Examining the Legislative Landscape for Rare Disease Drug Development

In October, Alnylam said it would halt development of a therapy for a rare eye disorder to evaluate the impact of the Inflation Reduction Act. The decision is a reflection of the unintended consequences that policies can have on rare disease drug development. We spoke to Amanda Malakoff, executive director of the Rare Disease Company Coalition, about the policy landscape for rare disease therapies, unfinished business from the recent passage of a lean Prescription Drug User Fee Act, and policy priorities for 2023.

Daniel Levine: Amanda, thanks for joining us.

Amanda Malakoff: Thank you so much for having me.

Daniel Levine:  We’re going talk about the rare disease policy landscape, the efforts of the Rare Disease Company Coalition, and some specific concerns as we head into a new year and a new Congress. Perhaps we can start with the coalition itself, which was unveiled in 2021. Why was the coalition created? What unique needs was it seeking to address that other industry groups didn’t?

Amanda Malakoff: That’s a great place to start to provide some of that context about why the coalition got started. Rare disease drug development faces unique circumstances, unique challenges, and its own set of opportunities. It requires different considerations than standard drug development. Prior to the coalition forming about a year and a half ago, there was no one group just advocating or speaking on behalf of rare disease drugmakers and talking about those unique circumstances that those companies face. The group started informally. There were about 10 companies that were getting together and just talking about rare disease policies. Another part that makes rare disease unique is a lot of the companies in this space tend to be midsize or smaller with less resources or, maybe less of a voice individually. They felt that if they were to come together and provide one unified front and one voice to their perspective on policy issues, that it would be more impactful. That’s how the coalition got started. And, and what we aim to do is provide that one voice behind common issues that all companies face in the rare disease face.

Daniel Levine: I think it can be easy for people who live in this world to forget that policymakers may not be terribly well versed in drug development, let alone drug development for rare diseases, and the challenges that go with that. What’s the case that rare disease drug development is fundamentally different from other types of drug development and that it warrants different policy treatment from the rest of the industry?

Amanda Malakoff: That’s a great question as well. That’s frankly another key tenant of the coalition besides just providing the one voice and unifying different companies in this space. What we’re set out setting out to do is to educate policymakers on, not just the rare disease space, but why rare drug development is different and can be more challenging because there is a lack of awareness about some of those nuances out there. And it’s important for policy makers to be able to consider, when they work on broader pharmaceutical or health policy, how there could be implications for rare diseases that they might not be aware of. In terms of why it’s so different, I think it’s important to acknowledge up front that rare disease drug development by its nature incurs a lot more risk than standard drug development. There’s a few reasons behind that. there’s a lack of history and knowledge about rare diseases just because of their nature, right? How rare they are. there could be some rare diseases that affect only a few hundred or a few thousand people in the country or the world, and those can be hard to even diagnose. So for some rare diseases, for example, there might be, let’s say a few hundred thousand people in the world with that rare disease, but only 1,000 that have actually been diagnosed. It takes a long time to study the disease, to find people that have the disease, recruit them for clinical trials, et cetera. It takes a lot longer to do the research and development. On average, it’s over 10 years spent on the life cycle for one drug and a lot of that, again, is just the baseline research, that’s necessary. Then advancing further along that process, due to the nature of these small populations, it’s difficult to recruit patients for clinical trials. There are health disparities of course involved where it might be difficult for patients to travel to participate in clinical trials. About half of the patients impacted or diagnosed with rare diseases are children. That also provides a challenge. And so, as a result, companies spend an outsized amount on rare disease research—more than the standard industry, who invest more than any other industry in R&D. I think the standard pharma benchmark for R&D investment is about 20 percent of their budget. Our member companies in the coalition spent over 50 percent of their budgets on average on R&D, so its much riskier, much more complex, and much more costly. And then the last thing I’ll say is, it’s less profitable. There’s a less, strong economic case for doing a lot of this work. Rare disease companies rely primarily on investment, private investment from capital markets to fund all this work that they’re doing, which can be challenging, especially in certain economic times where there’s uncertainty. People don’t want to invest in high risk assets.

Daniel Levine: This is a time of impressive innovation. But during the past year, with the economic downturn, it’s also been a difficult time for rare disease drug developers. In recent years there’s been large inflows of capital into the sector, but in the past year we’ve seen investors grow cautious, stock prices plummet, and more than 40 rare disease drug companies announce layoffs and restructurings. How would you describe the state of the industry today?

