Orphan products—pain relief for clinical development headaches

from Nature Biotechnology

Christopher-Paul Milne

Christopher-Paul Milne is assistant director, Tufts Center for the Study of Drug Development, Tufts University, Boston, MA 03301 email: christopher.milne@tufts.edu

As the cost of clinical development rises, and products take longer to reach the market, the biotechnology industry may be wise to take a closer look at orphan drug indications.

The pharmaceutical industry is in trouble: its late-stage drug pipelines are drying up, fewer drugs are being approved, and those already approved are generating lower sales. Yet investment in research and development (R&D) continues to escalate, with much of the increase attributed to the rapidly rising costs of clinical development. So should the biotechnology industry be worried? During 2001, around 35% of all new products launched were products of biotechnology, and this percentage will continue to increase over the next 10–15 years¹. But unavoidably, the fortunes of the biotechnology industry are entwined with those of the pharmaceutical industry. The products of biotechnology are taking longer, and costing more, to reach the market. This article looks at the pressures on clinical development of biopharmaceuticals and examines one potential safe haven—orphan drugs.

First, we need to ask why the climate for R&D has grown so hostile in recent years. Three factors have had a negative impact on the success of clinical development:

The increased complexity of the products, which has prolonged the clinical development process

The increased burden on, and from, regulators

The difficulty in balancing risk and return in drug development.

Clinical complexity

Clinical development times have doubled from an average of 32 months for biopharmaceuticals approved during 1982–1989, to 68 months for those approved during 2000–2001 (ref. 2). The reasons for the observed prolongation of clinical development time include the use of more sophisticated treatments and research technologies; the treatment of more complex diseases; the demand for higher standards of safety and efficacy; difficulties enrolling patients; and the need to develop medicines for global markets.

Most of the early biopharmaceuticals were protein-replacement therapies and recombinant versions of natural proteins whose pharmacological and clinical properties were relatively well characterized, making them comparatively "easy" targets for product development³. Today, there are some 1,500 different biological modes of action being explored by the industry⁴, which have resulted in such experimental treatments as DNA vaccines, cellular and gene therapy, and xenotransplantation. It will take longer to characterize the therapeutic profiles of the products of such strategies, and to standardize their quality control, in part because this requires more complicated and less well-validated technologies, such as microarrays⁵. Furthermore, the lack of a suitable animal model for many common diseases, and difficulties designing studies to measure key characteristics such as pharmacokinetics, often mean there is less information than ever before about a typical product entering late-stage clinical development, leading to unpleasant surprises during pivotal phase 3 trials³.

Moreover, not only are today's biological targets and therapeutic strategies more complex, but the diseases they treat are also more challenging as the industry switches its focus from acute transient illnesses to more common chronic health problems. For example, antibiotics used to treat acute infections have clinical development times almost two years shorter than those for trials of drugs to treat cardiovascular, inflammatory, and neurological diseases⁶. The evaluation of drugs to treat chronic conditions also requires larger clinical trials because it is often methodologically more difficult to prove not only that the drug can treat the condition, but also that it is superior to available treatments. Typically, trials must be conducted over longer periods to detect drug benefits in patients with chronic and often worsening illness, and to ensure that the drug is safe to use over prolonged periods.

Furthermore, regulators now also demand evidence that a drug is safe and effective in special subpopulations such as women and children, that it can be used safely with other medications, and that it is also cost effective. Market forces are driving these new demands: trial sponsors need to differentiate their products from the competition and get their medicines included in formularies of the managed care organizations that reimburse drug costs. Heightened public and political concerns over safety have also recently arisen following the high-profile withdrawals of more than a dozen medicines since 1997, further pressuring regulators to get it right the first time.

To compound the problem, the major rate-limiting step for any clinical development program—patient enrollment—has become a headache because of increasingly demanding study designs, the various exclusion criteria, and negative media coverage following deaths of patients taking part in clinical trials⁷. Patient enrollment now takes up half the length of most trials⁸. Although the use of placebo-controlled trials (for life-threatening illnesses) is increasingly viewed as unethical, further complicating the design of the study, there is also heightened public concern about the risks to patients, especially following the death of teenager Jesse Gelsinger in an experimental gene-therapy trial. Inclusion and exclusion criteria are also problematic: more restrictive criteria result in slower patient enrollment or unpredicted safety issues when the drug reaches a wider market; less restrictive criteria can increase the likelihood of negative trial results for efficacy or safety.

