Pharma's Orphans - Pharmaceutical Executive


Pharma's Orphans

Pharmaceutical Executive

Big Breaks for Little Diseases

The Orphan Drug Act was passed by Congress in 1983 to coax the drug industry into the rare disease space. The law offers a raft of incentives, including a tax credit equal to 50 percent of the clinical trials' cost, priority review at FDA, no PDUFA fee, and, most enticingly, seven years of market exclusivity.

Seeking Approval: The regulatory road is challenging to get approval for orphan drugs, which are designed to treat rare medical conditions
The legislation is almost universally viewed as a roaring success. Since its passage, FDA has approved 353 orphan drugs and granted orphan designations to more than 2,116 compounds. A report in January by Christopher Milne at the Tufts Center for the Study of Drug Development found that even after more than 25 years, the trends in orphan drug development are up. One third of all FDA approvals between 2006 and 2008 were orphan drugs. Revenue from orphan drugs in the US reached $32.5 billion in 2006, more than half of the entire market; sales are set to grow to $50 billion by 2011, an 8 percent jump. Such statistics contrast vividly with most industry trends—a fact that has not escaped Big Pharma, whose share of all orphan approvals leapt from 35 percent in 2000-02 to 56 percent in 2006-08. (For a more detailed breakdown of orphan drug and designation trends, see chart.)

Novartis has long been Big Pharma's lonely leader in this space, with four orphan drugs on the market, including the tyrinose kinase inhibitor Gleevec, which brought chronic myelogenous leukemia (and related rare cancers) to heel. Approved in 2001 after clinical trials that broke all records for speed, the "magic bullet" had originally been shelved, the victim of a marketer's "too small" mentality, until a Web-driven protest by CML patients helped the Swiss pharma see the light. Now a $5 billion blockbuster, Gleevec is both a cautionary tale for advocates and the envy of every orphan drugmaker.

Now Novartis has company. Most notably, GlaxoSmithKline launched a standalone business unit for orphan drugs in February even as it was shuttering several primary-care development programs. Last month, the British firm inked a deal worth up to $1.5 billion with Isis Pharmaceuticals, whose antisense platform is the granddaddy in the RNA-based therapy space. This follows the behemoth's $650 million agreement with Dutch biotech Prosena to take its antisense drug for the orphan disease Duchenne muscular dystrophy into Phase III.

Ironically, the emergence of the orphan space as a significant opportunity for pharma may have less to do with the incentives of the Orphan Drug Act than the necessities of the industry's radically upended market dynamics. With the collapse of the high-volume primary-care blockbuster model, companies are dancing as fast as they can to stuff their pipelines with high-margin specialty drugs. Not only are orphan drugs the ultimate niche product—they're also a state-protected monopoly free of price controls and generic competition, with guaranteed reimbursement and minimal marketing expenses. And they fetch some of the market's highest price. Orphan powerhouse Genzyme charges from $200,000 to $400,000 for its enzyme-replacement therapies for lysomal storage diseases such as Gaucher, Pompe, and Fabry.

Emil Kakkis, Kakkis EveryLife Foundation
These budget-busting bills are typically covered by insurance in the US because keeping small numbers of patients healthier for longer is more cost-effective than leaving them untreated and in need of frequent hospitalizations. Drugmakers try to remove some of the sting with patient-assistance programs where shortfalls and steep copays occur. Yet a child with an orphan disease requiring lifelong treatment can reach the lifetime cap in the family's insurance policy before hitting adolescence. As a result, the orphan disease lobby pushed hard for Healthcare Reform Bill's no-lifetime-caps provision. (They continue to fight against cost-effectiveness, seeing it as a serious threat to patients with orphan diseases that are treated only by off-label drugs.)


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