Despite concerns that the FDA fails to meet the needs of people with rare diseases, a new study by an industry-backed association found the agency has demonstrated flexibility in reviewing so-called orphan drugs. The findings appear to contradict concerns that drugmakers have less incentive to develop meds for small pools of patients compared with meds for much larger populations.

The study, which was conducted by the National Organization for Rare Disorders, examined 135 new chemical entities - except cancer meds - that were considered orphan drugs and approved by the FDA between 1983, when the Orphan Drug Act was enacted to provide drugmakers with incentives to develop such medicines, and June 2010.

The purpose of the study was to determine how much flexibility the FDA may have used in reviewing effectiveness data compared with reviews for other meds. NORD found that 45 would have met traditional data requirements, 32 reflected “administrative flexibility” based on a previously documented FDA system, and 58 reflected flexibility applied on a case-by-case basis (read the study).

“This review of FDA actions concludes that two of every three orphan drugs approved show FDA’s historic flexibility in its review of effectiveness data on orphan drug therapies,” Frank Sasinowski, the NORD chairman study author a lawyer at Hyman, Phelps & McNamara, says in a statement.

He adds that the FDA should memorialize its approach to provide greater certainty. “It would be helpful for such flexibility and importance to be recognized in a formal FDA policy, and for FDA officials to incorporate and recognize that flexibility in a systematic way in their evaluations of each new therapy in development and under FDA review for Americans with any rare disease,” he says.

The timing is deliberate. The FDA is expected to release guidance before the end of the year that would spell out requirements for orphan drug approvals. In general, there is ongoing concern among patient groups that drugmakers have little financial incentive to develop orphan drugs because, The Wall Street Journal writes, these have small markets and big development costs. To encourage development, the FDA has approved orphan drugs based on smaller studies and less proof of efficacy than is generally required for meds for other illnesses, the paper adds.

However, some consumer advocates say that altering approval hurdles for drugs based on differing patient populations may create the proverbial slippery slope. “There are all kinds of other benefits already written into law,” Public Citizen’s Sid Wolfe tells the Journal. “Why should the standard of approval be different if you have a rare disease than for non-rare diseases?”

Interestingly, orphan drugs already seem to have greater odds of winning FDA approval. According to a 2010 study by the Tufts Center for the Study of Drug Development, sponsors engaged in clinical development between 2000 and 2009 funded through orphan grants reported that 22 percent of their programs led to approvals, compared to a clinical approval success rate of 16 percent among other drug developers (see this).

Consequently, one Wall Street analyst believes that orphan drugs already offer an advantage that would benefit not only patients, but also drugmakers and investors. “We believe that orphan drugs have advantages over non-orphan ‘mass-market’ drugs, providing unique opportunities for companies and investors,” writes Leerink Swann biotech analyst Joseph Schwartz in an investor note this morning.

“We have found that orphan drugs have faster development time lines, lower R&D expenses, and a higher likelihood of clinical and regulatory success. Once on the market, they tend to have less competition, lower marketing costs and a longer life-cycle with less risk of generic erosion. Orphan drug products are also generally more innovative than non-orphan drugs as evidenced by a high number of new molecular entities,” he continues.

As a result, Schwartz writes that orphan drugmaker stocks have outperformed their so-called mass-market peers and benchmark indices over the past 10 years. Although, he adds that large-cap drugmakers have actually been responsible for many orphan drug approvals, even as the majority of orphan drugs have been developed by small biotechs.

Meanwhile, orphan designations are up. As of July, he notes, the FDA had granted 2,410 designations. Back in the 1980s, designations reached a mean of 52 a year, and rose to 63 in the 1990s. From 2008 to 2010, the number of designations hit a record - 165, 159, and 192, respectively.