LAUSR

We appreciate the interest that Manning and readers have shown in orphan drug policy [1]. The incentives established in the 1983 Orphan Drug Act have undoubtedly become a success story helping to create new markets for rare conditions in the USA. Our concern, however, is that the incentives established by this Act have been exploited by certain drugs to significantly extend monopoly periods [2]. Extended monopoly periods enable drug manufacturers to increase drug prices without facing competition from generics or biosimilars, which ultimately may have serious effects in compromising affordability and patient access. It is true that orphan drug market exclusivities are indication specific—during the exclusivity period, a generic or biosimilar competitor may not be approved for that indication. While in theory a generic or biosimilar could be approved for a different indication, there are a series of reasons why it is unlikely that a generic or biosimilar would seek approval and that it would have relevant uptake even if approved. First, as described in our paper, pharmacies and hospitals would be unlikely to carry the generic or biosimilar or add it to their formulary [3]. This is an important consideration for injectables or other drugs with complex delivery mechanisms such as biologics; carrying more than one product for the same drug means having to invest in training of staff, maintaining separate inventories, and monitoring appropriate use. In addition, even if off-label prescribing may be common, it typically occurs for clinical conditions where there is some empirical evidence of effectiveness. Prescribing a generic or biosimilar off-label when the reference product is approved for the condition (and is protected by exclusivity) might raise questions of reimbursement and potential malpractice liability in case the patient experiences an adverse reaction. Particularly in the field of oncology, offlabel use is an exception, not a rule. Moreover, off-label prescribing under the Medicare Part B program is not boundless; it requires evidence generation by the manufacturer to meet Medicare reimbursement requirements. Second, health insurers are unlikely to cover the generic or biosimilar competitor because of drug price negotiations. Provided the reference drug has unexpired market exclusivity for a given condition, the insurer has an incentive to cover the reference drug (to avoid the potential liability of offlabel prescribing). Adding the competitor to the health plan’s formulary would reduce the market share of the reference drug in that plan. Drug manufacturers tend to offer price concessions according to the drug’s market share and may choose to withdraw or reduce price concessions if the reference product loses market share to the competitor. Because of the high cost of orphan drugs, the discount offered by the competitor may not be large enough to offset the lost price concessions, essentially representing a “rebate trap” that results in the incentive for the health plan to cover the reference product only [4]. Third, while the primary analysis assumes a discount rate of 20% for biosimilars and 75% for small molecules, we This author’s reply refers to the letter to the editor at https ://doi. org/10.1007/s4027 3-020-00975 -7. This reply refers to the article available at https ://doi.org/10.1007/s4027 3-020-00934 -2.