Regulators adopt ever-growing number of orphans

Analysis

Rare diseases, by definition, affect very few people. This has not prevented a huge number of drug developers pursuing therapies to treat these conditions.

As a result, each year global medical regulators are granting orphan designation to an increasing number of products. Data from EvaluatePharma show that the FDA sanctioned a record 260 such designations last year; in Europe the tally reached 122 (see table below). It is clear that despite growing concerns about the sustainability of sky-high prices and pushback from payers in some regions, the industry’s love of orphans is not waning.

Historically neglected

The US led the way in recognising that financial incentives would be needed to spur research in to rare diseases, historically neglected by the pharmaceutical industry due to poor returns. The Orphan Drug Act of 1983 guaranteed seven years of marketing exclusivity from approval, a 50% tax credit on R&D costs, R&D grants and the waiving of the FDA user fee for any drug being developed for a rare illness.

Europe waited until 2000 to pass a similar law, and now grants 10 years of marketing exclusivity from approval.

The table below reveals that the push from regulators has worked. In Europe, over one hundred orphan designations are granted each year, while the US is sanctioning double that.

Orphan designations continue to climb
Date EU orphan designations US orphan designations US orphan approvals*
2014 YTD 13 23 1
2013 122 260 31
2012 149 190 25
2011 108 205 25
2010 130 195 15
2009 107 167 21
2008 75 166 14
2007 100 119 16
2006 82 142 24
2005 91 123 18
2004 74 136 13
2003 54 95 11
2002 52 64 13
2001 63 78 6
2000 14 70 13
*EU orphan approvals not available by year


Valuing the orphan drug market is tricky because many drugs are sold for a number of different uses, and only one might have orphan designation – the designation is attached to the use rather than the molecule.

So for example the first approval that Roche’s Rituxan received was in an orphan indication – relapsed or refractory, low-grade or follicular, B-cell non-Hodgkin’s lymphoma – and it has gone on to receive this designation in three other indications. However the antibody is now authorised to be used in much wider lymphoma stages and settings, as well as chronic lymphocytic leukaemia and rheumatoid arthritis, and these uses are likely to generate the vast majority of its $8bn in annual sales.

To come up with an approximation of the market size, EvalulatePharma has analysed all therapies with orphan designations, and defined a sub-set which excludes products where less than 25% of lifetime sales are expected to come from orphan indications. This has led to the exclusion of products, such as Avastin, Enbrel and Herceptin, all of which have orphan designations for various indications.

Based on this, EvaluatePharma estimates that orphan drug sales totalled $92bn in 2012, and will grow 8% a year to reach $148bn by 2018. That is double the rate of growth it predicts for the global prescription drug sales over the same period. The projections suggest that by 2018 these products will be generating 16% of prescription drugs sales, up from 13% in 2012.

Price push back

The greater number of drugs becoming available for rare diseases will be contributing to the projected rise, but so too will the sky-high prices that these therapies are able to demand. It is not uncommon for price tags to surpass $200,000 a year; Alexion’s Soliris, frequently labelled the world’s most expensive drug, costs on average around $440,000 a year.

Drug makers argue that these prices are required because the development costs, which do not differ much from standard drugs, have to be recouped from vastly smaller sales volumes. But pushback is happening, particularly in Europe, as cash-strapped health systems struggle to keep a lid on costs.

The arrival of life-changing therapies for patient populations of any size should be celebrated. But for more to benefit, a negotiation on price has to happen. As the pharmaceutical industry continues to pour much effort into rare diseases, this negotiation will become more urgent.

To contact the writer of this story email Amy Brown in London at AmyB@epvantage.com or  follow @AmyEPVantage on Twitter

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