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Rarediseases-orphandrugsandtheirregulation-questionsandmisconceptions.pdf

Historically, health-care systems and medicine development did not address the needs of patients with rare diseases. In the early 1980s, the National Organization for Rare Disorders (NORD), a patient organization based in the United States, advocated for the installation of special incentives to change that situation. In 1983, the Orphan Drug Act (ODA) was passed in the United States to promote the devel- opment of drugs for rare diseases, which amount to more than 6,000 identified diseases at present.

This landmark legislation, recognized as one of the most successful legislative actions of the United States in recent his- tory1, generally acknowledged the medical needs of patients with rare diseases. It also recognized that a fundamental obstacle to the introduction of rare disease therapies was the reluctance of industry to invest in research and development with little prospect of return on that investment. The ODA, which defined rare diseases as those affecting fewer than 200,000 people in the United States, therefore introduced economic incentives for drug development

for such diseases. These economic incen- tives include 7 years of US Food and Drug Administration (FDA)-enforced market exclusivity for approved products, exemp- tions from FDA fees for regulatory submis- sions, regulatory advice and tax credits.

In the 27 years since the ODA was intro- duced, more than 350 orphan drugs have been approved in the United States, com- pared with only 10 such drugs in the decade preceding the ODA2. Legislation to promote the development of orphan drugs has also been successfully introduced elsewhere in the world, including in Japan in 1993, in Australia in 1998 and in the European Union in 2000. Nevertheless, even in coun- tries with existing legislation, many patients with rare diseases are still faced with many challenges in receiving appropriate care, owing to low disease awareness and limited access to medical expertise, diagnostic testing and therapies.

These challenges, coupled with the medical and commercial success of some orphan drugs and their growing number, has increased societal scrutiny of the field. Questions are being raised over several

issues, from the validity of incentives for orphan drug development to the value of long-term patient outcomes and the appro- priate pricing of orphan drugs. However, the debate around these questions has some- times been hindered by misconceptions that might slow down efforts to advance the field or to provide access to the treatments. With this in mind, this Perspective provides an industry view on some of these ques- tions and misconceptions, with the aim of improving understanding of the field (see also REF. 3).

Rare disease characteristics Knowledge of rare disease pathology and the patient population. A commonly encoun- tered misconception is that patients with a particular rare disease are readily identi- fied before the development of a potential orphan drug starts and that ample informa- tion about the disease and its epidemiology is available.

Currently, there are ~6,000–8,000 rare diseases described in the literature, of which 80% have a genetic basis4. The Orphanet database (see Further information) also provides valuable insights on the issue of identified and confirmed rare diseases versus the estimated number. These dis- eases are thought to affect about 6% of the population in the European Union alone (30 million out of 500 million inhabitants in the 27 European Union countries)3,4, sug- gesting that a relatively high percentage of the population would need treatment for a rare disease.

However, not only is the prevalence of most rare diseases ill-researched, not all of the affected individuals will need treat- ment and even those that do are not neces- sarily already identified. Indeed, although some rare diseases, such as Duchenne’s muscular dystrophy, have clear and identifi- able clinical symptoms, this is not the case for most rare diseases, which may have symptoms that resemble those of other dis- eases or which are unfamiliar to most gen- eral practitioners. Increased knowledge of the disease mechanisms is now potentially allowing better diagnosis but this does not automatically lead to the identification of patients suffering from a rare disease before

O P I N I O N

Rare diseases, orphan drugs and their regulation: questions and misconceptions Erik Tambuyzer

Abstract | Sustained advocacy efforts driven by patients’ organizations to make rare diseases a health priority have led to regulatory and economic incentives for industry to develop drugs for these diseases, known as orphan drugs. These incentives, enacted in regulations first introduced in the United States in 1983 and later in Japan, Europe and elsewhere, have resulted in substantial improvements in the treatment for patients with a range of rare diseases. However, the advent of orphan drug development has also triggered several questions, from the definition of rarity to the pricing of orphan drugs and their impact on health-care systems. This article provides an industry perspective on some of the common questions and misconceptions related to orphan drug development and its regulation, with the aim of facilitating future progress in the field.