Clinical trials now not only are more expansive and complex, but also have gone global. Competitive marketing strategies necessitate that companies launch a new product in multiple markets, demanding that clinical trials be conducted in multiple countries. To speedily enroll as many patients as possible, trial leaders now run studies at numerous sites throughout the world⁹. More sites mean not only a bigger and more representative pool of patients, but also a more diverse group of patient volunteers. However, with this diversity comes a greater range of underlying health conditions and additional ethical and practical concerns.

Regulatory burden

The second factor slowing biopharmaceutical development is the increasing regulatory burden on product sponsors and reviewers alike.

Mark Elengold, operations deputy director of the Center for Biologics Evaluation and Research (CBER) within the US Food and Drug Administration's (FDA; Rockville, MD) says that the early products of biotechnology had protracted licensure (review) times because of the agency's inexperience in evaluating such new technology. Although licensure times fell for a while, declining steadily from 24 months during 1982–1989 to 14 months during 1995–1999, they rose again to 19 months during 2000–2001. Elengold adds that clinical development times continue to increase: key problem areas are quality and safety issues in manufacturing, changes in study design with new knowledge of pharmacology and toxicology, and the adoption of new clinical trial methods such as the use of surrogate endpoints (using laboratory or physical signs such as blood pressure as a substitute for a clinical endpoint, e.g., stroke-free survival time)⁵.

Regulatory caution is also now hindering clinical development. Recently, the US FDA has become increasingly "sensitive" about drug safety, following suggestions that the performance goals imposed by the user-fee program made the FDA "rush" reviews of products to satisfy the industry and congress. (The user-fee program, which went into effect in the mid-1990s, entails the payment of three types of user fees—application, product, and establishment—by product sponsors; in return the FDA must meet certain performance goals in the speed and efficiency of product reviews.) Now, the FDA is demanding more data to verify the primary efficacy endpoints and safety of a new medicine, so companies have had to test a new drug on even more patients, and include special subpopulations.

Where's the money?

The third factor is the problem of risk and return for drug developers, which influences the products that they choose to take to market.

A study by the Tufts Center for the Study of Drug Development (Boston, MA) reports that it costs around $800 million to bring a new product to market—indicating that the overall cost of R&D has increased 2.5-fold during the past decade. However, according to the same study, the inflation-adjusted annual growth rate for capitalized clinical costs was more than five times that of the growth rate of preclinical R&D costs over the same period. Investment in R&D by big pharma doubled between 1995 and 2001 to a colossal $30.5 billion, and public biotechnology companies spent a further $10.2 billion (2000 figures)⁸. Perhaps as a consequence, the pharmaceutical industry has to date almost exclusively concentrated on developing blockbuster products—drugs for common diseases that can generate over $1 billion in peak sales annually—for which it can get a significant return on its investment. Indeed, during 2002, blockbuster drugs will account for 30% of total drug sales¹⁰.

Many factors could explain the falling cost effectiveness of drug discovery: resources have been wasted on failed projects and flawed technology platforms, such as high-throughput screening and combinatorial chemistry, that did not deliver¹¹; attrition rates during clinical development, rather than the cost of trials, could also be to blame⁷; there has also been an increase in the "variable costs" associated with product development—for example, manufacturing costs, registration fees, and marketing expenses. In the United States, some of these additional costs come from marketing, in particular direct-to-consumer (DTC) advertising and promotion to medical professionals.

So what is to be done when the mainstream market is looking more like a riptide? Companies are trying various strategies to boost clinical development capabilities and their drug pipelines: Some are investing in pharmacogenomics and "virtual" clinical development; others are consolidating, merging their pipelines and R&D functions with others. Yet other companies are "buying" R&D by partnering with start-up companies or even outsourcing their R&D functions altogether. But companies in search of calmer waters could be well served by considering a stable, albeit small, market with potential for substantial growth—the R&D of medicines for rare diseases and conditions, so-called orphan drugs.

Safe haven

Orphan drugs include both biological and drug products (devices and medical foods are also eligible for orphan status), which were so named because their relevant patient populations were too small to render them economically attractive to the large pharmaceutical companies that dominated the industry during the 1980s. To circumvent this barrier, in 1983 the US FDA passed the Orphan Drug Act (ODA), which provides a number of incentives for research into treatments for rare diseases (see "Supporting orphan indications" ).