Amanda Malakoff: I think you summarized it well. There’s a duality facing rare disease biotech. On one hand, the medical innovation that has been advanced by rare disease companies has never been more impressive or more cutting edge, especially if you look at, for example, what some companies are doing in the gene editing space. There are rare disease companies that have found ways to permanently treat a rare disease by one time spinal tap that allows them to edit one aspect of a gene. That’s amazing, but due to some of the factors we discussed in your previous question, there are a lot of challenges in fully realizing that promise and that innovation. When we were talking about just a minute ago, we are in a time of economic uncertainty and, investors, want to be able to look to more certainty to dictate where they spend their funds, right? With every rare disease clinical trial for the most part being pretty unprecedented and approached differently, there’s less key milestones that investors can look to in the rare disease space. With economic uncertainty, and regulatory uncertainty, it’s making rare disease investment, rare disease drug development investment less attractive. We are seeing real threats. We are seeing, these headwinds impacting the industry, and companies are having to make difficult trade-offs about what to do to stay viable. To your point that some companies have had to look at layoffs, have had to prioritize what’s in their pipeline, and no one wants to be in that situation, right? Our end goal is to discover these medical advancements, bring them through the clinical trial process, get approval, and provide treatments to patients who need them. No one wants to be in a situation where they’re making trade-offs, but unfortunately that’s is the situation we’re finding ourselves in.

Daniel Levine: Given that current environment, what role do you see policy playing in the health of the industry?

Amanda Malakoff: Our concern is pretty similar to the concern we had around the orphan drug tax credit, which is, again, the unintended consequences. so having these precedent setting, large policies that allow, the federal government to negotiate drug pricing has a ripple effect on the, the pharmaceutical industry, which has an impact on rare disease, companies and their investors. And, we did see consideration for, for an exemption for orphan drugs, but the exemption was, still a little bit narrow. And again, these companies need more consideration, more incentives, not less. And so, a concern we have is it’s very common for rare disease treatments to be used in more than one indication or more than one disease state. that’s very, very common. I think the majority of, of orphan drugs are used for multiple conditions. And so saying that you can only be exempted from negotiation if you are, drug only treats one condition is not, does not match the reality and the science of what companies are doing today. And so, again, we wanna see, these companies be given the special consideration that they need, and we don’t think that this exemption goes far enough.

Daniel Levine: Well, let’s walk through some of the policy issues that the industry’s facing right now and get your read on those. Let’s start with the Prescription Drug User Fee Act. The seventh incarnation of PDUFA passed, but in a rather stripped-down form. Much of the riders we’ve come to expect were not included in the legislation, although there was the Rare Disease Endpoint Advancement Pilot Program, which was included. How meaningful is that program and is there unfinished business from PDUFA that the coalition is focused on during the lame duck session?

Amanda Malakoff: We are certainly supportive of the rare disease Endpoint Advancement program. Anything that promotes more collaboration between FDA and industry and the sponsors going through the clinical trial process is really a positive thing. We were glad to see that provision move forward. But as you said, there is unfinished business. We believe there are some provisions that were originally supposed to be included in user fee that we would like to see positive action on in Congress. We did have some concerns about some of the proposals to limit the use of accelerated approval that were originally included in user fees. Accelerated approval is an opportunity for rare disease drug development. It provides flexibility to the clinical trial process, which is sorely needed for rare diseases because, like I said, every clinical trial is a little bit different and is unprecedented in the rare disease space. It’s important for companies to be able to have the accelerated approval pathway as a tool that they can use to try to get treatments to patients as quickly as possible. It’s been proven to be a scientifically sound and reliable and effective pathway. We want to see that be preserved. And then another provision that was included in the user fee that we were supportive of was the HEART Act, which would ensure that there is expert key rare disease expertise being included in the FDA clinical trial process. Not sure if that is going to end up being included or not, but the coalition is supportive of, at the very least, there being a provision that moves forward whereby the FDA at least takes a look at where they currently have rare disease expertise within review divisions so we can identify if there are any gaps and at least be able to fill those and make sure we’re bringing in the right experts. I think where review divisions have rare disease experts brought in today, things are working well, but it’s inconsistent. Every company has a slightly different experience when they work with FDA and it’s important for that to be more consistent for companies to know what to expect and not to have, have radically different experiences based on what review division they’re in. And that goes back to increasing certainty will help with increasing investment. We would like FDA to really look at their process of how they bring in rare disease experts today and be able to see if there are ways we can at least incrementally improve.

