Patent protection for orphan drugs

Priyanka Gupta

Orphan diseases, generally known as rare diseases, are conditions that affect fewer than 200,000 individuals at any given time. Most orphan diseases like cystic fibrosis, muscular dystrophy, Huntington disease etc. are life-threatening and are primarily caused by genetic alterations. The treatment of such diseases is complex and essentially requires the development of drugs to effectively treat the rare disorders.

However, despite the urgent and unmet needs for these drugs, due to small patient populations, pharmaceutical and biotechnology companies did not take active initiatives to develop drugs for treating the rare or orphan disorders. Keeping in view the above described scenarios, several government regulations including the Orphan Disorder Act by the US were formulated to provide multiple incentives to drug developers for promoting drug development that could aid treatment of orphan diseases. The most prominent encouragement so far has been the seven-year marketing exclusivity period for drugs approved by the Food and Drug Administration (FDA) to treat the rare disorders.

Development trends of orphan drugs has steadily been moving towards greater interest in the recent years, as pharma companies perceive a huge revenue potential in the development and launch of orphan drugs. FDA statistics suggest that at the time of authorisation of the Orphan Drug Act in 1983 until June 2013, Orphan Drug designations have been awarded to 2,843 compounds, and of these, there have been 442 approvals for orphan indications alone. Of the 39 drugs approved by the Agency in 2012, approximately one-third carried Orphan Drug status, and nearly 200 orphan drugs per year enter development.

Complementing the FDA statistics, Thomson Reuters analysis also suggest that the orphan drug market was worth more than $50 billion worldwide at the end of 2011, and currently accounts for about six per cent of total pharma spending. In 2012, the pharma industry’s most expensive drug, Alexion Pharmaceuticals’ Soliris (eculizumab) which was launched in the US in April 2007 for the treatment of paroxysymal nocturnal haemoglobinuria (PNH), attained blockbuster status with total sales of $1.134 billion. This is particularly significant as PNH, a rare life-threatening blood disease, only affects about 4,000 to 6,000 individuals in the US; Soliris is estimated to cost more than $409,000/patient per year. According to Consensus data from Thomson Reuters Cortellis for Competitive Intelligence, Soliris is predicted to grow at a compound annual growth rate (CAGR) of 18.5 per cent, rising from $1.806 billion in 2013 to $ 3.561 billion by 2017.

As more orphan drugs reach the market, industry analysts predict that the growth rate of these products will significantly outpace non-orphan drugs, with high price premiums offsetting the impact of smaller patient populations. It is needless to say that with such revenue potential, the rare disease niche market poses a unique opportunity for pharma and biotech companies.

Initially, orphan drugs meant smaller markets; thereby they posed less risk or had less vulnerability to direct or generic competition. As a result, patent protection was usually viewed as an expensive luxury, while marketing exclusivity was considered the most cost-effective option to protect the drug from direct competition. Recent trends, however, present a different picture. With the increase in orphan drug registration and high revenue potential predictions; it has become crucial for companies to re-evaluate their patenting strategy for these drugs.

When a drug receives the status of ‘orphan’; it is bound to attain a benefit of 10-12 years of protection from market competition with similar medicines with similar indications. In the US and EU, orphan drug designation grants marketing exclusivity rights for seven and 10 years respectively, subject to approval. In such a scenario, the question of patent protection may become irrelevant to companies, as orphan drug designation alone provides market exclusivity against competition. However, when painting the revenue picture of the orphan drug, companies should take into account a critical aspect of protection that can only be provided by patents. To increase the possibility of high revenue for increased years, companies should include this ‘term of protection’ as an extension to the already existing market exclusivity. For example, a European patent, when granted, provides 20 years of absolute monopoly to the patented drug molecule. It may be already known, that the patent duration can also be extended up to 25 years with a supplementary protection certificate (SPC) in the EU, thereby allowing the patent owners to increase the ‘monopoly period’ of the orphan drug.

For instance, the patent for the active ingredient of Glivec, imatinib mesylate, was filed in March 1993. Under normal circumstances, this patent would have expired in March 2013 i.e., in 20 years from the date of filing of the patent for the Glivec active ingredient. However, imatinib mesylate was provided SPC protection, which has extended the patent protection until mid 2016. Considering the fact that the marketing exclusivity for Glivec expired in November 2011, Glivec drug with patent protection did receive an extended monopoly period of five years. Even if marketing exclusivity extends to a maximum of 12 years, patent protection can help in providing a significant additional protection time for high revenue potential orphan drugs like Glivec.

In conclusion, patents for orphan drugs provide additional protection of the capital invested into the drug’s research and development, launch, and marketing. The combination of marketing exclusivity, coupled with financial incentives, has been and will remain a powerful driver of the development of orphan drugs. It may indeed provide sufficient incentive alone to lead to such drugs being developed. However, analysis of successful orphan drugs also provides insights that regulatory marketing exclusivity may not be sufficient protection for these drugs and that patents ensure the maximum protection period for maintaining the exclusivity of the orphan drug.