The ODA has been a resounding success: around 1,200 products have received orphan designation, and a total of 240 will have been approved by the end of 2002. Although the industry was in an embryonic stage when the ODA was passed, biotechnology companies were soon attracted to orphan R&D because of the ODA's seven-year marketing exclusivity incentive.

Orphan drugs have continued to provide fuel for the biotechnology industry. During the past two decades, 22% (50 out of 232 approved to date) of all orphan products approved have been biologics. Between 1998 and 2001, biotechnology companies were awarded 65% of all orphan drug designations and 40% of approvals, whereas pharmaceutical companies were awarded just 28% of designations and 54% of approvals (Figs 1 and 2). Moreover, nearly half of all new significant biological approvals granted by CBER since 1994 have been orphan drugs.

So, how does orphan R&D fare in the face of the problems for R&D today? The evidence suggests that orphan drugs have faster clinical development times, greater support from regulators, lower costs of development, and more significant, if smaller, end markets than products for common diseases—all key advantages for the biotechnology industry.

Speed in the clinic

Orphan diseases are challenging for drug developers because they are often life-threatening conditions and the majority require long-term or intermittent therapy¹². However, a number of factors—active patient advocacy groups, the absence or scarcity of existing treatments, and close patient–doctor relationships with specialists—actually facilitate enrollment in clinical trials for orphan products, despite patient populations that are small and geographically dispersed. As a consequence, the median clinical development time for new biopharmaceuticals with orphan drug status is over a year shorter than that of standard review products (Fig. 3). For priority review products, orphan clinical development time is nine months shorter (Fig. 4).

Moreover, previously published research has demonstrated that the number of trials required for orphan drugs, and the number of patients studied per trial, have been much lower than for trials of non-orphan biopharmaceuticals. The number of trials per Biologic License Application (BLA) was half that of non-orphan BLA applications (9.7 versus 14.8 trials), and the total number of patients studied was one-third that of the non-orphan biopharmaceuticals (576 versus 1,627 patients)¹³.

Regulatory helping hand

On balance, orphan developers view the regulatory system as more help than hindrance. Orphan product developers get assistance from the FDA review division in designing their clinical trials, and staff of the Office of Orphan Product Development (OOPD) can help to facilitate the review process. Because orphan biopharmaceuticals often represent therapeutic advances for serious or life-threatening diseases, the majority of them have been given priority review status by the FDA (10 out of 12 new biopharmaceuticals approved from 1995–1999)¹⁴, and must be acted on within six months as compared with ten months for standard review products. Furthermore, orphan products are exempt from new FDA regulations requiring that all new medicines be evaluated in children.

Developers of orphan drugs also take advantage of the FDA's fast-track designation, which expedites development and review of products that address unmet medical needs for serious or life-threatening illnesses. A recent survey showed that 57% (13 out of 23) of fast-track program participants also had orphan designations¹⁵. Similarly, among drug developers with the healthiest product pipelines and portfolios, 12 had drugs approved on efficacy data derived from a single, well-controlled phase 3 trial, and a third of these drugs had orphan designation¹⁶. Moreover, 67% (29 out of 43) of so-called "treatment investigational new drug (IND)" designations were also orphan-designated products¹⁷. Treatment INDs are granted by the FDA for drugs to treat seriously ill patients who have no treatment options, medicines that historically have had shorter development times. The benefit of taking advantage of these special programs likely explains why nearly a quarter of the 50 fastest drug approvals carried out since 1984 have been of orphan products¹⁸.

A therapeutic "Gold Coast"

But where product development is concerned, it is all about economics. Despite the industry's passion for blockbuster medicines, around 90% of all drugs generate < $180 million a year¹⁹. Indeed, if a company markets a product in an area where it has established expertise and market share, a product's sales need not be in excess of $100 million a year for the product to be financially viable²⁰. During 2000, annual US sales for biologicals with first approvals as orphans averaged at $103 million per drug²¹. The economics of orphan R&D are therefore favorable—entry barriers are lower and markets, albeit smaller, are predictable and profitable.

Because orphan products address considerable unmet needs for relatively small patient populations for which care would otherwise be inordinately expensive (if available at all), managed care organizations can afford to reimburse patients the cost of expensive orphan products because they are cost effective and represent a small fraction of total health costs for any particular healthcare insurer²². The combination of higher prices but lower R&D costs (because fewer trials and smaller patient numbers are required) mean healthier profit margins for the developers of orphan products²². The seven-year period of market exclusivity provides protection against "me-too" competitors, and the small markets for the drugs typically dissuade generic competition—an ideal combination.

