When Blockbusters Garner the Benefits of Orphan Drugs

While the Orphan Drug Act has been a powerful incentive for getting drug companies to pursue the development of therapies for rare diseases, it has also been an ongoing source of controversy as many top-selling drugs that benefitted from the act are approved for both non-orphan and orphan indications.

The argument among critics is that with the ability to tap multi-billion markets for these products, drug companies shouldn’t reap the benefit that the Orphan Drug Act confers.

A new study published in Health Affairs continues this debate with a slightly more nuanced look than past studies. The study, led by a team of University of Michigan and Boston University researchers, looked at how much spending on partial orphan drugs actually goes to treat rare diseases.

The list consists of familiar blockbusters including Humira, Remicade, and Enbrel. It also includes new immunotherapies like Keytruda and Opdivo.

The researchers found that for these so-call partial orphans, orphan indications accounted for $822 million in spending on these drugs in 2018 (21.4 percent) while non-orphan indications accounted for $2.7 billion (70.7 percent). The remaining utilization included off-label use and was not categorized as either orphan or non-orphan.

While other studies have estimated the spending on orphan drugs, the researchers believe their study is the first to estimate spending for orphan indications among a broad group of partial orphan drugs.

The researchers also distinguished among these 15 drugs between those that were approved first for orphan indications and those that won approval for orphan indications after their first approval. They found that among the orphan-first subset, half of spending was for orphan indications while 40 percent were for non-orphan indications.

The meaning of that, however, is a matter of speculation. They suggest it could reflect unforeseen discovery of common disease indications after initial approval. But, they say, it may reflect the fact that orphan drug policy incentivizes sponsors to pursue an orphan-first strategy.

The authors offer potential policy remedies to address the situation. These include implementing indication-sensitive pricing; revoking orphan status if the total patient population for a therapy reaches a specific threshold or lifting exemptions on partial orphan drugs from the required discount in the government’s 340B drug pricing program.

“Our findings provide some support to policy makers’ concerns regarding the cost of orphan drug benefits for partial orphan drugs, particularly those initially approved for rare diseases,” they write. “Yet reducing these benefits entails trade-offs. To inform assessments of these trade-offs, future studies should evaluate whether the benefits of the orphan uses, or partial orphan drugs justify the potentially substantial costs of granting these drugs orphan status.”

With incentives, the challenge is often avoiding unintended consequences. In the case of the Orphan Drug Act, the creation of incentives was to get drug developers to pursue medicines for small patient populations. The act is widely credited for sparking industry interest in the pursuit of treatments for rare diseases. The authors of the act likely didn’t envision that some of these drugs would become multi-billion products as their benefits extended to patients with more common diseases.

But taking steps to address what some see as drugmakers gaming the system carries the risk of dissuading drug developers from pursuing needed treatments for rare diseases. It could also disincentivize them from finding benefits for more common diseases for their orphan drugs if they face a significant cost for doing so. And, there is the risk that the loss or elimination of such incentives could become a disincentive for drugmakers to prioritize orphan indications over larger market indications.

The assumption is that drug companies are reaping rewards they don’t need to get them to pursue rare indications when the uses of a drug extend to larger markets. The assumption is that the big markets are rewards enough.

It would seem an oxymoron that a drug could be both an orphan and a blockbuster, but just because orphan drugs get repurposed for common ailments and drugs for common ailments get repurposed for orphan indications doesn’t mean that incentives aren’t important for driving their development for treatments of rare diseases.

If it is distortions to pricing that critics fear when a drug is first approved for an orphan indication and then expanded to common indications, that problem is not endemic to the Orphan Drug Act and ultimately is a question of value.

A drug’s orphan status and its utility in more common indications are separate matters. Before crafting a solution, it is critical that policymakers understand what problem they are trying to fix and not create new ones in the process.