mean for covid-19 treatments, and briefly proposes two ways which may be used to ensure their accessibility in Europe, and beyond.

Orphan Drug Status

Orphan drug status is reserved for drugs that target rare, topical diseases which affect so few people that research and development (R&D) in these areas would be unprofitable and unsustainable without government intervention. To be considered an orphan drug in the US, the drug must treat a specified rare disease which affects less than 200,000 people in total; although, when it cannot be expected that R&D costs will be recouped from US sales, this status is also granted if the people affected exceeds 200,000.

The other criteria that must be met is that no other means to diagnose, prevent or treat the disease have been authorized, or that the proposed drug is clinically superior to an already approved drug. EU orphan drug requirements are slightly different as they stipulate that: the disease must be life-threatening or chronically debilitating; the number of people affected must be lower than 5 in 10,000, or that generating “sufficient returns to justify the investment needed for its development” is unlikely; no other methods to treat, prevent or diagnose this disease have been authorized, or, if another drug has been authorized, that this new drug involves a significant public health benefit. Given these conditions, it is unlikely that Remdesivir would (or should) be afforded EU orphan drug status.

Remdesivir as “orphan drug”?

As the FDA did grant Remdesivir orphan drug status, it now enjoys a prolonged market exclusivity period of 7 years in the US, meaning no other company may market or sell the drug without obtaining prior consent. In addition to this, the drug already enjoys a 20-year patent monopoly, which prevents generic market entry, and allows Gilead to set the market price. The reasoning behind price-setting rights is to allow companies to recoup R&D costs, particularly relevant for orphan drugs as the number of patients is low, and to further incentivize drug development.

Is there a benefit to the public?

The FDA’s accordance of orphan drug status, even for what turned out to be only a short period of time, demands our attention for several reasons. It is important to note that the essence of orphan drug status is to secure a benefit to the public, by helping pharma companies develop drugs for rare diseases. With the current pandemic, it is the public who are now under threat and the public who now need access to any drug which will help reduce the alarming mortality rate.

Yet, Gilead received $79 million dollars from the US government and tax-payer money when developing this drug, meaning the public may, to some extent, effectively pay for the drug twice.

The requirement for the disease to be ‘rare’ is also important. In granting orphan status, the FDA thereby classified covid-19 as rare. This is curious. Not only is it suspect to claim that a virus affecting over 948,000 people is rare, but if the disease were indeed rare, governments would not be shutting down the economy and society, nor would the race to find treatments be drawing so much attention worldwide. But orphan drug status is also awarded in the US if the disease affects more than 200,000 people when “there is no reasonable expectation that costs of research and development of the drug for the indication can be recovered by sales of the drug in the United States”. This is a reasonable commercial justification. However, claiming that a potential treatment drug for covid-19 would fail to recover investments is absurd. Given the number of people affected, it is also likely that any costs will be recovered (and more), either by governments, insurance companies or from patients out-of-pocket. Indeed, it is worth noting that President Trump allegedly offered $1bn for a corona vaccine. Based on these facts, it is inconceivable that Gilead would not make a return from its small, additional investments to get Remdesivir tested and approved for covid-19. In short, it is hard to see how the drug satisfies any of the criteria for orphan drug status, demonstrating that it, and SARS-CoV-2 (or “Covid-19”) treatments in general, are not orphan drugs.

Can orphan drugs be subject of compulsory licensing?

Equally important is the fact that it is unclear whether orphan drugs can be subject to compulsory licenses, as the law suggests that regulators should preserve their exclusivity by not granting similar drugs market authorizations. Compulsory licenses are permitted under Article 31 of TRIPS and allow governments to circumvent patent rights on public health grounds by allowing generic manufactures to produce and distribute the drug at a lower price, while fairly compensating the original rights-holder. An orphan drug status or stringent patent enforcement on Remdesivir, or on any other covid-19 drug, may therefore entail higher prices for years to come. The public health safety net, which is specifically designed to put the public’s health above commercial profits in times of dire need, is also maybe not applicable, just at the moment when the public needs it most.