Daniel Levine: We’ve also seen a continuing effort to cut back the Orphan Drug Act. Some of the benefits under the previous administration saw that cut, and it was once again, a target of proposed legislation this year that would’ve further cut the incentives it provides. Do you expect this to be an ongoing fight? And is there concern about whether congress will continue to chip away at the act?

Amanda Malakoff: There is certainly concern about that. The coalition was vehemently opposed to that provision earlier this year that would’ve limited the use of orphan drug tax credit down to the first indication. and I think it’s good timing for you to ask that question because we’re coming up in January on the 40th anniversary of the Orphan Drug Act. It is impressive to see how many more orphan drugs or rare disease drugs were able to come to market before versus after the ODA was passed almost 40 years ago. I think everyone agrees it’s been an effective policy. But as we reach that milestone, I think it’s important, for policy makers to realize that we still have a, a long way to go. We still have 90 percent of rare disease patients without any treatment at all. And so we should all be aligned and working together on finding more ways to incentivize, or make possible drug development for, for rare disease companies instead of chipping away at that slowly. When the Orphan Drug Act was created, the orphan drug tax credit was at 50 percent and it’s slowly been chipped away at. Now it’s down to 25 percent. And then, like you said, it was being proposed to be limited further. But we agree, and I know our partners in the patient advocacy space agree, we should be increasing and further incentivizing companies, not disincentivizing them. And it just speaks to, again, the unintended consequences. It might look like an easy line item to cut as a policy pay for other policy measures. But that has an unintended consequence of impacting companies pipelines and ultimately patients being able to get access to treatment. We want to see Congress increase and not decrease or further limit incentives.

Daniel Levine: You touched on the Inflation Reduction Act a moment ago. This has been a target of industry criticism. Alnylam has said it was suspending development of a therapy for a rare eye disorder to evaluate the impact of the legislation. The Act has a provision that exempts price setting negotiations on rare disease drugs that treat a single condition. What’s the concern here?

Amanda Malakoff: Our concern is pretty similar to the concern we had around the orphan drug tax credit, which is, again, the unintended consequences. Having these precedent setting, large policies that allow the federal government to negotiate drug pricing has a ripple effect on the pharmaceutical industry, which has an impact on rare disease companies and their investors. We did see consideration for an exemption for orphan drugs, but the exemption was still a little bit narrow. And again, these companies need more consideration, more incentives, not less. A concern we have is it’s very common for rare disease treatments to be used in more than one indication or more than one disease state. That’s very common. I think the majority of orphan drugs are used for multiple conditions. Saying that you can only be exempted from negotiation if your drug only treats one condition does not match the reality and the science of what companies are doing today. Again, we want to see these companies be given the special consideration that they need. We don’t think that this exemption goes far enough.

Daniel Levine: Rare disease therapies have long been given a somewhat privileged place with regard to pricing by payers and health technology assessment bodies. While there are a wide range of concerns for the Rare Disease Company Coalition, much of what it seems concerned about centers on issues related to pricing and drug economics and how value is determined. How big a concern is the pricing landscape and the ability of rare disease drug developers to continue to have a viable economic model, particularly as the industry appears to be moving toward genetic medicines that target smaller populations with more expensive therapies.

Amanda Malakoff: Again, I think the problem that we see with some of these value assessment frameworks or these broader models is they, they’re not accounting for, or differentiating rare diseases within the that model. It, it continues to be a one-size-fits-all approach. We think it’s important, whether it’s, the federal level or the state level for anyone who is, looking at using these type of models to consider, again, why rare disease drug development is different, what those unique considerations are, and at the very least, engage with the right experts, engage with the right stakeholders and industry to understand that and make sure that that’s factored into that model or that decision making process.

Daniel Levine: We’ve seen both ICER and NICE try to wrestle with how to treat both rare disease and ultra-rare diseases differently than more general population conditions. Where have you seen a one-size-fits-all approach?

