Big pharma’s enthusiasm for rare and orphan disease (ROD) drug development is paying off, at least in new drug approvals. As reported last month by Yahoo Finance (Yahoo article), 11 of the 37 of the drugs approved in 2011 by the US FDA were for rare diseases. As noted in the article, companies now believe developing and selling these drugs constitute a “viable” business model: “The companies are saying ‘this is actually a viable model.’ Whereas back in the nineties they were skeptical, now they seem convinced,” said Mark Schoenebaum, an analyst with International Strategy & Investment. My simplified explanation for the gold rush is the confluence of the following:
1) a relatively easy discovery pathway in that the RODs sometimes involve single targets and hence are more “druggable” unlike chronic diseases that are multifactorial including behavioral factors that are not treatable by drugs;
2) reduced preclinical risk in that smaller companies, sometimes with support of specific disease advocacy groups, have generated lead candidate drugs, sometimes through Phase II;
3) a relatively easy approval pathway due to ROD favoritism by the FDA (more below); and
4) a potential for high-margin prices and reimbursement which is aided by patient groups which advocate for insurers’ and government attention and, for drugs approved for rare cancers, by the opportunity for off-label sales for more common cancers. How high-priced? Most of the 12 priciest drugs are for rare conditions, topped by Soliris at $409,500 per year used to treat a rare blood disease which occurs in about 8,000 people in the U.S. (FiercePharma article).
I’m sure I’m not the first person to ask the question, but it is worth asking: how can we (the wealthy world) turn drug development for the neglected diseases (NDs) of the rest of the world into a viable business for the pharma/biotech industry? Using lever number 1 above is possible, but, of course, varies by disease and is hampered by the general lack of funding of basic research into the NDs, a situation being changed by increased foundation and European Union funding, but not the US NIH which, despite its relatively new program for rare and neglected diseases, puts peanuts into neglected disease research (besides HIV/AIDS). Number 2 is possible, but would need to be driven by more funding by enlightened investors, foundations (generally clueless about business and fearful of “for-profit” contamination), and advocacy groups (which tend to fund disaster relief and their own operations). Number 4 is not relevant to NDs and is posing a problem for US and EU governments as health care costs soar. There is a developing ROW market but profits will be slimmer and harder to get (see my post of last week, “Putting the B in B-BoP”). That leaves us with 3, having the FDA do what it can to promote the approval for drugs for ND for use in the US and, through their position as a leader in regulatory affairs, in the rest of the world.
The 1983 Orphan Drug Act empowered the FDA to accelerate the development of orphan drugs, defined as afflicting fewer than 200,000 in the US so most of the neglected diseases would be US “orphans,” the exceptions being HIV/AIDS and tuberculosis. As amended, the Act directs the FDA to provide direct research grants for drugs and pediatric medical devices, a 50% tax credit for human clinical testing, seven years of market exclusivity, and waiver of user fees for companies submitting orphan drug applications (Center for Global Health Policy Asessment summary). The FDA also helps orphan drug companies with an Office of Orphan Products Development (FDA OORD). These services can and have been used by companies developing treatments for the world’s neglected diseases but what else could the FDA do? Here are three ideas:
- transferable marketing exclusivity: a company granted US market exclusivity for an orphan drug could sell that exclusivity to another company for a more-than-orphan drug (see Kettler 2001);
- expedited approval: cancer drugs can get on a faster approval path and extending this benefit to orphan and life-threatening diseases has been proposed in Senate recently but its future is uncertain since big pharma is agin it and biotechs are for it (FierceBiotech article); and
- international regulatory harmony: drugs approved in the US would be accepted as approved in other countries. The FDA and its European counter part, the European Medicines Agency, have the most experience and capabilities and could assume a leadership role in a unified effort to create a unified regulatory body for approving treatments for the world’s neglected diseases. Of course, international acceptance of a unified regulatory path is a huge challenge and companies, trade groups, governments, and international organizations have been struggling with the multiple aspects of international regulatory harmonization for years but some progress is being made (Scientific American).
Not easy but necessary, and as a first step, the US government could improve the orphan drug process to include expressly neglected disease drugs and build the framework for a viable neglected disease drug industry.