Strategic Commentary
The Evolving Drug Development Landscape: From Blockbusters to Niche Busters in the Orphan Drug Space 1
DDR
DRUG DEVELOPMENT RESEARCH 75 : 231–234 (2014)
Ashish Kumar Kakkar1* and Neha Dahiya2 Department of Pharmacology, All India Institute of Medical Sciences, Bhopal, India 2 Department of Preventive and Social Medicine, Lady Hardinge Medical College, New Delhi, India
Strategy, Management and Health Policy Enabling Technology, Genomics, Proteomics
Preclinical Research
Preclinical Development Toxicology, Formulation Drug Delivery, Pharmacokinetics
Clinical Development Phases I-III Regulatory, Quality, Manufacturing
Postmarketing Phase IV
ABSTRACT Large pharmaceutical companies have traditionally focused on the development of blockbuster drugs that target disease states with large patient populations. However, with large-scale patent expirations and competition from generics and biosimilars, anemic pipelines, escalating clinical trial costs, and global health-care reform, the blockbuster model has become less viable. Orphan drug initiatives and the incentives accompanied by these have fostered renewed research efforts in the area of rare diseases and have led to the approval of more than 400 orphan products. Despite targeting much smaller patient populations, the revenue-generating potential of orphan drugs has been shown to be huge, with a greater return on investment than non-orphan drugs. The success of these “niche buster” therapeutics has led to a renewed interest from “Big Pharma” in the rare disease landscape. This article reviews the key drivers for orphan drug research and development, their profitability, and issues surrounding the emergence of large pharmaceutical firms into the orphan drug space. Drug Dev Res 75 : 231–234, 2014. © 2014 Wiley Periodicals, Inc.
Key words: orphan drugs; rare diseases
INTRODUCTION
Drugs for rare diseases, so-called orphan drugs, are an important public health concern and a challenge for the medical community since they are often difficult to discover, develop, and market. Basic research in the mechanisms of rare diseases receives relatively little attention and financial support in both academia and industry. Clinical trials on drug safety and efficacy in small populations also entail a tedious and complex process from funding to enrollment to patient compliance. Additionally, the costs of developing and bringing to the market such medicinal products are not expected to be recovered by the sales revenue under traditional market conditions [Heemstra et al., 2009]. Orphan diseases are defined by their rarity. In the USA, the Orphan Drug Act (ODA) [FDA 2014b] defines an orphan disease as a condition that affects © 2014 Wiley Periodicals, Inc.
fewer than 200,000 individuals, such as Huntington’s disease, myoclonus, amyotrophic lateral sclerosis, Tourette syndrome, and muscular dystrophy. The European Medicine Agency Committee for Orphan Medicinal Products defines orphan disease as a lifethreatening or chronically debilitating condition the prevalence of which is not more than 5 in 10,000 [Dear et al., 2006]. Therefore, the number of patients affected *Correspondence to: Ashish Kumar Kakkar, Department of Pharmacology, All India Institute of Medical Sciences, Bhopal 462024, India. E-mail: [email protected], akakkar.pharm@aiimsbhopal .edu.in Received 23 February 2014; Accepted 25 March 2014 Published online in Wiley Online Library (wileyonlinelibrary .com). DOI: 10.1002/ddr.21176
232
KUMAR KAKKAR AND DAHIYA
by a rare disease may be about 36 million in Europe and 25 million in the USA [European Commission, 2014; FDA, 2014c]. Specific legislation to stimulate the development and commercialization of orphan drugs has been introduced in the USA (1983), Japan (1993), Australia (1998), and the EU (2000) [Dear et al., 2006]. Orphan drug designation is granted if the therapeutic is specifically used to treat a disease whose prevalence is so low that, in the absence of incentives, commercializing the drug will be unlikely to generate sufficient revenues to justify the investment required for its development. Key Drivers of Orphan Drug R&D Under the ODA, sponsors (drug companies, biotech firms, investigators) with an orphan designation for a medicinal product can benefit from incentives such as tax credits, exemption from FDA application filing fees, funding grants for clinical development, protocol assistance, and a 7-year marketing exclusivity following regulatory approval. According to statistics from the FDA, since the authorization of the ODA in 1983, the agency has granted nearly 3000 orphan designations and approved more than 400 of these products for marketing [FDA, 2014d]. There has been an exponential increase in the total number of orphan drug designations from 53 in 1997 to 258 in 2013. Concurrently, the annual number of orphan drug approvals has remained more or less constant. This trend has been observed within the broader setting of declining numbers of new molecular entity (NME) approvals [Braun et al., 2010]. Potential reasons for the discrepancy between the increasing number of orphan drug designations and the relatively constant number of orphan drug approvals include difficulties in attaining appropriate sample sizes and logistical issues related to the organization of trials [Phillips, 2013; Dunoyer, 2011; Thomson Reuters, 2012]. Key drivers facilitating the development of orphan products can be classified into R&D-related and commercial-related. The former category includes shorter timelines for clinical development and the greater probability of regulatory success in addition to fee waivers, tax credits, and grants. Commercial-related economic drivers include high pricing, relatively lower commercialization costs, increased reimbursement possibilities, and longer periods of market exclusivity [Meekings et al., 2012]. In the USA, orphan drugs are granted a 7-year marketing exclusivity. In the EU and Japan, the period of market exclusivity lasts for 10 years after the marketing authorization. There have been conflicting views on the strength of market exclusivity as a driver for orphan Drug Dev. Res.