However, the decrease in marketing costs may, in fact, be the more critical factor favoring orphan products. With a captive market, an active network of advocacy groups, and a knowledgeable body of medical specialists, market penetration can be fast. Moreover, there is little need for DTC advertising or for a large sales force to promote the medication to doctors. For example, recent analysis showed that the R&D costs to produce a drug for a rare disease such as Huntington's chorea were one-quarter of costs to produce an anti-hypertensive, but annual marketing costs were seven times lower²².

The revenue streams for mainstream and orphan drugs also differ. The typical blockbuster has a rapid growth in sales after launch, peaking 11–12 years after first launch and then declining rapidly. By contrast, orphan drugs have a slower growth curve and a slower decline. So, although peak sales for mainstream drugs often last 8–12 years after launch, this period can stretch to 15 years post launch for orphan drugs²³. Although orphan drug markets are typically small, off-label use, high price per product, the need for chronic use, and registration in multiple countries can turn a small market into a substantial one. Indeed, during the 1990s the majority of the top-ten selling biotechnology products had orphan approvals.

The near horizon

One trend that makes orphan product R&D even more attractive for the biotechnology sector is increasing government support. The OOPD provides 20–25 new grants every year, each lasting one to three years, which cover both the direct and indirect costs of clinical development of orphan drugs. Overall, the OOPD has contributed to the development and approval of 29 new products²⁴. Further assistance could come in the form of a bill that would provide companies with retroactive orphan tax credits from the day they apply for orphan designation rather than the day the FDA awards designation, as occurs under current law. The new legislation will also increase orphan grant funding from $12 million to $25 million, and provide the National Institutes for Health (Bethesda, MD) with $20 million to establish centers of excellence for rare disease research²⁵.

Orphan R&D is poised to take advantage of several other favorable trends. Global registration and harmonization for orphan R&D can occur because of laws existing in the three major markets (Japan, Europe, and the United States), and several emerging economies (including Singapore and Australia). Also, orphan product developers may be considered ideal candidates to pursue counter-bioterrorism R&D under government incentive programs because of their proven track records for performance when profit expectations are low but society's needs are high. Lastly, the trend toward internet-based prescription fulfillment is particularly valuable for the orphan drug market because patients need to purchase large quantities of the medicines, but conventional commercial sites have limited storage.

The far horizon

The known combined orphan patient population in the United States is thought to be 11 million, but could be as high as 20 million, and there are around 20–30 million affected patients in Europe. Orphan products currently generate $3–5 billion a year, but the potential market could be as high as $200 billion²².

Moreover, even though orphan R&D costs have to be countervailed by costly end products—which can be as high as $300,000 per year²⁶ and may average at $5,000 per year²² —a recent inquiry by the Inspector General's Office of the US Department of Health & Human Services (Washington, DC) reported that most patients have access to even the costliest orphan products²⁶.

Orphan R&D may also provide incentives for R&D of the so-called neglected diseases such as malaria, tuberculosis, schistosomiasis (bilharzia), and other tropical illnesses that afflict millions in the developing world but because they rarely occur in developed countries could qualify as orphan diseases²⁷.

Other market, technological, and social forces could help make orphan R&D even more attractive in the future. Pharmacogenomics will segment the mainstream market into smaller ones²⁸ where orphan R&D would thrive: when markets are smaller, patient power is stronger and more influential. For example, the Cystic Fibrosis Foundation, frustrated by the slow pace of commercial R&D in this therapeutic area, has struck a $30 million deal (funded initially by a $20 million donation from the Gates Foundation) with Aurora Biosciences (San Diego, CA) to identify compounds to treat cystic fibrosis. With the possibility of a further commitment of $16.9 million to prepare candidate drugs for clinical trials, the intent is to attract coinvestment by a major pharmaceutical company to carry the drug to final approval²⁹.

Until new technology provides real improvements in R&D—which could take at least 5–10 years, and some say up to 20 years—orphan product development could be the way for biotechnology companies to hedge their bets against the vagaries of poor funding climates and high attrition rates for products and platforms. The competencies developed along the way could help companies to weather the strains of an increasingly demanding regulatory and technological environment, and a mainstream market that could be rendered obsolete by the impact of pharmacogenomics. When considering the prospects of orphan R&D, companies would do well to reflect on the experience of one of the world's leading biotechnology companies, Amgen (Thousand Oaks, CA), which started life 20 years ago with a focus on orphan products but now has annual revenue of $4 billion.

References