PErSPEcTivES

Nature Reviews Drug Discovery | AOP, published online 9 November 2010; doi:10.1038/nrd3275

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or during the development of a treatment. The average time from the first clinical symptoms to diagnosis may range from 5 years up to 30 years depending on the dis- ease and this often results in unnecessary medical interventions5.

So, when a new orphan drug is being developed and when it is approved, a key challenge is to find the patients who need it. The actual number of patients that need to be treated, as compared to an extrapolated estimated prevalence, is often highly uncertain. For example, a report from the Committee for Orphan Medicinal Products (COMP) on 5 years of orphan medicinal products regulation in Europe mentions alongside the product miglustat (Actelion Pharmaceuticals) that the prevalence of Gaucher’s disease, which is caused by a deficiency in the enzyme β-glucocerebrosidase, is 27,500 people in the 15 European Union countries making up the European Union at that time6. If this figure is correct, it would mean that in Germany alone, there would be approxi- mately 5,000 patients with Gaucher’s dis- ease. However, although the first enzyme replacement therapy for Gaucher’s disease, alglucerase (Genzyme), received market authorization in Europe in 1994 (replaced in 1997 by its recombinant version imi- glucerase (Genzyme)), there are still only ~250 patients in Germany receiving this drug, which is the standard treatment for Gaucher’s disease.

If the prevalence estimate is correct, only about 5% of the estimated 5,000 German patients with Gaucher’s disease have been found, although a treatment has been available for over 15 years. Given that Gaucher’s disease is a serious, potentially life-threatening disorder for which the need of the patients affected by it and the drive for their physicians to find a treatment is therefore high, this indicates that most of these patients do not exist. This example illustrates the extent of the lack of knowl- edge about rare disease prevalence, given that Gaucher’s disease is among the more well-studied rare diseases and a treatment has been available for a considerable time. It also provides an indication of the difficulty in identifying patients with rare diseases for clinical trials, which is often encountered in other rare disease drug development programmes. The overestimation of the prevalence rate of many rare diseases is most probably related to the fact that prevalence studies are usually done in regions of higher prevalence. The prevalence rate is also usually based on hospital data7.

Should rare cancers be classified as rare diseases? A second view encountered related to orphan disease characteristics is that rare cancers should not be part of the systems for rare diseases because they are covered by systems for oncology, which has its own set of treatment centres and rules. However, patients with rare cancers, just like those affected by other rare diseases, suffer from lack of information, difficulties in diagnosis and lack of available treatment. So, even if these patients could be treated in an oncol- ogy setting, the rare disease systems would provide additional access to information, awareness, diagnosis and incentives for treatment development.

Orphan drugs for rare cancers make up 30–40% of the orphan drugs developed or designated in Europe or in the United States8. Oncological diseases also have the highest chance to have a related orphan drug designation7. Orphan drugs developed for cancer indications include imatinib (Novartis), dasatinib (bristol–Myers Squibb) and nilotinib (Novartis) for chronic myeloid leukaemia; clofarabine (Genzyme) for acute lymphocytic leukaemia; and bortezomib (Millennium Pharmaceuticals) and thalido- mide (Celgene) for multiple myeloma.

An additional complexity for rare cancers is that orphan drugs developed for one ther- apeutic indication may be also used for other indications. For example, imatinib has been approved for several cancer indications. It is not well understood by society that for each therapeutic indication, the clinical trials for that indication have to be carried out independently from the previously approved indication(s). Also, different indi- cations have different disease prevalences. Taking again the example of imatinib, the first approved indication encompasses about 90% of all patients treated with the drug, whereas the remaining indications account for about 10% of the patients.

Orphan drug research and development Public funding of orphan drug research and development. Outside of industry, a com- monly encountered view is that research on rare diseases and orphan drugs is done in academic institutions and so society is pay- ing twice for orphan drugs; once by provid- ing public funds for research and again by paying for approved orphan drugs. Indeed, this view is also often expressed about drug research and development in general.

basic research in almost any sector is carried out by academic researchers and this is also true in the biomedical field. With regard to orphan drugs, research suggests

that the likelihood that a drug development programme for a rare disease will be started is more than two times higher if more than 600 scientific papers were published for that disease7. basic research therefore has an important role in orphan drug development.