drug development. As compared to patent protection, where the sponsor needs to demonstrate novelty, for market exclusivity only an orphan status is required. Also, while the former is usually awarded relatively early in the life cycle of a product, the latter commences only after drug approval [Dear et al., 2006]. Consequently, while market exclusivity has been hailed as the strongest of orphan drug incentives [Clissold, 1995; Dear et al., 2006], it may have a relatively modest overall impact on the effective patent and market exclusivity life of an orphan drug [Seoane-Vazquez et al., 2008]. For orphan drugs, the FDA user fees for reviewing a marketing application (NDA) are waived. One of the key provisions of the ODA is the Orphan Drug Tax Credit (ODTC). Under the ODTC, sponsors can claim a tax credit of 50% of expenditures incurred during the clinical development phase for orphan drugs. Such incentives have not been possible for sponsors in the EU owing to the fact that taxation in Europe is controlled by individual member states [Dear et al., 2006]. The FDA also provides an orphan products grants program that annually funds 12–15 clinical studies on product safety and efficacy [Haffner et al., 2002]. Since its inception in 1982, the Office of Orphan Products Development has reviewed over 1400 grant applications and funded over 550 studies, with the orphan products grants program facilitating the marketing approval of more than 45 products [FDA, 2014a]. Regulatory agencies also provide scientific advice to orphan product developers to aid in the optimization of the design of safety and efficacy studies enabling them to meet regulatory requirements and maximizing their chances of successful marketing application [Boat and Field, 2010]. An analysis by Meekings et al. [2012] showed that the average time from Phase II to launch of an orphan drug was 3.9 years, considerably shorter than the 5.42 years for non-orphan drugs. Their study further demonstrated a significant 5% increase in the probability of regulatory success for orphan drug applications (93%) compared with that of non-orphan drugs (88%). The Phase III development costs of orphan drugs are estimated as 25% those of non-orphan NMEs, while the median number of patients enrolled in Phase III trials has been estimated to be 528 versus 2234 for nonorphan drugs [EvaluatePharma, 2013]. Orphan drugs usually bear premium prices due to the smaller target populations, longer periods of exclusivity, meager availability of alternatives, and limited negotiating capabilities of patients and third-party payers [Simoens, 2011]. Incentives given to boost R&D of orphan drugs must be coupled with reimbursement mechanisms to ensure access to these therapies.
