If pricing isn’t going to be an issue in the next decade, then should we not be concerned with our development pipeline?
Pricing, and the sustainability of high cost orphan drugs is increasingly making headlines in the pharma industry. But will pricing ever really become an issue? Kim Stratton, Head of International Commercial at Shire, spoke on Wednesday about the future of the orphan drug industry. during her speech she plainly stated that “we do not expect to face the flood gates opening, and a deluge of orphan drug products hitting the market that the health care providers cannot afford.” Her reasoning stands that orphan drugs currently constitute just 3% of overall pharmaceutical spend (which is in turn just 15% of total healthcare expenditure).
With EURORDIS expecting just 10 new orphan drugs to hit the EU market a year up until 2019, along with the support pledged from governments and healthcare providers to continue to support rare disease patients, it’s easy to see her reasoning.
Now this view was not shared by many of the other speakers at the World Orphan Drug Congress Europe this week, whose concerns were that increasing pressure on payers from expensive drugs would make them more price sensitive even when it comes to rare disease treatments.
The issue at the centre of this disagreement then is how many products will receive market approval. EURORDIS predicts 10 products a year until 2019. But how many after that? The number of orphan designations received in the last few years has sky rocketed, and whilst we do not expect all products granted a designation to receive approval, we can expect a good few of them to reach the market. If there is no increase in the number of products, then we can assume that there is a problem with either the current pipeline of orphan treatments, or the system through which they must be approved.
So we have three potential concerns related to the fuyture growth of the orphan industry:
- Pricing: if the number of orphan products available increases over the next decade at a rate comparable to the increase in designations over the last 5 years, we can expect the current 3% of pharma spend dedicated to orphan drugs to increase if prices follow the same pattern.
- Pipeline: if the number of orphan products does not jump in line with designations, could this be put down to a weak pipeline of products? Orphan drugs do address some of the biologically least-understood diseases and conditions that we have managed to characterise. This can make development difficult, but there shouldn’t be any reason to suspect the science behind these products is so poor that just a tiny fraction of developers are, and will ever reach the marketing approval stage.
- Policy and Regulation: if it’s not price, and it’s not pipeline, is it policy? The current regulations surrounding market approval for medicinal products are still very much aimed at products with much larger populations. this is true at both the regional level, and the country level for the EU. The data requirements for the approval of an orphan product vary between each member country of the EU, putting pressure on developers to sit down early and work to appease every HTA department in the EU, who often want different things. This is costly and time consuming and can keep effective treatments out of markets for years, even after approval from the EMA.
My contention is that, whilst any of these concerns could rear their head over the next decade, pricing still represents the ultimate hurdle for the industry. If regulation and policy is streamlined in the EU and across the world we will see more products hitting the market, increasing the burden on payers. If continuing research into rare diseases and advances in genomics allow us to create more effective treatments, then we will see more drugs hitting the market, putting pressure on payers.
So whilst we may not see a flood of orphan designations over the next few years, continued attempts to improve the regulatory processes for market approval will eventually allow orphan drugs to move easily to market in the future. And when this happens, price will be a problem for orphan drugs.