However, these researchers focus on discovering new scientific knowledge and exploring new avenues, not on making prod- ucts. Once biomedical research becomes more translational — for example, identify- ing suitable drug candidates and conducting clinical trials — it is nearly exclusively pur- sued by industry. The translational stages in the development of new drugs demand high standards for quality control and reproduc- ibility, which entail large amounts of capital investment and the need for highly trained personnel. In addition, most clinical trials, even for very small patient populations, can be very expensive. Highly controlled and regulated manufacturing processes are nec- essary to provide a safe and efficacious final product that consistently meets regulatory marketing authorization requirements.

For biotechnology-derived drugs in particular, the development of such a manu- facturing process and the construction of manufacturing facilities that meet regula- tory standards is costly and time-intensive. BOX 1 presents some of the history of enzyme replacement therapy to help illustrate the roles of academic institutions and biotechnol- ogy companies in developing orphan drugs.

As a result, the final cost of an orphan drug reflects the cost of all the steps in the development process. License costs for the transfer of the results of the basic research to the developing company are counted, as are, most importantly, the cost for the translation of these results into a reproducible, market- able product. In this context, the definition of industry also includes university spin-off companies, which means that the transition from academia to industry is not clear cut.

Relative costs and regulation of orphan drug development. A common misconception is that orphan drugs are cheaper to develop than other drugs because smaller clinical trials are required and they are subject to different regulatory standards.

Researching, developing, manufacturing and bringing to market any medicine is a long, complex process and recent data indicate that approximately 30% of all drugs still fail in Phase III trials9, although others claim that this number could be as high as 50%10. With regard to orphan drugs, each stage of the development process is further complicated by disease rarity. Challenges for

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orphan drug development typically include lack of data on the natural course of the dis- ease, poor or late diagnosis, lack of validated clinical end points, major logistical difficul- ties in the organization of clinical trials and low expertise in the medical community. Given this complexity, a recently cited suc- cess rate of 62.9% in the orphan field com- pared with 70.7% for non-orphan drugs11 should be considered a success for orphan drug development.

Randomized placebo-controlled clinical trials involving several hundreds of patients, which are typically part of drug development programmes for more common diseases, are often not possible for rare diseases because of rarity, ethical considerations and medical need. Nevertheless, although our knowledge on the safety of orphan drugs is still incom- plete and is based on mostly modest patient numbers, to our knowledge, no orphan drugs have been withdrawn from the market

in Europe for safety reasons. Certainly, the literature information supports the conclu- sion that orphan drugs are relatively safe drugs, even compared with those for other diseases7.

The additional challenges in finding patients, as mentioned above, and the organization of clinical trials can both contribute considerably to the cost of orphan drug development. An example is the clinical trial for the development of alglucosidase α (Genzyme) — a therapy which obtained regulatory approval in the European Union and in the United States in 2006 — for the treatment of infants with Pompe’s disease. Pompe’s disease or acid maltase deficiency, also known as glycogen storage disease type II, is an extremely rare, life-threatening lysosomal storage disorder that affects the muscles. The incidence of Pompe’s disease may vary according to ethnicity and clinical form. Infantile or early onset Pompe’s disease has a prevalence of 1 in 100,000 to 1 in 200,000 in Caucasians, 1 in 37,000 among individuals of Dutch descent but 1 in 14,000 in African Americans and 1 in 40,000 to 1 in 50,000 among Chinese. The frequency of late-onset disease in Caucasians may be as high as 1 in 60,000 individuals12.

For patients with infantile Pompe’s dis- ease, treatment initiation after 6 months of age is considered to be too late. For the pivotal trial of alglucosidase α in infants, 18 patients aged 6 months or less were iden- tified all over the world and then flown in with their families to one of two trial sites to participate in the clinical studies. In addition to the actual clinical trial costs, transport, accommodation and language translation services had to be provided for the family members of the patients for the duration of the trial, which lasted for 52 weeks.