FROM BLOCKBUSTERS TO NICHE BUSTERS
This has been a contentious issue due to the limited cost-effectiveness of orphan drugs in most settings and uncertainty regarding clinical benefits of treatment [Drummond et al., 2007]. Some orphan drugs can cost in excess of $400,000 a year [Medical Billing Coding, 2012]; such drugs include imiglucerase (Gaucher’s disease), complement C1 esterase inhibitor (hereditary angioedema), eculizumab (paroxysmal nocturnal hemoglobinuria), idursulfase (Hunter syndrome), pralatrexate (peripheral T-cell lymphoma), glucosidase-α (Pompe’s disease), rilonacept (cryopyrinassociated periodic syndromes and gout flares), alsulfase (Maroteaux-Lamy syndrome, also known as mucopolysaccharidosis type VI), and elosulfase alfa (Morquio A syndrome). Rituximab, approved for use in rheumatoid arthritis, has orphan drug status for nonHodgkin’s lymphoma, chronic lymphocytic leukemia, Wegener’s granulomatosis, and microscopic polyangiitis and is presently the second best-selling drug in the world [Thomson Reuters, 2012]. Rituxan is projected to retain its position as the bestseller orphan drug through 2018, with annual sales of US$6.9 billion for all indications [EvaluatePharma, 2013]. Creative approaches, including risk-sharing schemes, have been employed to address these inherent risks of orphan drug development and limit payer concerns regarding costs [Simoens, 2011]. Costs associated with marketing of orphan drugs are minimal, since typically, only a few specialized tertiary care centers are involved in the management of patients suffering from rare diseases [Côté and Keating, 2012]. Profitability of Orphan Drugs According to economic analysis of orphan and non-orphan products by Meekings et al. [2012], between 2001 and 2010 the compound annual growth rate (CAGR) of the orphan drug market was 25.8% versus 20.1% for a matched group of non-orphan drugs, suggesting that the CAGR of orphan drugs will continue to exceed that of non-orphan drugs for the period 2010–2030. Exceptionally high prices coupled with attractive development incentives have made orphan drugs equally viable to non-orphan drugs, with gross profit margins in excess of 80%, five times the pharmaceutical industry average [Phillips, 2013]. The global orphan drug market is estimated to reach US$127 billion by 2018, accounting for nearly 16% of total prescription drug sales, excluding generics [EvaluatePharma, 2013]. Orphan drug profitability can continue after expiration of orphan drug exclusivity (ODE) periods due to the fact that a large number of these products are biologicals that are in general less amenable to generic competition as compared to
233
NMEs, given complex manufacturing processes that are subject to greater variability. New patents and additional exclusivities may continue to protect these drugs beyond their ODE periods [Thomson Reuters, 2012]. In addition, generic competitors may be dissuaded from entering the orphan market by small target populations for these agents. Off-label use of these products, especially anticancer therapies, can boost sales [Côté and Keating, 2012]. Evolution of Drug Development Business Models: From Blockbusters to Niche Busters Big pharmaceutical companies have traditionally focused on “high-prevalence” disease states, such as cardiovascular disorders, diabetes, hyperlipidemias, and arthritis, for generating revenue and supporting their drug discovery efforts. However, with the loss of patents on blockbuster NMEs, a drought in product pipelines, and mounting clinical trial costs, the blockbuster model may have seen its day. New drugs launched between 2006 and 2010 had average annual sales of US$143 million in the USA 3 years after their launch, as compared with US$208 million in the preceeding 5 years [Rockoff and Winslow, 2013] and offered only minor improvement over existing therapies. Several pharma companies have well-established orphan product portfolios [Phillips, 2013] that have been supported by mergers and acquisitions; those of Genentech by Roche in 2009, FoldRx by Pfizer in 2010, and Genzyme by Sanofi in 2011 are prime examples. Additionally, Novartis has acquired CAM2029, a longacting form of the the somatostain peptide octreotide for the treatment of acromegaly and neuroendocrine tumors, from Camurus, a Swedish biotechnology company [Camurus, 2013]. Although the advantages for large pharmaceutical companies to enter the orphan drug space may appear obvious, there are concerns given that the rare disease arena is a close-knit community comprising specialists deeply committed to patient care, with patient advocacy groups and academic researchers requring pharma to embrace a “patient-centric” approach where the drug sponsors function in close collaboration with all the stakeholders [Phillips, 2013]. There are also intrinsic differences between drug development and marketing approaches for blockbusters and those for rare disorders, with the latter involving higher risk but less marketing muscle. To date, most of the approved orphan drugs represent the only therapeutic options in their respective disease categories. However, with the emergence of more orphan products for indications that are limited by the affected population, this is bound to change. This, together with increasing constraints on Drug Dev. Res.
