Since its passage in 1983, the US Orphan Drug Act has led to the approval of more than 350 drugs for around 200 rare diseases, mostly thanks to small biotech startups looking for a unique niche in the marketplace. Yet with the demise of big pharma's traditional business model, some of the world's largest drug makers are aggressively entering the rare disease sector.
“There's a trend toward the death of the blockbuster, so people are moving toward the niche buster,” says Christopher Milne, associate director of the Tufts Center for the Study of Drug Development in Boston.
The latest company to enter the orphan market is New York–based Pfizer, which in June announced the creation of a new research unit devoted to developing and commercializing new biologics to treat rare diseases. The move follows GlaxoSmithKline's February announcement that the London-based firm was forming a similar stand-alone unit. Other companies, including the Swiss drug maker Novartis and Indiana's Eli Lilly, have made similar investments.
“It's the industry saying, 'where is there an unmet need, and how can I address it?'” says Edward Mascioli, who is heading up Pfizer's new unit, based in Cambridge, Massachusetts.
According to Milne's calculations, the share of orphan product approvals in the US by large biopharma grew from 35% ten years ago to 56% in 2006–2008, the last years that records were kept (Tufts CSDD Impact Rep. 12, 1–4, 2010). Milne also found that only four orphan drugs were among the top 200 bestselling medications in the US a decade ago; by 2006–2008, the number had quadrupled to 16 orphan products, with annual sales ranging from $200 million to nearly $2 billion each.
With drying drug pipelines and increasing generic competition, the orphan drug sector offers several attractions for pharma. It provides tax credits on clinical trial expenses, grant funding from the US Food and Drug Administration (FDA), seven years of marketing exclusivity after an orphan drug is approved and a waiver of user fees. “The economics are much more attractive for rare diseases than they were in the past,” says Usama Malik, Pfizer's head of business innovation. What's more, orphan drugs are often given high price tags to help recoup costs within the small market, which further boosts pharma's bottom line.
“Society is turning away from us and saying, ‘this is a raw deal’.”
Beyond profitability, pharma's shift toward rare diseases also helps in the court of public opinion, notes Bernard Munos, a former advisor on corporate strategy for Eli Lilly (who retired last month). With few new drug entities emerging from the industry's pipeline, and more than 6,000 diseases affecting an estimated 25 million Americans still without a therapeutic option, “society is turning away from us and saying, 'this is a raw deal; this is not the covenant that we agreed to,'” Munos says. “Ultimately, the acid test of success for the industry is our impact on public health.”
To complement the private sector, federal agencies are also searching for new ways to bolster research into orphan products. In March, for example, the FDA created the Rare Disease Review Group (which held its first public hearings this summer), and the regulatory agency has teamed up with the National Institutes of Health to run a rare disease investigator training course, scheduled for October. At the two agencies' request, the Institute of Medicine is also conducting a review of national policy for rare disease research and product regulation; recommendations are due next month.
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