This is especially concerning for three principal reasons. First, this pandemic may last 6-18 months, and corona viruses may continue to re-surface in different ‘variations’. Second, financial markets are already collapsing, causing businesses to lay off employees and governments to use billions to save the economy. Having to spend billions more to subsidize medicines may not only perpetuate this economic downturn, but these drugs may nonetheless be too expensive for certain patients, particularly, those of a lower socio-economic background and/or who lack health insurance. Third, developing and least developed countries and the citizens living in these countries cannot afford high-priced medicines. All in all, this may cause more deaths than need be.

It is thus vital to tackle accessibility issues regarding covid-19 treatments head-on, whether it be for vaccines, diagnostic treatments or medicines. To widen said accessibility, there are different measures which may be implemented, including compulsory licensing and voluntary licensing. So far, Chile and Canada have adopted legislation to facilitate for compulsory licensing, with Israel already having issued a compulsory license for the HIV drug Kaletra; another potential covid-19 treatment. Abbvie, the rightsholder for Kaletra, has notably waived its patent rights and placed the Kaletra patent in the Medicines Patent Pool (MPP) which opens up the possibility of large voluntary license schemes. The MPP is a UN backed organisations which obtains licensing rights from patent-holders and then sub-licenses manufacturing and distribution rights to generic companies. Its focus remains on developing and least countries, but its scope may notably be broadened during this pandemic to ensure universal access.

Conclusion

In conclusion, Gilead’s filing and the FDA’s initial approval of Remdesivir for orphan drug status is a wake-up call. It is a warning that discovering treatments does not guarantee accessibility. Some pharmaceutical companies may, even in the face of a pandemic, prioritize the extension of its monopoly rights rather than widening access. Public pressure may well force them to behave more honorably, as shown with Gilead, and this is welcome, showing the power of digital connectivity at a time when physical connectivity is practically non-existent. However, the public authorities also have a duty to serve the public interest. Now is not the time to game the intellectual property system to guarantee an extended monopoly. Now is the time, for all parts of society, to place human lives above potential profits, and uplift the potentials barriers which orphan drug designations and patents may have on medicinal accessibility.

by Katarina Foss-Solbrekk, PhD Student at the Law Faculty of Oxford University

This article was first published by IPKAT under the title: “Covid-19 Treatments: The Issue of Orphan Drug Status and Patents“.

For further reading on the US Orphan Drug Act (ODA) of 1983:

“Financialization of the U.S. Pharmaceutical industry” by William Lazonick, Öner Tulum, Matt Hopkins, Mustafa Erdem Sakinç, and Ken Jacobson, The Academic-Industry Research Network December 2, 2019

The Orphan Drug Act (ODA) of 1983 provided financial subsidies and market protection for pharmaceutical companies to develop drugs for rare and genetic diseases. Lazonick and Tulumhave shownthat these so-called orphan drugs were the foundation for pharmaceutical revenue growth in the 1990s and 2000s.17From the law’s enactment in 1983 through November 21, 2019, there were 5,173ODA designations and 836approvals.18ODA also offers R&D tax credits as well as FDA assistance in ensuring the rapid transformation of a promising therapy into an approved marketable drug. Most important, ODA incentives include seven-year marketing exclusivity fora specific therapeutic application. Unlike patent protection, which begins at the outset of the drug-discovery process, ODA exclusivity begins once the drug has been approved for sale by the FDA. Moreover, the company that has obtained ODA approval does not necessarily require patent protection to have market exclusivity in selling the drug.Orphan drugs, which have typically come with very high price tags, were central to the growth of the leading companies in the biopharmaceutical drug industry, including Amgen, Genentech, Genzyme, Biogen IDEC, Cephalon, and Allergan. Large pharmaceutical companies have alsobenefitedfrom orphan drugs, either by acquiring smaller biopharmacompanies or by entering into co-marketing deals with them that entail both equity investments and research contracts critical to funding the quest to develop an approved orphan drug.

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