234
KUMAR KAKKAR AND DAHIYA
health-care budgets, is likely to introduce changes in public policy and may have far-reaching implications for patient access to such medicines [Hyde and Dobrovolny, 2010]. Through partnerships with biotech companies, big pharma firms can continue to build relationships with the rare disease community. The orphan disease arena represents an opportunity to introduce novel molecules for unmet medical need that will enhance public trust by ensuring transparency of clinical trial data and pricing strategies. Such partnerships will continue to emerge, since smaller biotechnology firms, with research and development capabilities, and “Big Pharma,” with superior infrastructure and commercialization expertise, complement each other well. REFERENCES
EvaluatePharma. 2013. EvaluatePharma Orphan Drug Report 2013. Accessed on 2 May 2013. http://www.evaluategroup.com/public/ Reports/EvaluatePharma-Orphan-Drug-Report-2013.aspx. FDA 2014a. Developing Products for Rare Diseases & Conditions. Accessed on 23 Jan 2014. http://www.fda.gov/forindustry/ DevelopingProductsforrareDiseasesConditions/default.htm. FDA. 2014b. Orphan Drug Act. Accessed on 5 Jan 2014. http:// www.fda.gov/regulatoryinformation/legislation/federalfood drugandcosmeticactfdcact/significantamendmentstothefdcact/ orphandrugact/default.htm. FDA. 2014c. Orphan Products: Hope for People With Rare Diseases. Accessed on 5 Jan 2014. http://www.fda.gov/Drugs/Resources ForYou/Consumers/ucm143563.htm. FDA. 2014d. Search Orphan Drug Designations and Approvals. [online] Accessed on 15 Feb 2014. http://www.accessdata.fda.gov/ scripts/opdlisting/oopd/index.cfm. Haffner ME, Whitley J, Moses M. 2002. Two decades of orphan product development. Nat Rev Drug Discov 1:821–825.
Boat TF, Field MJ. 2010. Rare diseases and orphan products. Washington, DC, National Academic Press.
Heemstra HE, van Weely S, Büller HA, Leufkens HGM, de Vrueh RLA. 2009. Translation of rare disease research into orphan drug development: disease matters. Drug Discov Today 14:1166–1173.
Braun MM, Farag-El-Massah S, Xu K, Coté TR. 2010. Emergence of orphan drugs in the United States: a quantitative assessment of the first 25 years. Nat Rev Drug Discov 9:519–522.
Hyde R, Dobrovolny D. 2010. Orphan drug pricing and payer management in the United States: are we approaching the tipping point? Amer Health Drug Benefit 3:15–23.
Camurus.com. 2013. Camurus receives option-exercise milestone for octreotide FluidCrystal® product CAM2029. Accessed on 12 Feb 2014. http://www.camurus.com/?DocumentID=6&Lang=sv &Show=%286%29&showsid=yes&main=News&newsID=43. Clissold DB. 1995. Prescription for the Orphan Drug Act: the impact of the FDA’s 1992 regulations and the latest congressional proposals for reform. Food Drug Law J 50:125–147. Côté A, Keating B. 2012. What is wrong with orphan drug policies? Value Health J. Int. Soc. Pharmacoeconomics Outcomes Res 15:1185–1191.
Medical Billing & Coding. 2012. The 11 Most Expensive Medicines in America. Accessed on 6 Feb 2012. http://www .medicalbillingandcoding.org/blog/the-11-most-expensive -medicines-in-america/. Meekings KN, Williams CSM, Arrowsmith JE. 2012. Orphan drug development: an economically viable strategy for biopharma R&D. Drug Discov Today 17:660–664. Phillips MI. 2013. Big Pharma’s new model in orphan drugs and rare diseases. Exp Opin Orphan Drugs 1:1–3.
Dear JW, Lilitkarntakul P, Webb DJ. 2006. Are rare diseases still orphans or happily adopted? The challenges of developing and using orphan medicinal products. Br J Clin Pharmacol 62:264– 271.
Rockoff JD, Winslow R. 2013. New Medicines Emerge, but Few Blockbusters. Wall Street Journal. Accessed on 15 Dec 2013. http://online.wsj.com/news/articles/SB1000142405270230428100 4579222362098933226.
Drummond MF, Wilson DA, Kanavos P, Ubel P, Rovira J. 2007. Assessing the economic challenges posed by orphan drugs. Int J Technol Assess Health Care 23:36–42.
Seoane-Vazquez E, Rodriguez-Monguio R, Szeinbach SL, Visaria J. 2008. Incentives for orphan drug research and development in the United States. Orphanet J Rare Dis 3:33.
Dunoyer M. 2011. Accelerating access to treatments for rare diseases. Nat Rev Drug Discov 10:475–476.
Simoens S. 2011. Pricing and reimbursement of orphan drugs: the need for more transparency. Orphanet J Rare Dis 6:42.
EC.europa.eu. 2014. Policy—European Commission. [online]. Accessed on 3 Jan 2014. http://ec.europa.eu/health/rare_diseases/ policy/index_en.htm.
Thomson Reuters. 2012. The Economic Power of Orphan Drugs. Accessed on 15 Jan 2014. http://thomsonreuters.com/products/ipscience/04_013/1001450.pdf.
Drug Dev. Res.
