Orphan drugs are the pharmaceutical industry’s way of helping those who suffer from rare conditions. Thanks to the Orphan Drug Act, such patients can get the medications they need, and pharmaceutical companies can be duly incentivized to invest the time and resources required to research and develop these drugs. But what happens when competing rival drug companies are successful in undermining those incentives? The results could have broad, and perhaps unintended, effects throughout the industry.

An orphan drug is one produced to treat a rare medical condition. Under the Orphan Drug Act¹, drug companies are offered several incentives to create drugs to treat these rare diseases that command smaller, and thus “less profitable,” markets for their treatment. First, a company may request an FDA “orphan drug” designation for a qualifying drug being researched. Upon receiving an orphan drug designation, the pharmaceutical company developing this drug will receive financial benefits such as tax credits during the period for which it conducts safety and efficacy testing. Following receipt of an orphan drug designation, the developer must then file an New Drug Application (NDA) with the Food and Drug Administration (FDA) in order to obtain permission to market the drug. Once the FDA approves the orphan drug’s NDA, then it is permitted to benefit from seven years of marketing exclusivity.

Firdapse (amifampidine phosphate) was developed by Catalyst Pharmaceuticals Inc. to treat a rare condition known as Lambert-Eaton Myasthenic Syndrome (LEMS).² In November 2009, the FDA designated Firdapse as an orphan drug. Catalyst then filed its first NDA in 2015, which the FDA rejected on the grounds that Catalyst’s Firdapse application was “not complete to permit a substantive review.” Catalyst re-filed its Firdapse NDA in March 2018. In November 2018, the FDA approved Firdapse to treat LEMS “in adults,” triggering market exclusivity until November 2025.

Meanwhile, Jacobus Pharmaceutical Co. Inc. had developed its own amifampridine drug to treat LEMS nineteen years prior to Catalyst’s Firdapse. Jacobus’s drug Ruzurgi received its orphan drug designation from the FDA in 1990. Jacobus continued developing it for more than two decades, delaying its submission of an NDA for Ruzurgi until August 2017, two years after Catalyst’s first NDA for Firdapse was submitted. Ruzurgi’s NDA was rejected. Catalyst’s NDA was approved in November 2018. Jacobus re-filed its NDA in 2018, including information about the treatment of LEMS in patients between the ages of six and sixteen. However, the drug’s label would mention that Ruzurgi may also be used to treat adults. Upon comparison with Catalyst’s approved NDA, the FDA found that Firdapse only covered the treatment of LEMS in adults. Consequently, the FDA construed this to mean that Firdapse only had exclusivity for treating adult patients, and not children. Thus, the FDA took it upon themselves to create an “administrative[] divide” between the treatment of LEMS in adults vs in children.³ As the FDA later acknowledged, this was the first time it ever “approved an application for a drug with an indication to treat pediatric patients for a certain disease while another sponsor has obtained orphan drug exclusivity for a drug application for the same drug with only an indication to treat adult patients for that disease.”⁴

Following the FDA’s Ruzurgi approval, Catalyst filed a complaint against the FDA in the Southern District of Florida alleging violations of the Administrative Procedures Act (APA) in approving Jacobus’s NDA. Jacobus intervened as a co-defendant. In its suit, Catalyst sought, among other relief, an order to revoke the FDA’s Ruzurgi approval. Catalyst’s lawsuit was based on two premises:  First, the plain language of the Orphan Drug Act prevented the FDA from approving an NDA for the “same drug” that is used to treat “the same condition,” where Firdapse was approved first and Ruzurgi, the same drug (amifampidine), used to treat the same condition (LEMS), was approved only two years into Firdapse’s 7-year exclusivity. Second, in violation of the Food, Drug and Cosmetics Act (FDCA)⁵, Ruzurgi had “false or misleading” labeling suggesting that the drug could also be used for adult patients, even though Ruzurgi was only approved to treat children.

At the summary judgment phase of the case, it was undisputed that Firdapse and Ruzurgi are the “same drug,” and that LEMS, which both drugs treat, is a “single disease.” The Magistrate Judge, interpreting the doctrine of Chevron deference,⁶ determined that the phrase “same disease or condition” in the Orphan Drug Act is ambiguous, that the FDA was reasonable in its interpretation, and that Ruzurgi’s label was not in violation of the FDCA. The District Court adopted the Magistrate’s recommendation and ruled in favor of the FDA and Jacobus.

Catalyst appealed to the 11th Circuit, which reversed the Southern District of Florida’s decision. The 11th Circuit held that the phrase “same disease and condition” was unambiguous, adding that “a statute is not ambiguous merely because it contains a term without a statutory definition.”⁷ The 11th Circuit went on to explain that “Congress is not required to define each and every word in a piece of legislation in order to express clearly its will.”⁸ As such, the Circuit Court determined that the Southern District erred in granting summary judgment in favor of the FDA and Jacobus. Jacobus’s subsequent motion for reconsideration was denied.

Even though this case primarily focuses on statutory interpretation, a victory for Jacobus and the FDA would have completely shifted the way medications enter the market.

When a brand company files an NDA for a new drug, and the NDA is approved, the drug may get at least one of several types of exclusivity. For example, orphan drugs get a 7-year exclusivity, “New Chemical Entities”⁹ or “NCEs” (a classification for small-molecule drugs) get a 5-year exclusivity, and NDAs entitled to new clinical investigation exclusivity get 3 years. This exclusivity begins when the FDA approves an NDA. Drug companies may obtain a 6-month extension, known as pediatric exclusivity, if they test the NDA-holding drug for use on children. Upon expiry of a drug’s exclusivity, competing generics may enter the market.¹⁰

Under this system, the original NDA filer gets two main benefits if their application is approved:  First, the NDA filer gets the exclusive right to market the drug for a set period of time. This is an incentive for drug companies to invest the time, money and effort to create innovative drugs because it provides these innovator companies the opportunity to recoup their investment by profiting from a period during which barriers to competitive entrants are erected by statute. Second, the NDA filer gets the option to extend its exclusivity to pediatric use.

Here, had the FDA been allowed to approve a second NDA for the same drug being used to treat the same disease, it would have completely disrupted the system by which orphan drugs enter the market. It would have created precedent allowing drugs to enter under the guise of a new pediatric exception to an orphan drug NDA, but still would have permitted such secondary entrants to create labels suggesting that use in adults is approved. This would have driven down the profit incentive for initial orphan drug NDA filers and undermine the economic incentive for drug companies to commit the considerable resources it takes to research, develop, and market new drugs for rare indications.

The situation in this case can serve as a cautionary tale to orphan drug developers. Jacobus was the first company to develop amifampidine to treat LEMS, and Jacobus was the first company to receive the orphan drug designation for Ruzurgi. It was also already giving the drug out for free at research institutions like the Mayo Clinic for years before Catalyst filed its NDA for Firdapse. In the case of orphan drugs, perhaps companies like Jacobus could use this example to push for changes to ensure that companies who first develop an orphan drug do not get foreclosed from marketing it due to the delay between receiving an orphan drug designation and the filing of an NDA.

Perhaps FDA’s decision was intended to permit Jacobus to enjoy a slice of the profits for a drug it did develop first. But giving this credit should not come at the expense of inadvertently setting precedent that can potentially upset a much larger, and much more active part of the pharmaceutical industry. As such, orphan drug companies should take steps to protect their innovations by following through on the entire process – from filing patents to submitting the NDA to requesting their pediatric exclusivity – to mitigate the risk that a later filer is able to secure exclusivity on a first filer’s drug.