FDA Special Status Programs (Part II: Concerns)

June 16, 2019 | RP
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FDA Special Status Programs (Part II: Concerns)

The original intention of FDA “special status” programs such as “orphan status” and “breakthrough therapy” was to level the playing field by providing financial and development incentives to get drug companies to target ailments or treatment types which would otherwise be ignored. And these programs have certainly achieved that goal of motivating the pharma industry. Hundreds of drugs for rare or very serious illnesses have come to market which otherwise would never have been justifiable for drug companies to pursue, including therapies with entirely new mechanisms of action. Based on these numbers, the special status programs have been widely touted by industry as a success in achieving these objectives.

However, from the standpoint of consumers and patients, there is increasing concern that pharma companies have increasingly learned to game the system, often using special status to simply create monopolies around already-existing drugs so that they can raise prices and prevent the FDA from approving alternative treatments. There is also concern that the incentives now lead drug companies to disproportionately target highly lucrative niche indications while ignoring significant threats to broader public health which lack such incentives.

Ka-ching. From the standpoint of consumers and patients, concepts like skewed incentives and confiscatory profits have an understandably negative ring to them. But when it comes to small biotech companies, the mere mention of terms like “orphan status” or “breakthrough therapy” can cause significant spikes in the share prices. The only ring heard by the investors is the hoped-for ring of the cash register.

Ka-blam. Despite the confiscatory profits being reaped by existing pharma players, the use of “special status” buzz words by smaller biotech companies pursuing new drugs has been consistently proven to add no value whatsoever. The material below should hopefully clarify why this is the case.

In general, special status does not increase the likelihood of approval for new drugs. The reality is that the vast majority of new drugs, even those with a “special” status, are never ultimately approved. Different studies consistently show that the approval rate for new drugs is only around 10-14%. The largest study to date was conducted by MIT and contained over 400,000 data points on drugs entering clinical trials between 2000 and 2015. The MIT study revealed that the likelihood of FDA approval is about 13.8%. A separate study conducted by the Biotechnology Innovation Organization (BIO) found that between 2006 and 2015 the overall likelihood of approval from Phase I for all drugs was only 9.6%.

In fact, receiving a “special” status is no longer very special at all. The New York Times found that today the majority of drugs seeking approval receive one or more of the “special” statuses mentioned above. Much of the reason for this increased granting of “special” status is that the scope of the approvals for such awards has significantly expanded over the years. A study published by the Journal of the American Medical Association (JAMA) found that the scope of accelerated approval has “expanded to include drugs with marginal ancillary benefits such as a novel mechanism of action without improvements in safety or efficacy.”

Drugs approved under a special status program may be more likely to experience safety issues. A study published in The British Medical Journal (BMJ) reviewed 382 FDA approved drugs from January 1997 to April 2016. The study found that expedited pathway drugs with “special” status qualification had a 48% higher rate of changes to “black box” warnings and contraindications, which are the two most important categories of safety warnings. The study concluded that special status drugs approved under expedited pathways “are associated with increased safety related label changes after approval, particularly for the types of changes representing the highest risk warnings.”

Another study from Yale University School of Medicine found that nearly one-third of therapeutics approved between 2001 and 2010 had postmarket safety events. The study found safety events were more frequent among therapeutics that received accelerated approval.

In some cases, drugs that were approved under an expedited approval pathway were later found to be ineffective and toxic to the patient. For example, oncology drugs often qualify for a special status like orphan designation or breakthrough therapy. This article from JAMA discusses how many of these oncology drugs have never been shown to reduce mortality and patients on these drugs suffer the toxic side effects without experiencing any increase in survival. This was the case for Avastin in treating metastatic breast cancer. The FDA withdrew approval for this indication when they realized there was no mortality benefit.

One scenario where odds of approval might tangibly benefit from special status is when the drug is allowed to be considered on the basis of an alternative endpoint. However, this practice is drawing increasing scrutiny from the medical profession. As stated by Dr. Rita Redberg in an article on JAMA:

“If there are no drugs available that can extend life with tolerable adverse effect, we must extend warmth and compassion and support in a continued therapeutic relationship without further chemotherapy. In our rush to find new effective treatments, we should not harm our patients with ineffective toxic ones.”

Conclusion: Even though achieving “special” status is becoming increasingly common, some companies continue to tout “orphan” drug status, “fast track” approval and “breakthrough therapy” designation as if it provides some kind of difficult-to-achieve advantage when in fact obtaining such designations is now the rule rather than the exception. In addition, the benefits of the programs and the effectiveness of any drug still need to be evaluated over many years. Initial spikes in share prices for small biotechs are typically not warranted.