The Evolving Drug Development Landscape: From Blockbusters to Niche Busters in the Orphan Drug Space 1
DDR
DRUG DEVELOPMENT RESEARCH 75 : 231–234 (2014)
Ashish Kumar Kakkar1* and Neha Dahiya2 Department of Pharmacology, All India Institute of Medical Sciences, Bhopal, India 2 Department of Preventive and Social Medicine, Lady Hardinge Medical College, New Delhi, India
Strategy, Management and Health Policy Enabling Technology, Genomics, Proteomics
Preclinical Research
Preclinical Development Toxicology, Formulation Drug Delivery, Pharmacokinetics
Clinical Development Phases I-III Regulatory, Quality, Manufacturing
Postmarketing Phase IV
ABSTRACT Large pharmaceutical companies have traditionally focused on the development of blockbuster drugs that target disease states with large patient populations. However, with large-scale patent expirations and competition from generics and biosimilars, anemic pipelines, escalating clinical trial costs, and global health-care reform, the blockbuster model has become less viable. Orphan drug initiatives and the incentives accompanied by these have fostered renewed research efforts in the area of rare diseases and have led to the approval of more than 400 orphan products. Despite targeting much smaller patient populations, the revenue-generating potential of orphan drugs has been shown to be huge, with a greater return on investment than non-orphan drugs. The success of these “niche buster” therapeutics has led to a renewed interest from “Big Pharma” in the rare disease landscape. This article reviews the key drivers for orphan drug research and development, their profitability, and issues surrounding the emergence of large pharmaceutical firms into the orphan drug space. Drug Dev Res 75 : 231–234, 2014. © 2014 Wiley Periodicals, Inc.
Key words: orphan drugs; rare diseases
INTRODUCTION
Drugs for rare diseases, so-called orphan drugs, are an important public health concern and a challenge for the medical community since they are often difficult to discover, develop, and market. Basic research in the mechanisms of rare diseases receives relatively little attention and financial support in both academia and industry. Clinical trials on drug safety and efficacy in small populations also entail a tedious and complex process from funding to enrollment to patient compliance. Additionally, the costs of developing and bringing to the market such medicinal products are not expected to be recovered by the sales revenue under traditional market conditions [Heemstra et al., 2009]. Orphan diseases are defined by their rarity. In the USA, the Orphan Drug Act (ODA) [FDA 2014b] defines an orphan disease as a condition that affects © 2014 Wiley Periodicals, Inc.
fewer than 200,000 individuals, such as Huntington’s disease, myoclonus, amyotrophic lateral sclerosis, Tourette syndrome, and muscular dystrophy. The European Medicine Agency Committee for Orphan Medicinal Products defines orphan disease as a lifethreatening or chronically debilitating condition the prevalence of which is not more than 5 in 10,000 [Dear et al., 2006]. Therefore, the number of patients affected *Correspondence to: Ashish Kumar Kakkar, Department of Pharmacology, All India Institute of Medical Sciences, Bhopal 462024, India. E-mail: [email protected], akakkar.pharm@aiimsbhopal .edu.in Received 23 February 2014; Accepted 25 March 2014 Published online in Wiley Online Library (wileyonlinelibrary .com). DOI: 10.1002/ddr.21176
232
KUMAR KAKKAR AND DAHIYA
by a rare disease may be about 36 million in Europe and 25 million in the USA [European Commission, 2014; FDA, 2014c]. Specific legislation to stimulate the development and commercialization of orphan drugs has been introduced in the USA (1983), Japan (1993), Australia (1998), and the EU (2000) [Dear et al., 2006]. Orphan drug designation is granted if the therapeutic is specifically used to treat a disease whose prevalence is so low that, in the absence of incentives, commercializing the drug will be unlikely to generate sufficient revenues to justify the investment required for its development. Key Drivers of Orphan Drug R&D Under the ODA, sponsors (drug companies, biotech firms, investigators) with an orphan designation for a medicinal product can benefit from incentives such as tax credits, exemption from FDA application filing fees, funding grants for clinical development, protocol assistance, and a 7-year marketing exclusivity following regulatory approval. According to statistics from the FDA, since the authorization of the ODA in 1983, the agency has granted nearly 3000 orphan designations and approved more than 400 of these products for marketing [FDA, 2014d]. There has been an exponential increase in the total number of orphan drug designations from 53 in 1997 to 258 in 2013. Concurrently, the annual number of orphan drug approvals has remained more or less constant. This trend has been observed within the broader setting of declining numbers of new molecular entity (NME) approvals [Braun et al., 2010]. Potential reasons for the discrepancy between the increasing number of orphan drug designations and the relatively constant number of orphan drug approvals include difficulties in attaining appropriate sample sizes and logistical issues related to the organization of trials [Phillips, 2013; Dunoyer, 2011; Thomson Reuters, 2012]. Key drivers facilitating the development of orphan products can be classified into R&D-related and commercial-related. The former category includes shorter timelines for clinical development and the greater probability of regulatory success in addition to fee waivers, tax credits, and grants. Commercial-related economic drivers include high pricing, relatively lower commercialization costs, increased reimbursement possibilities, and longer periods of market exclusivity [Meekings et al., 2012]. In the USA, orphan drugs are granted a 7-year marketing exclusivity. In the EU and Japan, the period of market exclusivity lasts for 10 years after the marketing authorization. There have been conflicting views on the strength of market exclusivity as a driver for orphan Drug Dev. Res.
