Too Much of a Good Thing: is the orphan drug act sustainable?

In Regulation & Government by CameronLeave a Comment


In 2013 the US Food and Drug Administration (FDA) awarded a record breaking 260 orphan drug designation to developers, up from 190 the year before. In 2012, the European Medicines Agency (EMA) handed out 134 orphan medicinal product designations, with 136 in 2013. And as the graph below (courtesy of Nature) suggests, this trend of increasing orphan designations looks to be gathering pace.

Orphan Ascent Nature

So what has caused this significant upswing in the number of orphan drug designations of the past decade? The completion of the Human Genome project, our increased understanding of the mechanisms behind over 5,000 diseases (up from around 1,000 in 1999), along with other scientific advances have made it easier to understand rare diseases. These advances have given us the information to create treatments. And our improved knowledge has led to improved diagnostic ability, increased patient populations (though comparatively small) for both research, clinical trials and sales.

But a side effect of the increasing levels of understanding surrounding the gene mutations, and protein folds that lead to various diseases, has been the identification of subgroups within traditionally common illnesses. Particularly common in oncology, we are seeing an increasing number of orphan designations being given to treatments for subsets of cancers such as melanoma and non-small cell lung cancer, and diseases such as cystic fibrosis. Product granted orphan status tend to target specific antigens (as in cancer) or specific mutations. Products such as Vertex’s Kalydeco is aimed at just 4% of the USA’s 30,000+ cystic fibrosis sufferers and as such can achieve the 1-in-2000 requirement for FDA orphan designation.

Orphan status brings with it a number of benefits afforded only to those companies willing to tackle diseases with tiny patient populations. The FDA, for example, waive their $2.17 million fee for orphan developers, and offer numerous tax breaks and funding incentives designed to make orphan development a more attractive prospect: from application and trial design help from the FDA, to the reimbursement of many costs associated with clinical trials. Orphan drugs also have a higher ratio of approvals compared to products created to treat more common ailments. These benefits have seen big pharma flocking to orphan drugs as a way of softening the blow from the numerous blockbuster drugs losing their market exclusivity over the past few years and in the coming years.

The true cost of increasing orphan drug designations

The orphan drug designation program was created in America in an attempt to stimulate the development of treatments for patients who had nothing available to them. The program has been an undeniable success, but the current trend of salami slicing and the huge price tags for these drugs, are putting the whole program at risk of collapse.

There are two problem areas here.

  1. Can the FDA afford to stay open if this trend continues?
    Currently, the FDA wives their fees for orphan drug related applications. These fees provide the majority of the FDA’s funding, and in the last decade they have risen from $573,500 to $2.17 million. This is no doubt connected to the fact that last year, orphan drugs accounted for a third of all FDA approved treatments. If the current trend continues, and treatments for common diseases become more and more targeted, the FDA could see the number of fees waived dramatically increase, leaving just the generic drugs and equipment manufactures to foot the bill. 
  2. Who will break first: Patients or Pharma?
    It’s no secret that pharma’s move to orphan drugs has been motivated by stable markets, the size of which is mediated by regulatory perks and high price tags. But if more and more treatments for more common illnesses, such as the many forms of cancer, are granted orphan designation and as such are given huge price tags (which can reach into the hundreds of thousands) there will come a point when payers are no longer willing to fork out hundreds of thousands of pounds a year for a targeted cancer treatment, when just a few years earlier they would have paid a few thousand for broader course of treatment.

Now we could sit here and debate who has is morally obliged to take the hit, whether patients should pay more, or pharma should reduce their revenue for the good of patients. But such a discussion is ignoring a crucial point: if the future of medicine is in targeted medicine for small patient populations, we cannot continue to regulate, fund and subsides development on the basis of a system designed around blockbuster drugs.

Orphan drugs for truly rare diseases are getting caught up in the wider shift we are seeing in drug development. Regulators cannot subsidise every drug for a small patient population if the future of development is primarily in drugs for small populations.

Pharma and biotechs are currently enjoying incentives provided to orphan drug developers. These incentives were designed to draw developers away from the lure of blockbuster and generic drugs. But if the future is dominated by ‘orphan’ drugs for small patient populations, these incentives are now outdated.

What regulators need to begin considering is an orphan designation model based upon the research that is going into a drug. In the future of subtype targeted drugs, developers will be drawn towards those we already have a good amount of data behind, such as cancer and our knowledge of antigen specific subtypes. The FDA and EMA should be looking to fund the development of drugs that have little established data behind them, developers which are taking more of a risk to treat diseases we do not fully understand.

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