The rise of the orphans

Paroxysmal nocturnal haemoglobinuria, or PNH, is a rare blood disorder that affects one to two people in a million. Characterised by red urine and anaemia, it frequently leads to life-threatening blood clots in patients who require blood transfusions. Currently, the only drug approved by FDA for treating PNH is Soliris from Alexion Pharmaceuticals, the world’s most expensive drug at $440,000 per year which clocked more than $1.1 billion in drug sales last year. Future projections are higher even as profits continue to soar. Welcome to the world of orphan drugs, which are redefining the blockbuster model for the pharmaceutical industry.

Unleashing the opportunity

The Orphan Drug Act of 1983 in the US can be rightly termed as the catalyst that has helped foster growth in orphan drugs, followed by similar acts in Singapore (1991), Japan (1993), Australia (1997) and European Union (2000). As per estimates, there are 7,000 rare diseases as of today, with drugs approved for only 400 indications by the FDA even as 250 new ones are discovered every year. So technically, the scope is huge for pharma companies to come up with new drugs for these diseases. Expiring patents of blockbuster drugs, drying pipelines, stringent regulations across the globe along with incentives such as increased market exclusivity, tax credits, waiver on FDA fees and research grants for companies venturing into the business of rare diseases have helped propel growth even further. Orphan drugs then offer better return on investments for both small and large pharma alike in a market that has decreased R&D productivity, high regulatory barriers and evolving payer requirements. In a report released last year, Thomson Reuters estimated the rare disease market to be at $50 billion globally by 2011 which today occupy a meagre share of six per cent of the total pharma market. Data from Evaluate Pharma’s recent report indicates that this number is poised to grow at a whopping $127 billion by 2018, double that of the overall prescription drug market. Also orphans are climbing up the ladder of pharma industry’s drug output forming 15 of the 43 drugs approved by FDA last year.

“Companies have acquired rare disease portfolios either organically by setting up divisions or inorganically via acquisition. It’s worth bearing in mind orphan drug companies trade at a premium – they have higher valuation multiples than traditional primary care companies.” Kiran Meekings Principal Consultant (Business) Life Sciences, Thomson Reuters

While there are companies that are single mindedly dedicated to orphan drug research such as Genzyme (acquired by Sanofi), Biomarin, Shire, Alexion pharmaceuticals, Big Pharma has also integrated a rare disease portfolio as essential in its kitty. Chips in Kiran Meekings, Principal Consultant (Business), Life Sciences, Thomson Reuters, “Companies have acquired rare disease portfolios either organically by setting up divisions or inorganically via acquisition. It’s worth bearing in mind orphan drug companies trade at a premium – they have higher valuation multiples than traditional primary care companies.”

New chips on the block include Aegerion, which makes an orphan drug, Juxtapid, for a rare genetic cholesterol disorder called homozygous familial hypercholesterolemia, or HoFH and NPS Pharmaceuticals, which recently got FDA approval for Gattex, its ultra-orphan treatment for short bowel syndrome. Both treatments cost a staggering $295,000 per year and were approved by the FDA late last year. HoFH also has another drug called Kynamro, which was developed by Isis Pharmaceuticals and marketed by Sanofi’s Genzyme unit. And then there is collaborative research. GlaxoSmithKline (GSK) recently announced an investment of $23.5 million in The Kurma Biofund II to develop new drugs that have the potential to target rare diseases in Europe. Shire also embarked on a research collaboration with TIGEM in October 2012 to research 13 non-disclosed rare diseases for which it announced a commitment of $22 million over a period of five years.

A drop in the ocean?

Even though rare diseases might be getting their fair share of attention, patients might still not have access to them, most might still not be diagnosed and worse many might not even have a drug for their particular condition and hence may have little or no chance of survival. Patient advocacy groups then have been the harbinger of hope for those afflicted with such diseases and have also helped pharma companies see a market where there was none. Take for instance NORD or National Organisation for Rare Diseases, that has been at the forefront of the rare diseases movement. In the US it serves more than 200 disease-specific groups, helping patients work together to raise awareness and helping drug researchers access patient data and connect with trial participants.

“Organisation of Rare Diseases(ORD) will work at educating the medical fraternity by reaching out to doctors, identifying and registering diseases as well as associate and work with pharma companies while working on awareness programmes as we connect with all disease specific support groups in India at a local level.” Prassana Kumar Shirol President, Lysosomal Storage Disorder Support Society

Prassana Kumar Shirol, President, Lysosomal Storage Disorder Support Society (LSDSS), the first national level rare disease group in India, aims to have something along the same lines in India, which neither has an orphan drug policy or a patient registry for such patients. “Organisation of Rare Diseases (ORD) will work at educating the medical fraternity by reaching out to doctors, identifying and registering diseases as well as associate and work with pharma companies while working on awareness programmes as we connect with all disease specific support groups in India at a local level.”

While Meekings is not so hopeful of India as an attractive market for orphan drugs owing to the lack of regulations, Shirol is staunchly optimistic. India and China are the next markets for such drugs, he adds. He is in talks with companies in second and third stages of clinical trials to get them to enroll patients in India too as a part of their study. Genzyme which has already been present in the country through its charitable access programme is now being joined by Shire which will be implementing its humanitarian programme in India and has already selected 20 patients (10 in each of the two categories it works in). And even as orphan drugs might not exist for certain conditions, pressure is also mounting on the pricing strategy of companies. In Europe, the Netherlands is pushing back on Sanofi to reduce the cost of its Pompe disease orphan drug Myozyme ($900,000 a year per patient) after Ireland won a reduction in cost for Vertex Pharmaceuticals’ cystic fibrosis drug Kalydeco. Meekings suggests, “The solution will require more than just pricing; it requires a diligence approach throughout the whole drug development process to ensure that trials are conducted appropriately to meet the ultimate needs of patients, regulators and payors/reimbursers. Those needs are: industry (adequate ROI), regulators (the production of a safe,tolerable medicine) and payors (comparative effectiveness and value-based pricing which means the drug will get reimbursed).” It remains to be seen if companies will be able to justify prices in the light of access to medicines worldwide having reached a crescendo. Only time will tell.

[email protected]