BioPharma Dive: 5 Trends Shaping Rare Disease Drug Development

 Surging drugmaker investment in rare diseases, coupled with sky-high prices for some so-called orphan drugs, has drawn new attention to both the act and the broader market, triggering questions of whether reform is needed. While sales of orphan drugs are expected to grow, pharmaceutical companies will need to keep an eye on what that success may bring.

1. Soaring industry interest

Last year, the Food and Drug Administration received a record 582 requests for orphan drug designation from biopharma companies — 110 more than 2015, which had also set a record for the number of requests.

Lured by the array of incentives set up by the Orphan Drug Act, drugmakers large and small have increasingly sought to develop drugs for rare diseases or repurpose existing medicines for niche patient populations.

“Developing drugs for rare diseases, once considered a rare phenomenon itself, has fast become a mainstay for many companies’ drug development pipelines,” wrote Gayatri Rao, director of the FDA’s Office of Orphan Product Development, in a blog post last summer.

While the FDA rejects a fair number of requests, the agency designated 333 drugs in development as orphans last year and approved 39 products (including both novel medicines and new orphan uses of already approved drugs). Both numbers were dramatically higher than levels seen 10 years ago.

Looking just at novel drugs, nearly 40% of the new molecular entities approved over the past five years have initially been for orphan indications.

2. Rising sales

As more rare disease medicines make it to market, worldwide sales of the orphan drugs have grown rapidly, increasing at a faster rate than sales of non-orphans according to Evaluate Pharma, a life sciences intelligence firm.

By Evaluate Pharma’s calculations, 2016 orphan sales hit $114 billion, a 12% increase on 2015 numbers. And the market is set to double over the next six years, accounting for a fifth of the total prescription drug market by 2022 if forecasted trends hold.

On face value, that kind of frothy growth doesn’t seem to match the image of small, neglected markets which the writers of the Orphan Drug Act hoped to encourage drugmakers to tackle.

But there are a couple reasons underpinning rosy forecasts. For one, the vast majority of rare diseases remain unaddressed.

According to the National Institutes of Health, there are as many as 7,000 conditions that are classified as rare by U.S. standards, meaning they affect less than 200,000 Americans. Since the introduction of the Orphan Drug Act, only about 600 drugs have been approved, leaving most rare diseases without any licensed treatment.

Additionally, drugmakers typically can charge higher prices for orphan drugs, protected by the market exclusivity granted to any company that secures an orphan drug approval. To date, insurers have mostly agreed to cover such drugs, despite the sticker shock, due to the lack of other options.

3. Pushback on prices

But there are signs that such willingness to pay whatever price medicine developers decide upon is changing.

Last December, Biogen and its partner Ionis Pharmaceuticals won FDA approval for their spinal muscular atrophy drug Spinraza (nusinersen). It was the first drug to ever secure a regulatory okay to treat the often fatal genetic disease.

Shortly after approval, Biogen announced it would charge $125,000 per vial, meaning the first year of treatment would cost $750,000 and subsequent years a still-staggering $375,000 for a drug that will need to be taken for a lifetime.

Although Sprinaza was granted a broad label, major insurers Anthem and Humana chose to restrict coverage to only those patients with the most severe forms of the disease, likely due to the drug’s cost.

Another rare disease drug, Exondys 51 (eteplirsen), the first drug approved for Duchenne muscular dystrophy, has also run into payer reticence to extend coverage, partly due to shaky data as well as a $300,000 per year list price.

At the same time, there has been growing scrutiny over how drugmakers have used the Orphan Drug Act to secure orphan exclusivity for mass-market drugs in certain indications. For example, AbbVie’s Humira (adalimumab), Amgen’s Enbrel (etanercept) and Roche’s Herceptin (trastuzumab) each carry orphan drug approvals covering select groups of patients.

In February, Republican Senator Chuck Grassley, R-IA, announced an investigation into possible misuse of the orphan drug program and whether such practices contributed to high drug prices. Grassley attributed his interest to a Kaiser Health News report that shed light on pharma’s practice of obtaining orphan approvals for widely used drugs.

4. Not just biotechs, big pharma too

Many of the top rare disease drug manufacturers are not small, narrowly focused biotechs. Instead, most are the big pharma and big biotechs that dominate the industry elsewhere.

In 2016, the ten best-selling “rare disease” drugs as measured by Evaluate Pharma were made by Celgene, Roche, Teva, Bristol-Myers Squibb, Biogen, AbbVie, Amgen, Novartis, Takeda and Jazz Pharmaceuticals. Outside of Jazz, the remaining nine are all well-known multinational drug firms. And even Jazz has a market capitalization of more than $8 billion.

To be fair, Evaluate Pharma’s numbers include sales for all indications, not just rare diseases. Measuring only by orphan sales would change the picture dramatically. But the point remains the same, big pharma is just as much a player in rare disease as are nimble biotechs.

While there is nothing wrong with big pharma investing in rare disease drug development, many of those top-sellers listed by Evaluate Pharma are drugs also approved for broader patient pools — raising the question of whether pharma is merely “salami slicing” a drug’s indications to better defend against competition.