An estimated 25 million people in the US alone collectively live with some sort of orphan disease. Despite the understanding that specific diseases may afflict relatively small numbers of individuals, this overall growing pool of patients is now becoming an attractive opportunity for the pharmaceutical industry. This reflects the fact that appropriate treatments for unmet medical needs that generate high levels of reimbursement.
"The high cost of therapy and attractive developmental drivers, such as government incentives (including tax credits), smaller and shorter clinical trials, extended exclusivity and high rates of regulatory success, have made top orphan drugs as equally viable as their non-orphan peers," according to a new report from Thomson Reuters, which found the orphan drug market was worth slightly more than $50 billion worldwide at the end of last year.
Meanwhile, spending on orphan drugs currently makes up approximately 6 percent of total pharmaceutical sales, assumint a total market value of $880 billion. The compound annual growth rate of the orphan drug market between 2001 and 2010 was 25.8 percent, compared with 20.1 percent for a matched control group of non-orphan drugs. Combined with the increasing number of orphan drug approvals, the data suggests compounded annual growth will outpace other drugs.
Higher prices underscore the potential. In 2010, the most expensive drug was Soliris, which costs more than $409,000 annually and is used to treat paroxysymal nocturnal hemoglobinuria, a rare life-threatening blood disease. The med generated $541 million in sales for Alexion Pharmaceuticals. "This is a considerable achievement in terms of revenue, considering only 4,000 to 6,000 people suffer from this disease in the US," the report states.
Moreover, repositioning such drugs to treat other rare diseases can ring more registers. Thomson Reuters found that 15 percent of the drugs analyzed had subsequent launches for other rare illnesses. And of the top 10 orphan drugs, six had more than one rare disease indication with a peak value averaging $34.3 billion in overall sales potential, compared with $8.1 billion for drugs with only one such indication.
Which was the top-selling orphan disease drug? The prize went to Rituximab, an oncology treatment sold by Roche that is also known as Rituxan, which has present day peak sales value of $7 billion and a discounted peak value of $154 billion, according to the report. In fact, four of the top 10 drugs listed are oncology treatments, although the No. 2 spot went to the Lucentis eye treatment, which is another Roche drug.
Meanwhile, the report also found that of the 86 orphan drugs included in the study, 25 were blockbusters, which meant that 29 percent generated annual sales greater than $1 billion. This compares with 83 of 291 drugs that were not granted orphan status but were also considered to be blockbusters, and this also works out to 29 percent. The upshot is that Thomson Reuters suggests the blockbuster model is not dead when viewed through this prism (here is the report).
However, developing successful drugs for orphan diseases is not, of course, a slam dunk. The typical clinical trial model may not be best suited for generating evidence that a drug is safe and effective against diseases where patient enrollment can be difficult and diseases progress slowly and unevenly over a long period of time, according to Steven Grossman, who worked on the original Orphan Drug Act in 1983 and is now a policy and regulatory consultant.
"Often treatment populations are too widely scattered or too concentrated. A significant number of rare diseases do not have documented natural histories," he tells PharmaPhorum. "Many rare diseases are degenerative and are heterogeneous in terms of natural history. Will, for example, a two-year trial demonstrate sufficient benefit when the rate of decline in patients might occur over a 10-year period? Genetic diseases also pose significant challenges in the design of clinical trials, particularly in identifying biomarkers and other surrogates for disease progression."
6 Comments
The problem with orphans is not how much they make today; its when they go generic how will that work? Toprol XL or Lipitor going generic is easy lots of patients lots of pills; that's what generics do; make good enough copies of real products. But how many firms will get in the business of making pills for 4,000 US patients even if the marketplace is worth decent money? How much will costs fall; and with the federal govt on the hook for all of this now; how much will they meddle?
I think the general conclusion of T-R report is probably correct---orphan drugs are a market segment that will continue to grow and has the capability of providing satisfactory ROI to companies developing orphans. However, I have problems with the type of extrapolations being made by the report--which suggests that past profits and CAGR are sustainable into the future.
First, the rarity of $200k to $400k per year drugs is what makes it feasible for companies to charge that amount. As insurers are faced with more of these and they take some larger chunk of PPPM (per patient per month) insurance premiums, there is bound to be a market adjustment.
Second, within a decade (not necessarily sooner as some weirdly predict), there will be enough of a biosimilar market in the US to start affecting ROI and CAGR. I think life will still be very good for successful orphan developers--but not at the level achieved by extrapolating past growth.
I am a bit confused by the separate comment about generics. If a drug has a market of 10,000 patients at $100,000 per year, that comes to $ 1 billion per year. That provides more than enough incentive for both biosimilars and generics (depending on the orphan) to be fully incentivized. Even at a 20% discount, there are big savings for payers and there is still an $800 million market to divide. Maybe not enough for the very largest companies, but close...while there will be dozens of mid-size companies for which having a share of that market would be a bonanza.
The market is still going to be very generous to premium priced products if they solve serious medical problems and represent more than incremental improvements. Only price controls (still very unlikely in the US)will undercut the reality of marketplaces: real value in solving real problems will continued to be well-rewarded.