Once clinical proof of principle has been established for an orphan drug for which there is no alternative, the manufacturer may be under enormous pressure from patients, physicians and/or politicians to provide the therapy in development to patients, especially children, under a compassionate use programme. Apart from any financial aspects, this pressure may undermine the ability of a sponsor to perform controlled clinical trials.

In addition to the clinical trial expense, the investment needed in production methods and facilities for safe and effective medicines is high, especially for biologic therapies, which may be the preferred therapeutic modality for a number of rare disorders. As an example, the development

Box 1 | Enzyme replacement therapy

Lysosomal storage disorders, such as Gaucher’s disease and Pompe’s disease, are a life-threatening or seriously debilitating group of very rare genetic diseases that are caused by the lack or dysfunction of an enzyme in the lysosome. They have a published prevalence that is 50–100 (or more) times lower than the cut-off point defined for a rare disease in the existing orphan drug regulations, and so treatments for these diseases may be granted an orphan drug designation.

Enzyme replacement therapies (ERTs) — in which a replacement enzyme is injected regularly throughout the patient’s life — have been used to treat lysosomal storage disorders since the early 1990s. Gaucher’s disease, which is caused by a deficiency in the enzyme glucocerebrosidase, was the first such disorder for which an ERT was developed, initially using glucocerebrosidase purified from human placentae. The original work on this project was done in the United States by the National Institutes of Health and then transferred to the Tuft’s University Enzyme Centre, Boston, Massachusetts. However, production of sufficient quantities of the enzyme was a major barrier to project progression, as more than 20,000 placentae were needed to provide enough of the enzyme to treat one patient for 1 year. Genzyme took over the project in the 1980s and developed a viable production method. In 1991, the product alglucerase (Genzyme) was approved by the US Food and Drug Administration as an orphan drug. To address the sustainability of supply and other challenges, Genzyme developed a recombinant version, imiglucerase, which required the company to build a US$200 million manufacturing plant, although its annual revenues were ~$120 million at the time. The recombinant product was approved by the US Food and Drug Administration in 1994 and subsequently elsewhere.

The medical and commercial success of ERTs for Gaucher’s disease also generated interest in the industry by demonstrating that a viable market for innovative orphan drugs to treat very rare diseases existed. Examples of other approved ERTs for different diseases are: agalsidase β (Genzyme) and agalsidase α (Shire) for Fabry’s disease; laronidase (BioMarin/Genzyme) for Hurler–Scheie syndrome (also known as mucopolysaccharidosis type 1 (MPS-I)); idursulphase (Shire) for Hunter’s disease (also known as MPS-II); alglucosidase α (Genzyme) for Pompe’s disease; and galsulphase (BioMarin) for Maroteaux–Lamy syndrome (also known as MPS-VI). In addition, alternative treatments continue to be developed. For Gaucher’s disease, miglustat (Actelion Pharmaceuticals), an oral small-molecule drug, was approved in 2002. In addition, another recombinant version of glucocerebrosidase, velaglucerase α (Shire), was approved in 2010 and yet another, taliglucerase α (developed by Protalix Biotherapeutics), is in advanced stages of development and received temporary authorization for use in France. Development programmes for alternative treatments have also been started for some of the other above-mentioned diseases.

The price per patient of newer ERTs is similar to the pricing model originally used by Genzyme for its Gaucher’s disease treatment, presumably reflecting similar risk, high development and manufacturing costs and challenges in the clinical trial programmes (see main text for discussion). The annual treatment prices for ERTs are high — starting at ~€30,000 for infants to potentially over €400,000 per patient per year, as dosage depends on the patients’ weight. However, the market for the discussed orphan drugs is not by definition lucrative because the patients are not all identified and their numbers remain small. There are no published data on price-setting for orphan drugs and the industry is highly heterogeneous, with the only common factor being that increasing rarity and price are linked (see main text). Generally speaking, the price of an orphan drug is based on costs and on profit needs, and most companies developing orphan drugs do so as part of a strategic portfolio, especially after the first product has made it to market and is profitable. Owing to the nature of the development process, it may be difficult, if not impossible, to isolate the direct costs related to one product and to measure these direct costs against any return made from that product. Product-specific pricing details are also considered commercially sensitive information, but if societal agreement could be reached on what data should be made publicly available and according to what financial standards, more transparency in the price-setting of orphan drugs could be possible.