Amanda Malakoff: I think our concern would be approaches like value assessment frameworks that look at orphan drugs in the same way that they look at all drugs and don’t take into consideration, again, these outsized challenges and costs in drug development, and then the societal benefit provided by bringing orphan drugs to market. That’s what we talk about when we say one-size-fits-all—those unique considerations of rare disease drug development are not considered in those broader policies. Again, anything that these bodies can do to bring in rare disease experts or key stakeholders to understand why orphan drug development is different and the benefits that it brings would be beneficial. We see just these blanket frameworks being used that don’t address the unique nature and challenges of bringing these therapies to market.

Daniel Levine: We’ve been through an election season, the Democrats held onto its majority in the Senate, but the Republicans have taken control of the house with a slight majority. How difficult a policy environment do you expect in the next two years?

Amanda Malakoff: It’s always difficult when you’re looking at gridlock in Congress. and that’s certainly a concern we have because we do want to see proactive policy measures go forward. But I think we’re somewhat optimistic because if you look at the work that’s been done in Congress to date on in the rare disease policy space, most of it is bipartisan. For example, if you look at a bill from this last congress called the Benefit Act, that was a bipartisan bill from representatives and Representatives Wentrup and Matsui that we saw come together. There’s a lot of collaboration across the rare disease caucus. We see Democrats and Republicans working across the aisle on rare disease policy issues. We are remaining optimistic and hopeful that that bipartisan work will continue. One fortunate aspect of working in rare disease policy is that both Democrats and Republicans agree on the need to get more treatments to rare disease patients. There’s a lot of consensus about that. We think in this next Congress there will be areas for Democrats and Republicans to work together on things like advancing diagnosis and cures, supporting patient access. I mentioned about 50 percent of rare disease patients or children. I think everyone can agree, no matter their ideology, that we need to support getting treatments to children suffering from rare diseases as quickly as possible.

Daniel Levine: What are the top policy priorities from the coalition in the year ahead and have those changed at all as a result of the election?

Amanda Malakoff: I don’t think our priorities have changed materially because, like I said, so much more work needs to be done to try to reduce the number of people living today with a rare disease without any treatment options available to them. We’ve got a lot of work cut out for us and we’re willing to work with anyone, in Congress, or in the administration, who wants to support those efforts. Our focus areas continue to be the same for next year. And, that’s continuing to find ways to protect and strengthen incentives and considerations for rare disease drug development. Protecting the Orphan Drug Tax Credit remains a priority for us. There is a bill that we hope will work to help get reintroduced called Cameron’s Law, that would increase the Orphan Drug Tax Credit back to its original 50 percent. We will be working in any ways we can, to get additional incentives for rare disease drug development. Like we’ve talked about, we’re going to be working to ensure that the rare disease perspective is considered in any future broader drug pricing policies that come forward. We want to make sure policy makers do realize the consequences that their legislation might have on rare disease patients and can make those considerations wherever possible. And then lastly, there’s a gap in knowledge that exists today on a lot of these issues. We’ll continue to focus a lot of our efforts on educating policy makers and their staff and working with them to help tell the story, both from the company and the innovation perspective and from the patient perspective.

Daniel Levine: One thing I find striking about the Rare Disease Company Coalition webpage is the absence of patients, who are ubiquitous on the rare disease drug company websites. It’s particularly striking because of the power that patient stories can have on winning the minds and hearts of policymakers. The organization’s name itself suggest this is an industry organization, but why is that? Does the coalition seek to engage patient organizations in its policy efforts?

Amanda Malakoff: On our website, you’ll see that our mission is to make a better life for people living with rare disease. That is at the heart of everything we do. The way that we bring in the patient perspective is by elevating what our companies are doing. If you look at our website, all of our companies that our members are listed there and our social media amplifies the work our companies are doing. If you go to their websites, they’re incredibly patient-focused and the patient stories are at the heart of everything they do. We do also work closely with patient groups to help amplify their story as well. It’s important from our perspective to partner the industry perspective with the patient perspective and find ways that we can work together and share each other’s stories. That’s our role—to elevate what our companies are doing in membership and what the patient groups are doing.

Daniel Levine: Amanda Maloff, executive director of the Rare Disease Company Coalition. Amanda, thanks so much for your time today.

Amanda Malakoff: Thanks Danny, appreciate the conversation.