Pharma's Windfall: The Mining Of Rare Diseases

Thirty years ago, Congress passed the Orphan Drug Act as a way to lure pharmaceutical companies to develop drugs for rare diseases that had been "orphaned" — abandoned or ignored because they were unprofitable. The hope was that drugmakers would break even or post modest profits.

SEATTLE (AP) -- Her vision failed first.

Then she fell asleep at school from inexplicable fatigue. Even walking proved difficult, often impossible, as she knocked into furniture and walls. It was like an electrical switch in her body toggled without warning. Some days she was in control, most she was not.

Specialists were stumped. Some wondered if 10-year-old Violet O'Dell exaggerated her symptoms for attention. A teacher warned that it was adolescent rebellion.

It took three months before a general practitioner detected the shadowy, cancerous tumor that clung to Violet's brain.

In the fall of 2011, a cancer physician at Seattle Children's hospital met with Violet. He crouched, to talk eye to eye. And he told her: The rare, inoperable malignancy struck just a few hundred children each year. Most died within a year. None survived.

But doctors could offer this: An "orphan drug" — one approved for a rare disease — might slow the cancer's growth. With the drug, Avastin, Violet might live an extra month, maybe longer.

The drug cost up to $50,000.

"How much would you pay to have extra time with your dying child?" Violet's mother, Jessica O'Dell, asks. "We don't make a lot of money. We knew we'd lose our home, everything we own."

For the O'Dell family, the drug's cost exceeded their annual income. For Genentech, the San Francisco-based company that manufactures Avastin, the drug brings in $3 billion a year.

The O'Dells' conundrum — a lot of money for a little time — highlights the pharmaceutical industry's unchecked profiteering from rare diseases.

Thirty years ago, Congress passed the Orphan Drug Act as a way to lure pharmaceutical companies to develop drugs for rare diseases that had been "orphaned" — abandoned or ignored because they were unprofitable. The hope was that drugmakers would break even or post modest profits.

The act paid off, with hundreds of new drugs. But over the years, its good intentions have been subverted by the pharmaceutical industry, which has increasingly found ways to exploit this once-obscure health-care niche, transforming it into a multibillion- dollar enterprise.

The law gave drugmakers financial incentives: market exclusivity for seven years, tax breaks and abbreviated testing. The freedom from competition — coupled with the ability of drugmakers to price drugs however they want — has propelled the treating of rare diseases into the fastest-growing sector of America's prescription-drug system.

This growth has accelerated in recent years, as drugmakers have faced dwindling profits on mainstream drugs, courtesy of expiring patents and low-cost generics.

Drugs for rare diseases commonly begin in the six figures for a year of treatment. This year, one reached $440,000.

The law defines a rare disease as one that affects fewer than 200,000 U.S. patients a year. Most afflict fewer than 6,000, according to the National Institutes of Health. But collectively, they impact an estimated 25 million Americans — about 1 in 12 people, the government reports.

The Food and Drug Administration decides which drugs qualify for orphan status and receive federal perks.

By law, pharmaceutical companies can market a drug only for its approved use. However, doctors can prescribe drugs, orphan or otherwise, in whatever way they choose, which is known as going "off label." It's in this regulatory gray area that drugs officially approved for a few hundred patients can be sold to tens of thousands more.

While off-label prescriptions benefit many patients and provide freedom of choice for doctors, the practice comes with significant risks. According to a Seattle Times analysis of adverse-event reports, studies and enforcement records, thousands of preventable injuries and early deaths have occurred when orphan drugs have been prescribed for unlicensed use.


In the late 1970s, a California mother learned about a drug that could help control her teenage son's Tourette's syndrome, a rare disorder that causes involuntary speech and tics.

The drug, Pimozide, was available in Canada, but not the U.S. When a family friend tried to bring the pills across the border, U.S. Customs agents seized the drug.

Rep. Henry Waxman, D-Calif., launched an investigation in 1980 after learning of his constituent's plight. His staff found that medical researchers had identified dozens of treatments for rare diseases — but the pharmaceutical industry wouldn't manufacture the drugs because costs exceeded potential profits. Waxman called these abandoned medications "orphan drugs."

Waxman's first public hearing attracted just one reporter. But the resulting article in the Los Angeles Times inspired Hollywood producer Maurice Klugman, who suffered from a rare cancer, to write a television episode for his brother, Jack Klugman, who starred as a crusading medical examiner in "Quincy, M.E."

Waxman's next hearing coincided with the episode's airing. This time, the chamber overflowed with spectators and reporters.