drug development. As compared to patent protection, where the sponsor needs to demonstrate novelty, for market exclusivity only an orphan status is required. Also, while the former is usually awarded relatively early in the life cycle of a product, the latter commences only after drug approval [Dear et al., 2006]. Consequently, while market exclusivity has been hailed as the strongest of orphan drug incentives [Clissold, 1995; Dear et al., 2006], it may have a relatively modest overall impact on the effective patent and market exclusivity life of an orphan drug [Seoane-Vazquez et al., 2008]. For orphan drugs, the FDA user fees for reviewing a marketing application (NDA) are waived. One of the key provisions of the ODA is the Orphan Drug Tax Credit (ODTC). Under the ODTC, sponsors can claim a tax credit of 50% of expenditures incurred during the clinical development phase for orphan drugs. Such incentives have not been possible for sponsors in the EU owing to the fact that taxation in Europe is controlled by individual member states [Dear et al., 2006]. The FDA also provides an orphan products grants program that annually funds 12–15 clinical studies on product safety and efficacy [Haffner et al., 2002]. Since its inception in 1982, the Office of Orphan Products Development has reviewed over 1400 grant applications and funded over 550 studies, with the orphan products grants program facilitating the marketing approval of more than 45 products [FDA, 2014a]. Regulatory agencies also provide scientific advice to orphan product developers to aid in the optimization of the design of safety and efficacy studies enabling them to meet regulatory requirements and maximizing their chances of successful marketing application [Boat and Field, 2010]. An analysis by Meekings et al. [2012] showed that the average time from Phase II to launch of an orphan drug was 3.9 years, considerably shorter than the 5.42 years for non-orphan drugs. Their study further demonstrated a significant 5% increase in the probability of regulatory success for orphan drug applications (93%) compared with that of non-orphan drugs (88%). The Phase III development costs of orphan drugs are estimated as 25% those of non-orphan NMEs, while the median number of patients enrolled in Phase III trials has been estimated to be 528 versus 2234 for nonorphan drugs [EvaluatePharma, 2013]. Orphan drugs usually bear premium prices due to the smaller target populations, longer periods of exclusivity, meager availability of alternatives, and limited negotiating capabilities of patients and third-party payers [Simoens, 2011]. Incentives given to boost R&D of orphan drugs must be coupled with reimbursement mechanisms to ensure access to these therapies.
