Mounting political pressure to curb rising drug prices has put rare and orphan disease drugs into the crosshairs leaving the industry to wonder: how can it develop drugs for small patient populations and make the economics work while convincing payers and health technology assessors of their value?

This was the key question discussed during a recent Biotech Showcase 2020 panel in San Francisco on the value proposition of new modalities versus established ones for orphan diseases, areas that have been ripe for acquisition over the past few years.

Panelists included two heads of small biotech companies, a venture investor in the rare disease space, and the head of global external innovation at a specialty pharmaceutical that recently made a strategic decision to become a player in rare disease therapeutics.

Health technology assessments, such as those conducted in Europe are becoming a reality in the United States, said Geoff MacKay, CEO of AvroBio, which is developing lentiviral-based enzyme replacement therapies.

“The requirement for data for conventional drugs is increasing,” he said. “It’s no longer what they’ll bear, but how do you adjust?”

Steve Uden, co-founder of Rallybio and a rare disease veteran from many years at Alexion argued rare disease drug development has always been backed with strong health economics. “The R&D team needs to be thinking about how we make the health economics work and what we collect in the studies to support that pricing.” Such discussions, he said, are happening earlier in the development process.

Rare diseases often address conditions for which there are no treatment options, which makes the value equation very different from therapies that are developed to replace existing treatments. Questions that need to be answered in these cases include the costs to the healthcare system to care for these patients, to alleviate their symptoms, and to help them navigate through everyday life, said Maha Katabi, a partner at the venture firm Sofinnova.

“Effects on productivity of caretakers are much harder to factor into health technology assessments and pricing discussions,” she said.

Getting payers to reimburse for rare diseases therapies is also affected by changes in the way regulators are approving these drugs. Approvals are increasingly being based on new biomarkers, and clinicians are sometimes unsure about the meaningfulness of the approval endpoints, which adds another layer of complexity to the payer conversations.

And for therapeutic modalities like gene therapy that promise a cure, rather than chronic administration, the value equation has changed and new agreements need to be put into place that may spread payments out over time, or call for pay-for-performance type of arrangements.

Systemic constraints can impede the use of new therapeutic modalities and the panelists agreed that regulators and health technology assessors are moving to address the need to modify a system built for conventional drugs in order to take into account approvals based on single-arm trials, and the use of biomarkers as predictors of clinical outcomes.

“I would say that there’s some optimism because NICE, for example, implemented the highly specialized technologies where they are recognizing that the cost effectiveness threshold for orphan diseases may be different,” AvroBio’s MacKay said. “And, in fact, ICER has also showed some flexibility in changing their cost-effectiveness threshold for orphan designations.  It’s a fast evolving field. The easy part is to list what the health technology assessment requirements are. The tough part is to figure out how you bridge the gap because almost no orphan drug, and certainly not a gene therapy, is going to be able to fill all those data needs. Yet the onus is on us to address it as much as we possibly can.”

Katabi noted that in Canada, Novartis’ spinal muscular dystrophy gene therapy was approved for reimbursement only after protests and pushback from the patient population.

“I don’t think we can underestimate that patients will continue to have a great role in pushing and supporting and describing to government officials and payers what these therapies do to change their lives,” she said.

Indeed developers of rare and orphan disease therapies are increasingly working with patient groups to understand what the important endpoints are to them. In rare diseases, it’s important for the U.S. Food and Drug Administration to work with advocacy groups to figure out what the endpoints should be, says Chris Vlahos, global head of rare disease external innovation at the specialty pharmaceutical Ipsen.

The FDA is very engaged, says Uden. The agency is working with Rallybio to design studies and present data that show the therapies are addressing the real needs of the patients.

And rare disease parents are very well informed, says MacKay, who has attended scientific conferences put on by rare disease foundations and notes that they often include an FDA representative.

All the panelists agreed that the FDA is flexible and willing to approve new drugs for serious unmet needs on an accelerated basis, but it still demands rigor in conducting trials and showing that a biomarker is actually measuring and predicting a clinical outcome.

In some cases the FDA will accept a natural history study as the comparator arm of a clinical trial. In these cases, MacKay cautioned companies to segment their patient population. In many rare diseases, the age of diagnosis can make a difference in the manifestations and progression of the disease, and thus the natural history has to correspond with the patient cohort in the trial.

“The FDA’s guidance recognizes that it is not always possible to have a control arm, and in the absence of that, they would like a natural history,” he said. “It’s almost like a concession on FDA’s part so it needs to be extremely well-designed.”

Finally, the discussion veered to M&A and reasons why Big Pharma is investing in the space: to acquire the exciting new modalities like gene therapy and RNA-based therapies, many of which are being developed first for rare indications. “Companies could build it from the ground up but it’s a faster move to acquire the capability by bringing it in,” says Uden. “Big Pharma gene therapy deals are a hedge.”

One point that was clear during the discussion was that drug developers recognize they must work with patients throughout the entire process to think about endpoints and meaningful quality of life measures so they will be able to make a case for the value of their therapies and justify to payers the prices they seek.

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