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Big Pharma Companies Use Loophole on Old Drugs for New Profits

Drug companies are using a federal incentive for research into rare diseases to get additional exclusive selling time on existing drugs, according to an Axios report.

Blockbuster drugs that already do well are now scooping up so-called orphan drug incentives. Pharmaceutical companies depend on exclusive sales for their compounds to protect high prices and increase profits. For companies that do research into drugs for orphan diseases—those that afflict fewer than 200,000 people—the government can approve a seven-year extension to normal patent exclusivity.

Although the incentive was intended for new drug research, many companies find new applications for major drugs that have been around for a long time and then seek the extension. One example, Rituxan, has obtained seven orphan approvals—meaning seven additional uses—and now has exclusivity until June 2025.

The pharmaceutical companies say that the additional exclusivity doesn’t prevent others from making biosimilar products aimed at older uses. But critics say the orphan designation could discourage competition anyway.

Drug companies have been facing significant criticism over pricing, and the big pharma industry enjoys high-profit margins.

Concerns about potential misuse of orphan drugs isn’t new either. Johns Hopkins professor of surgery Martin Makary wrote in a 2015 commentary, “The industry has been gaming the system by slicing and dicing indications so that drugs qualify for lucrative orphan status benefits,” according to a statement at the time from the private university.