FROM BLOCKBUSTERS TO NICHE BUSTERS
This has been a contentious issue due to the limited cost-effectiveness of orphan drugs in most settings and uncertainty regarding clinical benefits of treatment [Drummond et al., 2007]. Some orphan drugs can cost in excess of $400,000 a year [Medical Billing Coding, 2012]; such drugs include imiglucerase (Gaucher’s disease), complement C1 esterase inhibitor (hereditary angioedema), eculizumab (paroxysmal nocturnal hemoglobinuria), idursulfase (Hunter syndrome), pralatrexate (peripheral T-cell lymphoma), glucosidase-α (Pompe’s disease), rilonacept (cryopyrinassociated periodic syndromes and gout flares), alsulfase (Maroteaux-Lamy syndrome, also known as mucopolysaccharidosis type VI), and elosulfase alfa (Morquio A syndrome). Rituximab, approved for use in rheumatoid arthritis, has orphan drug status for nonHodgkin’s lymphoma, chronic lymphocytic leukemia, Wegener’s granulomatosis, and microscopic polyangiitis and is presently the second best-selling drug in the world [Thomson Reuters, 2012]. Rituxan is projected to retain its position as the bestseller orphan drug through 2018, with annual sales of US$6.9 billion for all indications [EvaluatePharma, 2013]. Creative approaches, including risk-sharing schemes, have been employed to address these inherent risks of orphan drug development and limit payer concerns regarding costs [Simoens, 2011]. Costs associated with marketing of orphan drugs are minimal, since typically, only a few specialized tertiary care centers are involved in the management of patients suffering from rare diseases [Côté and Keating, 2012]. Profitability of Orphan Drugs According to economic analysis of orphan and non-orphan products by Meekings et al. [2012], between 2001 and 2010 the compound annual growth rate (CAGR) of the orphan drug market was 25.8% versus 20.1% for a matched group of non-orphan drugs, suggesting that the CAGR of orphan drugs will continue to exceed that of non-orphan drugs for the period 2010–2030. Exceptionally high prices coupled with attractive development incentives have made orphan drugs equally viable to non-orphan drugs, with gross profit margins in excess of 80%, five times the pharmaceutical industry average [Phillips, 2013]. The global orphan drug market is estimated to reach US$127 billion by 2018, accounting for nearly 16% of total prescription drug sales, excluding generics [EvaluatePharma, 2013]. Orphan drug profitability can continue after expiration of orphan drug exclusivity (ODE) periods due to the fact that a large number of these products are biologicals that are in general less amenable to generic competition as compared to
233
NMEs, given complex manufacturing processes that are subject to greater variability. New patents and additional exclusivities may continue to protect these drugs beyond their ODE periods [Thomson Reuters, 2012]. In addition, generic competitors may be dissuaded from entering the orphan market by small target populations for these agents. Off-label use of these products, especially anticancer therapies, can boost sales [Côté and Keating, 2012]. Evolution of Drug Development Business Models: From Blockbusters to Niche Busters Big pharmaceutical companies have traditionally focused on “high-prevalence” disease states, such as cardiovascular disorders, diabetes, hyperlipidemias, and arthritis, for generating revenue and supporting their drug discovery efforts. However, with the loss of patents on blockbuster NMEs, a drought in product pipelines, and mounting clinical trial costs, the blockbuster model may have seen its day. New drugs launched between 2006 and 2010 had average annual sales of US$143 million in the USA 3 years after their launch, as compared with US$208 million in the preceeding 5 years [Rockoff and Winslow, 2013] and offered only minor improvement over existing therapies. Several pharma companies have well-established orphan product portfolios [Phillips, 2013] that have been supported by mergers and acquisitions; those of Genentech by Roche in 2009, FoldRx by Pfizer in 2010, and Genzyme by Sanofi in 2011 are prime examples. Additionally, Novartis has acquired CAM2029, a longacting form of the the somatostain peptide octreotide for the treatment of acromegaly and neuroendocrine tumors, from Camurus, a Swedish biotechnology company [Camurus, 2013]. Although the advantages for large pharmaceutical companies to enter the orphan drug space may appear obvious, there are concerns given that the rare disease arena is a close-knit community comprising specialists deeply committed to patient care, with patient advocacy groups and academic researchers requring pharma to embrace a “patient-centric” approach where the drug sponsors function in close collaboration with all the stakeholders [Phillips, 2013]. There are also intrinsic differences between drug development and marketing approaches for blockbusters and those for rare disorders, with the latter involving higher risk but less marketing muscle. To date, most of the approved orphan drugs represent the only therapeutic options in their respective disease categories. However, with the emergence of more orphan products for indications that are limited by the affected population, this is bound to change. This, together with increasing constraints on Drug Dev. Res.
