[Ip-health] FT: Orphan drugs attract rich returns for pharmaceuticals

Thiru Balasubramaniam thiru at keionline.org
Thu Mar 2 05:31:23 PST 2017


FEBRUARY 28, 2017

by: Andrew Jack


The small number of individuals with each orphan disease — sometimes just a
few people in a country — often makes research, identification and
recruitment for clinical trials difficult. But today there is surging
interest in a sector focused on a growing number of rare diseases that had
been neglected. According to a new report by research group EvaluatePharma,
there have been nearly 4,000 orphan drug designations granted by regulators
in the US since the early 1980s, with more than 300 last year alone.
Worldwide sales of orphan drugs in 2016 rose to $114bn and accounted for 16
per cent of all prescription drug revenues. By 2022, the consultancy
forecasts that the proportion will rise to 21 per cent.


Large pharmaceutical companies such as Bristol-Myers Squibb and Novartis
are taking an interest. So are many of the smaller biotechs, some of which
have been acquired along the way. Once example is Genzyme, which was bought
by Sanofi in 2011.

 A number of factors explain the commercial appeal of orphan drug
development — and hold implications for the industry as it searches for new
models for growth. The first is the economic angle.

The Orphan Drug Act enacted in the US in 1983, along with its equivalents
in Europe and elsewhere, has provided strong incentives. These legal
frameworks have granted quicker regulatory approval for orphan than
non-orphan drugs, setting a lower bar on patient numbers in clinical trials
and providing monopoly protection from competitor products for as long as a


While prices are still high, the small number of patients with each
condition means the overall burden for health systems and insurers in
paying for treatments is still relatively modest.

 A second factor is scientific progress, which has allowed advances such as
cheaper and safer manufacturing. Breakthroughs have been helped by
initiatives including the UK’s 100,000 Genomes Project, which has expanded
DNA sequencing to provide insights into rare diseases that are often
genetically inherited.

 Third, there has been increased co-ordination between patient groups and
doctors, which has strengthened advocacy and made it easier to recruit
patients for clinical trials and share knowledge of diagnosis and

For a number of rare conditions, from haemophilia to Fabry’s disease, which
can cause kidney and cardiac problems, these factors have already helped
bring treatment options that can extend life and quality of life for

But with an expansion in both the identification of new rare diseases —
there are now about 7,000 — and the number of expensive medicines in
response, there are growing concerns over the sustainability of the


The UK’s National Institute for Health and Care Excellence (Nice), which
advises the National Health Service on drug purchasing, has increased its
scrutiny of orphan drugs, proposing rejection for those that cost more than
£100,000 per “Qaly” or quality-adjusted life year — a measure of the health
benefit they bring.

 Nice recently advised against prescribing Alexion Pharmaceutical’s drug
Kanuma for the inherited genetic disorder lysosomal acid lipase deficiency.
It argued that the annual price of £500,000 per patient was not justified
by the clinical benefits.

In the US, the health insurer Anthem last year refused to pay for Sarepta’s
Exondys51 for Duchenne muscular dystrophy; Anthem and insurer Humana also
tightly restricted reimbursement for Biogen’s Spinraza for spinal muscular


Such arguments are wearing thin with politicians. The German and French
authorities have questioned reimbursement of several rare disease drugs in
recent months. During The Netherlands’ stint as president of the Council of
the European Union last year, Dutch health minister Edith Schippers called
for scrutiny on incentives for orphan products. In the US this month,
Republican senator Chuck Grassley opened an inquiry into potential abuses
of the Orphan Drug Act, following an investigation that suggested some
companies had been exploiting loopholes.


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