Jul 27, 2015

ORPHAN DRUGS GROW UP

by Grant Goad

Orphan drugs—treatments for rare diseases—are now an important revenue driver for the pharma industry. And the revenues are growing quickly.

According to a recent EvaluatePharma report, worldwide sales of prescription orphan drugs reached $97 billion in 2014, and are predicted to grow to $176 billion by 2020. This is a growth rate of 10.5% per year—almost double the predicted 5.3% yearly growth for the overall prescription drug market.

A number of factors make orphan drug development attractive. These include limited competition, tax incentives, smaller clinical trial sizes, and premium pricing, that, while much higher than the average patient can afford, is usually covered by health insurers.

Most of these benefits come thanks to the Orphan Drug Act of 1983, which was passed to help solve a serious problem: the lack of available treatments for thousands of rare diseases.

The Orphan Drug Act and the FDA

The FDA defines an orphan drug as a:

“…drug or biologic intended for the safe and effective treatment, diagnosis or prevention of rare diseases/disorders that affect fewer than 200,000 people in the U.S., or that affect more than 200,000 persons but are not expected to recover the costs of developing and marketing a treatment drug.”

The National Organization for Rare Disorders, which was instrumental in the passage of the Orphan Drug Act, estimated that in 2014 there were 30 million Americans who suffered from 7,000 rare diseases. ALS (Lou Gehrig’s disease), muscular dystrophy, and Huntington’s disease are all well-known examples.

Without the Orphan Drug Act, the majority of patients suffering from rare diseases would likely have little hope: prior to its passing by Congress, only 38 orphan drugs had been approved by the FDA.

Since the legislation’s launch, however, the FDA has approved 511 orphan drugs and granted 3,280 orphan drug designations.

Among the incentives the Act provides to drug developers are:

  • Seven years of market exclusivity, which begins when the drug receives FDA approval and is independent of patent status
  • Tax credits equal to half the drug’s development costs
  • Research grants and FDA fee waivers
  • Fast-track FDA approvals

Similar legislation has also been approved in the European Union, Japan, Singapore, and Australia. The European Medicines Agency (EMA) defines an orphan drug as a treatment for a disease with a prevalence of no more than five in 10,000, and offers drug developers ten years of market exclusivity.

A recent white paper from Premier Research states that, once a drug is granted orphan status, the odds of attaining regulatory approval are 82% compared with a 34% approval rate for traditional drugs. Also, with their shorter clinical trials and FDA Fast Track Designation, “the average time from Phase II to launch was 3.9 years for orphan drugs compared to 5.4 years for non-orphan drugs.”

Successful Orphan Drugs

Even with their small target patient populations, orphan drugs can make serious money for their developers. Rituxan, developed by IDEC Pharmaceuticals, and currently co-marketed by Genentech and Biogen Idec in the U.S., is the world’s second-most-profitable drug.

Originally approved by the FDA for the treatment of B-cell Non-Hodgkin’s lymphoma, it generated $5.24 billion in sales in 2010. The drug was subsequently granted multiple designations—for other types of cancer, as well as rheumatoid arthritis—another key to high profits.

Even with its patent set to expire in 2018, EvaluatePharma predicts that Rituxan will generate $5.69 billion in 2020.

Also on EvaluatePharma’s list of top potential orphan drugs for 2020 are Celgene’s blood cancer drug Revlimid, with a predicted $8.01 billion, Vertex’s cystic fibrosis drug, Kalydeco, with $4.23 billion, and Alexion’s Soliris, approved for treatment of paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome, at $5.51 billion.

For more information on the growing orphan drug market, take a look at the above-cited research reports:

Orphan Drug Report 2014 from EvaluatePharma

The Science of Hope from Premier Research

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