Waxman co-sponsored a bill designed to stimulate drug-company research into rare diseases in exchange for such perks as federal grants, tax breaks and abbreviated clinical trials.

When political wrangling threatened Waxman's bill, the Klugman brothers penned a second episode of "Quincy, M.E." that featured 500 extras — all real patients with rare disease — marching on the Capitol. The episode galvanized public support.

The Orphan Drug Act became law in January 1983. In the decades prior, the FDA had approved only 10 drugs for rare diseases. In the years since, at least 363 drugs have been approved, licensed for 449 variations of rare disease, a Times analysis shows.

Waxman has characterized the Orphan Drug Act as "government at its finest." The act is praised by many physicians, researchers and patient advocates for helping millions of patients receive treatments that otherwise might not exist.

But despite its "enormous" success, the act has had "some downsides," Waxman told The Times.

"The industry has taken advantage of the incentives to charge excessive profits and to reap windfalls far in excess of their investments in the drug," he said.

Waxman has introduced amendments to rein in profiteering — to cut into the seven years of market exclusivity, for example — only to face defeat, thanks to lobbying from the pharmaceutical industry.

"Almost a third of orphan drugs net more than $1 billion in annual sales," Waxman said. "I think we need to put some outer limits on the prices for some of these drugs. But this of course has been fought vigorously by the drug companies.

"You can never take anything away from drug companies even when you can show that they are being overpaid."


Six months after Violet O'Dell's diagnosis, she was again the precocious redhead who raced after her goats and chickens, an eye to the sky to protect the smallest from eagle strikes.

In quiet moments, she'd lie on the ground with her mother and stare at drifting clouds. "I call it the period of false hope," says Jessica O'Dell. "Everything seemed so normal. You begin to believe that your child is going to be that miracle."

The O'Dell family — Jessica, a part-time teacher at a Christian school; Jeramie, a welding teacher at a community college; and three children — lived on a seven-acre farm in Sequim.

When Violet was diagnosed in September 2011, she'd been rushed by ferry, then by ambulance, to Seattle Children's. Chemotherapy began two days later for brainstem glioma, located where the brain and spinal cord connect. Cancerous tentacles intertwined with healthy tissue, making it impossible to remove the tumor.

Doctors supplemented chemotherapy with Avastin, because clinical trials had shown the drug could ease symptoms and prolong life.

Jeramie secured an extended leave with pay from his job, which came with insurance. But the family's combined annual income of about $41,000 would not even cover the cost of deductibles.

"We put our faith in God and decided not to worry about it," Jessica says.

When the Make-A-Wish Foundation came calling, Violet bypassed Disney World for a new puppy, which she named Randy in memory of a 5-year-old patient she'd befriended who did not survive treatment.

By late spring of 2012, treatment had stunted Violet's tumor. But a month later, the tumor spread across her brain.

"Violet made the decision to stop treatment," Jessica says. The daylong trips to Seattle and the sickness that followed every treatment had become too much.


Britain does it. So do France, Germany and Canada. The only major industrialized country that doesn't regulate the cost of prescription drugs is America.

Here, prices reflect what the market will bear. That's dictated largely by insurance carriers, which negotiate reimbursements, and Medicare, which pays for essential treatment no matter the cost.

Sometimes, those prices stun. Soliris, an Alexion Pharmaceuticals drug used for a rare anemia, costs up to $440,000 a year. Gattex, a short-bowel-syndrome drug from NPS Pharmaceuticals, came out at $295,000 — three times the price first floated. Both drugs are licensed for only a few thousand U.S. patients each year.

Typically, the mega-blockbusters are orphan drugs licensed for multiple disorders, expanding the patient pool. A celebrated example is botulinum toxin type A, known today as wrinkle-remover Botox. Licensed in 1989 as an orphan drug to treat uncontrolled eye blinking, it generated $1.8 billion in sales last year.

The current top revenue-producing orphan drug is Rituxan, licensed by the FDA for non-Hodgkin's lymphomas and rheumatoid arthritis, among others. Used widely off-label to treat other diseases like multiple sclerosis and autoimmune anemia, the drug rings up more than $7 billion a year.

The pharmaceutical industry says high prices offset costs of research, which can take years and cost a billion dollars or more. The winners help support the many losers, subsidizing the chase for new drugs, according to industry trade groups.

A Thomson Reuters industry report published last year noted that more pharmaceutical companies are entering the rare-disease market because profit margins often exceed those for non-orphan drugs.

But those profits have generated pushback. This year, more than 100 prominent cancer specialists from more than a dozen countries banded together to protest rising prices in the medical journal Blood.

