Payers threaten a hard-knock life for orphan projects

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An emerging tough payer line on new drugs for rare diseases should raise questions about the strategy of companies that have rested their investment cases on strong pricing power.

Anthem’s decision this month to limit coverage of Spinraza tightly follows its earlier refusal to pay for the hotly debated Exondys 51 – both are treatments for rare degenerative disorders in children. This ought to raise some concerns about market access for late-stage orphan drug candidates being advanced by companies like Bluebird Bio, GW Pharmaceuticals, Alnylam and Biomarin – 11 agents with combined forecast sales of $6bn will reach phase III or regulatory milestones this year (see table below).

Test cases

The FDA’s broad approval for Spinraza in spinal muscular atrophy (SMA) kicked the question of patient eligibility to payers. In this case Anthem has decided to restrict its use to patients confirmed to have specific SMN mutations and who developed SMA symptoms before they were six months old, largely conforming with the findings of clinical trials conducted by its owner, Biogen.

With a pricetag of $125,000 per injection, or $750,000 in the first year, Spinraza was bound to draw scrutiny. In years past, the relative rarity of SMA – EU prevalence is estimated at 20,000 people – might have persuaded payers to go easy on it after review. But heightened sensitivity around drug costs has emboldened payers to challenge the price even of rare disease drugs.

This is driven in no small part by the sector’s migration to rare disease agents because in the past they have delivered a better return on investment. High prices can be justified by the costs of rare diseases when they go untreated. Meanwhile, approvals can be achieved with small trials and surrogate endpoints, and even those relatively low development costs can be offset further by R&D tax credits.

This has led to an apparent glut of orphan drugs in the late-stage pipeline. The developers of many of these could argue for prices in excess of six figures. Exondys and Spinraza could be serving as test cases as payers scan the horizon for costly drugs.

Drawing near

This year is shaping up to be significant for orphan drugs – the only one currently filed with the FDA is Teva’s Huntington’s chorea project SD-809. However, at least five more could be with the US regulator by the end of the year. The European Medicines Agency is reviewing Kyowa Hakko Kirin and Ultragenyx’s KRN23 in X-linked hypophosphatemia.

Other orphan drugs expected to become big sellers are closing in on late-stage milestones. The phase III Apollo trial of Sanofi and Alnylam's patisiran, for example, will yield data around the middle of the year. The table below includes those products with milestones due in 2017 – many more are queuing up beyond.

Gene therapies from Bluebird Bio and Spark Therapeutics are progressing in beta thalassemia and retinal diseases. The once-and-done approach of gene therapies should test the orphan disease pricing model as drugmakers argue for a single up-front payment that averts long-term costs.

This rich late-stage pipeline represents a big financial risk, and will draw the attention of insurers and payers. Biopharma groups need to come into reimbursement talks well armed to avoid disappointing investors.

Tomorrow's orphan drugs?
Project Company US orphan designation  2022e sales ($m) Awaiting...? 
SD-809 Teva Chorea associated with Huntingdon disease 1,019 PDUFA Apr 3, 2017
Voretigene neparvovec Spark Therapeutics All inherited retinal disease due to RPE65 mutations 360 US filing to complete early '17
Epidiolex GW Pharmaceuticals Rare epilepsy syndromes 848 US filling due H1'17
Pegvaliase BioMarin Phenylketonuria 382 US filing due Q1'17
rhGUS Ultragenyx Sly syndrome (MPS 7) 71 Regulatory filings due H1'17
KRN23 Kyowa Hakko Kirin/Ultragenyx X-linked hypophosphatemia 968 EU decision H2'17; US filling due H2'17
Lentiglobin Bluebird Bio Sickle cell disease/beta-thalassaemia 969 Further phIII data this year
Patisiran Alnylam/Sanofi Familial amyloidotic polyneuropathy 580 PhIII data mid-'17
Zorblisa (SD-101) Amicus Therapeutics Skin blistering and erosions w/inherited epidermolysis bullosa 271 PhIII data mid-'17
Somavaratan Versartis Growth hormone deficiency 366 PhIII data Q3'17
Ace-ER Ultragenyx Hereditary inclusion body myopathy 88 PhIII data H2'17
Source: EvaluatePharma.

To contact the writers of this story email Jonathan Gardner or Amy Brown in London at news@epvantage.com or follow @ByJonGardner or @ByAmyBrown on Twitter

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