Rare diseases and orphan drugs: making research viable

Posted on September 11, 2012 by

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Rare Disease UK are currently conducting a survey to find out how well people think the major funding bodies are supporting research into rare diseases. On my blog about the survey, a reader commented that, because each rare disease affects so few people,  “it’s a stark fact that such research is not economically viable; isn’t it almost inevitable, then, that funding will rarely be allocated?”

It’s a good point, and also a concerning one when you consider that one in 17 of us will be affected by a rare disease in our lifetime. The “major funders” that the survey is asking about are public funders like MRC and Cancer Research UK, who are not driven by profit. They can fund the basic research and drug discovery but new treatments rarely make it to market by public money alone.

So how do you get companies to invest their own money into a drug that only a few people will buy? It’s a difficult question, but one way is through so called “orphan drug” policies, which, as far as innovation-promoting policies go, seem to have been relatively successful in turning economically inviable R&D into a money spinner that yields innovative new medicines.

Rare diseases

The EU definition of a rare disease is a condition with an incidence of five in 10,000, or less. In the US it’s any that affects 200,000 people or less. Examples include well know diseases, such as cystic fibrosis and Huntington’s disease, and much rarer ones like the blood disorder Diamond Blackfan Anaemia. Many AMRC members are dedicated to these rare diseases. Some may only affect one person in the whole UK. Despite being so rare, there are so many of them that one in 17 people will be affected by a rare disease during their lifetime.

Our increasing understanding of the genetic basis of disease means that many common diseases can in effect be sub-categorised into multiple seperate rare diseases. The genetic differences between the sub-categories allows the development of drugs that work on one catergory but not another. This is called stratified medicine. Orphan drug status has in the past often been denied due to difficulty in defining the number of patients who could benefit.

Member States of the EU have agreed to adopt national action plans for rare diseases by 2013 as part of a wider strategy to ensure patients have access to high quality care, including diagnostics, treatments and, if possible, effective orphan drugs. The UK signed up to the Council of the European Union communication on rare diseases back in 2009 and is currently developing its own plan. You can read more about EU rare disease policy initiatives in the AMRC report: “Opportunities for medical research charities to engage with Europe” (available to download from this page).

History of orphan drug policy

In 1983, the US government passed the Orphan Drugs Act (ODA), making it possible for even small biotech firms to get a slice of the drug market if they happened upon a new treatment for a rare disease. Taking a molecule from lab discovery to clinical treatment is a hugely expensive endeavour; take into account the drugs that fail to make it and we’re talking billions of pounds per drug. The idea of the legislation was to make it economically viable for firms to invest in the development of these drugs by reducing costs of development and providing market exclusivity. In 1999, the EU followed suit.

Orphan drugs in the EU

For pharmaceutical companies to obtain orphan drug status for a potential new drug in the EU they must first submit an application to the European Medicines Agency requesting orphan designation. This is granted if it is either:

  • intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating rare disease
  • intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition and, without incentives, is unlikely the costs of its development would be recouped through sales (thus orphan drugs aren’t necessarily just for rare diseases)

In both cases, there must also not be an existing product that does the same job, and if there is, the new therapy must be significantly more beneficial for the patient population.

Once awarded they receive product development incentives including:

  • Free guidance on designing studies and obtaining regulatory approval
  • Financial grants from the European Commission
  • Centralised regulatory approval, valid in all EU Member States
  • Reduced fees for regulatory and marketing approval
  • 10 years market exclusivity following regulatory approval (a normal patent will give the owner 20 years of exclusivity from the point of filing but it can take approximately 17 years from drug discovery to regulatory approval so there’s not much time to make your money back)
  • Additional benefits determined by Member States, including tax incentives

For a comparison of EU and US benefits, take a look at page 51 of this report.

The impact of  orphan drug policy

Since the introduction of the ODA in America, 2,364 products have been designated orphan drug status and 370 have obtained market approvalAn analysis of six major biopharmaceutical companies found that 61% of product revenues came from orphan drug sales. Some commentators say the policy has even been too successful, with companies benefiting too much at the expense of the tax payer. But it is generally agreed that the policy works to promote orphan drug R&D where none would exist otherwise.

It hasn’t just been applied to novel drug development however. Pre-existing drugs for relatively common diseases can also obtain orphan-drug status when they are found to be applicable to a rare disease as well. For example, the breast cancer drug Herceptin is licensed as an orphan drug for pancreatic cancer in the EU and in the States. When applied in this way, the orphan status is not rewarding drug development as it was originally intended.

In her book, The Entrepreneurial State, Mariana Mazzucato argues that the orphan drugs policy adopted by the US in the 1980s is an example of state intervention which has succeeded in driving private sector innovation. By creating product demand and helping with drug development, discoveries that would not ordinarily have been commercialised have been turned into valuable trading products. Mazzucato points out that this only happened because of proactive government action and financial expenditure.

As with all systems of course, there are losers. Just like normal patents, unless your application is the first on the table, your innovation can be worthless; Pfizer has recently had its license application for its Gaucher disease drug Elelyso turned down in the EU because a competing drug has exclusive marketing rights until 2020. The system also does not necessarily bring down the cost of the drug for the user (it often leads to higher prices in fact) and this in many cases can be a barrier to the drug benefiting those who need it. As a result, a further challenge for governments and healthcare providers beyond R&D incentives is to develop pricing systems – such as value based pricing – that support orphan drug development while still ensuring that all patients can receive the treatment that they need. Steps to develop more flexible and proportionate regulatory framework – taking into account the special needs of developing treatments for rare diseases – would also make the development of orphan drugs a more viable option for industry by, among other things, speeding up the time taken to get drugs on the market.

The future of orphan drug policy

So the policies of Europe and the US have received significant praise from economists, patient groups and the pharmaceutical industry for increasing the number of drugs available for rare diseases. But there are faults and imperfections and also challenges arising from new developments. For example, our growing understanding of genetics and the development of  stratified medicine could increase orphan drug designations, while shrinking healthcare budgets reduce our ability to pay for them.

But as governments – including our own – develop their rare disease strategies, there are opportunities for wider debate and action to improve the existing policies at a national level, considering both R&D incentives and the needs of patients, who are ultimately the winners and losers.

Posted in: Policy