One way the pharmaceutical industry has profited is by taking existing diseases and cutting them up, creating new diseases and new markets. Hundreds of rare diseases are so similar that they can be differentiated only on a molecular level.

The FDA calls this "salami slicing" and has begun to clamp down, requiring more rigorous examination before a new disease is recognized.

There were about 2,000 rare diseases before the Orphan Drug Act. As of last month, there were 6,432, a Times analysis found.


The O'Dell family received a miracle, just not the one they most wanted.

All their medical expenses not covered by insurance were paid through a program at Seattle Children's for uncompensated care. Their mortgage payments were picked up by a private charity. In Sequim, local businesses and a school staged fundraisers to help.

"It was unbelievable," Jessica O'Dell says. "We thought we'd lose everything. So many people opened their hearts."

In October 2012, a year after she was diagnosed with brain cancer, Violet died in her sleep at home, surrounded by family.

Violet's pediatric oncologist, Dr. Jim Olson, was inspired by Violet's maturity and grace, and the family's willingness to donate their daughter's brain for research.

Olson had been working to extract new drugs from nature, from insects to sea life to plants. A promising candidate had been culled from a flower — the violet.

With doctors and researchers, Olson created Project Violet at the Fred Hutchinson center. Today, they are developing a new class of compounds, nicknamed optides, engineered to attack cancer cells without harming healthy tissue.

Funds get collected through crowdsourcing, what Olson calls "citizen science." Contributors adopt and name a specific compound for as little as $100. The initiative has already pulled in millions of dollars.

The traditional research model is "broken," Olson says. It takes too long and costs too much to learn if a drug works.

Take Avastin, the drug that was supposed to help Violet live longer.

For 16 years, it was studied in at least 400 clinical trials that varied by cancer and design.

But it wasn't until this year that a comprehensive trial with more than 600 patients — the drug's first double-blind study for newly diagnosed brain cancer — found no difference in survival between those patients who got the drug and those given a placebo.


In 1998, a Bellevue, Wash., woman named Gina Dichter learned she had a rare, often fatal lung disease called lymphangioleiomyomatosis. The disease - called LAM, for short - strikes mostly women; maybe five in a million get it.

Desperate for information, Dichter's family reached out to a foundation in Cincinnati and learned that while the disease had been recognized for 60-some years, little research had been done.

The Orphan Drug Act was supposed to entice industry, but in the case of Dichter's disease, pharma has been slow in coming.

With family and friends, Dichter seized the initiative, hosting an annual auction to benefit The LAM Foundation, which directs money to research. Hundreds of people attended, bidding on such items as a ride with the Blue Angels. "It was like putting on a wedding every year — for nine years," Dichter says.

But as the years passed, Dichter questioned whether it was fair to ask so much of everyone. In 2007, she called it quits. By then, her circle had donated more than $1.7 million to The LAM Foundation.

In 2002, research indicated that a drug approved for use in kidney transplants might be useful in treating LAM. The drug, Rapamune, was owned by Wyeth, subsequently acquired by Pfizer. Some patients, including Dichter, began taking the drug off-label.

Typically a drug's maker pursues a treatment trial. But while the market for kidney transplants fueled industry interest, the shallow pool of LAM patients did not. So the job fell to Dr. Frank McCormack, a Cincinnati pulmonologist who serves as The LAM Foundation's scientific director.

With other researchers, McCormack raised $8.5 million to conduct a trial in the United States, Canada and Japan. The LAM Foundation gave about $500,000. Pfizer contributed about $1.2 million, mostly in free Rapamune.

The trial took seven years to complete. In 2011, the results were published: The LAM patients taking Rapamune stabilized, while lung function in the placebo group declined.

McCormack wanted Pfizer to pursue FDA approval, to enhance doctors' confidence in the drug and guarantee insurance coverage for patients. "They thought about it for several months," McCormack says. "And they said, 'We're not doing it.'?"

Pfizer told McCormack it was a financial no-go; a key patent for Rapamune expires in January 2014, which means generics can enter the market, diminishing the drug's value.

In the end, McCormack and The LAM Foundation found a workaround. They filed a citizen petition asking the FDA to approve Rapamune as an orphan drug for LAM - a request that remains under consideration.

Although Rapamune's maker declined to pursue the limited LAM market, it pursued other uses for the drug, ones with more patients. The federal government accused Wyeth of putting profits over safety by unlawfully marketing the drug for heart, lung, liver and pancreas transplants, not just for its approved use with kidneys.

Earlier this year, Wyeth agreed to settle by paying the government $491 million.

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