234
KUMAR KAKKAR AND DAHIYA
health-care budgets, is likely to introduce changes in public policy and may have far-reaching implications for patient access to such medicines [Hyde and Dobrovolny, 2010]. Through partnerships with biotech companies, big pharma firms can continue to build relationships with the rare disease community. The orphan disease arena represents an opportunity to introduce novel molecules for unmet medical need that will enhance public trust by ensuring transparency of clinical trial data and pricing strategies. Such partnerships will continue to emerge, since smaller biotechnology firms, with research and development capabilities, and “Big Pharma,” with superior infrastructure and commercialization expertise, complement each other well. REFERENCES
EvaluatePharma. 2013. EvaluatePharma Orphan Drug Report 2013. Accessed on 2 May 2013. http://www.evaluategroup.com/public/ Reports/EvaluatePharma-Orphan-Drug-Report-2013.aspx. FDA 2014a. Developing Products for Rare Diseases & Conditions. Accessed on 23 Jan 2014. http://www.fda.gov/forindustry/ DevelopingProductsforrareDiseasesConditions/default.htm. FDA. 2014b. Orphan Drug Act. Accessed on 5 Jan 2014. http:// www.fda.gov/regulatoryinformation/legislation/federalfood drugandcosmeticactfdcact/significantamendmentstothefdcact/ orphandrugact/default.htm. FDA. 2014c. Orphan Products: Hope for People With Rare Diseases. Accessed on 5 Jan 2014. http://www.fda.gov/Drugs/Resources ForYou/Consumers/ucm143563.htm. FDA. 2014d. Search Orphan Drug Designations and Approvals. [online] Accessed on 15 Feb 2014. http://www.accessdata.fda.gov/ scripts/opdlisting/oopd/index.cfm. Haffner ME, Whitley J, Moses M. 2002. Two decades of orphan product development. Nat Rev Drug Discov 1:821–825.
Boat TF, Field MJ. 2010. Rare diseases and orphan products. Washington, DC, National Academic Press.
Heemstra HE, van Weely S, Büller HA, Leufkens HGM, de Vrueh RLA. 2009. Translation of rare disease research into orphan drug development: disease matters. Drug Discov Today 14:1166–1173.
Braun MM, Farag-El-Massah S, Xu K, Coté TR. 2010. Emergence of orphan drugs in the United States: a quantitative assessment of the first 25 years. Nat Rev Drug Discov 9:519–522.
Hyde R, Dobrovolny D. 2010. Orphan drug pricing and payer management in the United States: are we approaching the tipping point? Amer Health Drug Benefit 3:15–23.
Camurus.com. 2013. Camurus receives option-exercise milestone for octreotide FluidCrystal® product CAM2029. Accessed on 12 Feb 2014. http://www.camurus.com/?DocumentID=6&Lang=sv &Show=%286%29&showsid=yes&main=News&newsID=43. Clissold DB. 1995. Prescription for the Orphan Drug Act: the impact of the FDA’s 1992 regulations and the latest congressional proposals for reform. Food Drug Law J 50:125–147. Côté A, Keating B. 2012. What is wrong with orphan drug policies? Value Health J. Int. Soc. Pharmacoeconomics Outcomes Res 15:1185–1191.
Medical Billing & Coding. 2012. The 11 Most Expensive Medicines in America. Accessed on 6 Feb 2012. http://www .medicalbillingandcoding.org/blog/the-11-most-expensive -medicines-in-america/. Meekings KN, Williams CSM, Arrowsmith JE. 2012. Orphan drug development: an economically viable strategy for biopharma R&D. Drug Discov Today 17:660–664. Phillips MI. 2013. Big Pharma’s new model in orphan drugs and rare diseases. Exp Opin Orphan Drugs 1:1–3.
Dear JW, Lilitkarntakul P, Webb DJ. 2006. Are rare diseases still orphans or happily adopted? The challenges of developing and using orphan medicinal products. Br J Clin Pharmacol 62:264– 271.
Rockoff JD, Winslow R. 2013. New Medicines Emerge, but Few Blockbusters. Wall Street Journal. Accessed on 15 Dec 2013. http://online.wsj.com/news/articles/SB1000142405270230428100 4579222362098933226.
Drummond MF, Wilson DA, Kanavos P, Ubel P, Rovira J. 2007. Assessing the economic challenges posed by orphan drugs. Int J Technol Assess Health Care 23:36–42.
Seoane-Vazquez E, Rodriguez-Monguio R, Szeinbach SL, Visaria J. 2008. Incentives for orphan drug research and development in the United States. Orphanet J Rare Dis 3:33.
Dunoyer M. 2011. Accelerating access to treatments for rare diseases. Nat Rev Drug Discov 10:475–476.
Simoens S. 2011. Pricing and reimbursement of orphan drugs: the need for more transparency. Orphanet J Rare Dis 6:42.
EC.europa.eu. 2014. Policy—European Commission. [online]. Accessed on 3 Jan 2014. http://ec.europa.eu/health/rare_diseases/ policy/index_en.htm.
Thomson Reuters. 2012. The Economic Power of Orphan Drugs. Accessed on 15 Jan 2014. http://thomsonreuters.com/products/ipscience/04_013/1001450.pdf.
Drug Dev. Res.