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costs for alglucosidase α for Pompe’s disease were greater than US$500 million by the end of 2004, without including any costs related to academic research13. The cost of post-marketing authorization studies, crea- tion and maintenance of patient registries and other activities required for regulatory approval — aimed at collecting more infor- mation on the value of the treatment once it is on the market — should also not be overlooked.

Additionally, for biologics, the proof of biological equivalence in scaling up pro- duction to different levels and fulfilling the requirements of regulatory agencies in prov- ing such equivalence can be a daunting task. The cost for developing alglucosidase α as a treatment for Pompe’s disease, as mentioned above, grew to greater than $900 million by the beginning of 2010 because of these additional requirements. The $900 million included investment capital (for manufac- turing plants in Allston, USA, and Geel, belgium), costs of regulatory obligations and out-of-pocket expenses, including the alglu- cosidase Alfa Temporary Access Program (ATAP) in the United States (Genzyme, unpublished observations).

Incentives for industry Does market exclusivity provided by orphan drug regulations create long-term, lucrative monopolies for the developing companies? A recent paper proposed that companies are increasingly interested in rare diseases because of the market exclu- sivity provided for orphan drugs8. However, although some approved orphan drug products have demonstrated substantial commercial success, we claim that no company would be motivated to develop a product by the prospect of market exclusiv- ity alone if a market does not exist. Indeed, the clinical and the commercial success of some orphan products, and the consequent increase in interest in the development of such products by both biotechnology companies, and most recently several large pharmaceutical companies, could be viewed as a success of the incentives for companies to make the risky investments required. It is important to note that the value of orphan drug incentives is only realized if market authorization and reim- bursement are both gained. Indeed, patients will mostly not be able to afford to pay for orphan drugs from their own funds. If no reimbursement approval is obtained, the company has lost its investment and has usually no way to recoup it. A small com- pany may actually go bankrupt as a result.

Furthermore, the perception that 7–10 years market exclusivity is equivalent to allowing a company to create a monopoly is incorrect. First, the market exclusivity is provided as an incentive by the orphan drug regulations because there is no treatment available for that particular disease. Second, it is granted to prevent a ‘similar’ (in the United States ODA ‘same’) product from entering the market during the exclusivity period. Therefore, exclusivity does not prevent a ‘non-similar’ product — for example, a small molecule versus a biologic — from receiving orphan drug designation for the same thera- peutic indication as an existing product or prevent that product from reaching the mar- ket. Third, a clinically superior product, even if it is similar, can break the market exclusiv- ity of a marketed orphan drug. This is stipu- lated in the orphan drug regulations of the United States and of the European Union.

In fact, in the United States in the 1990s, three interferon-β products to treat multi- ple sclerosis, from three different compa- nies, were all granted orphan drug status and subsequent marketing authorization, and although all three were protected by their respective market exclusivities, they had to share the market. Similarly, in the European Union, several orphan drugs have been approved for the same indica- tions. Sildenafil (Pfizer), bosentan (Actelion Pharmaceuticals), sitaxentan sodium (Pfizer), iloprost (bayer Schering Pharma) and ambrisentan (Gilead/GlaxoSmithKline) have all been approved for pulmonary arterial hypertension. Agalsidase β (Genzyme) and agalsidase α (Shire) have both been approved for Fabry’s disease. In the field of oncology, imatinib, dasatinib and nilotinib have been approved for chronic myeloid leukaemia, and lenalidomide (Celgene) and thalidomide (Celgene) have been approved for multiple myeloma. Finally, rilonacept (Regeneron) and canakinumab (Novartis) are both approved for cryopyrin-associated periodic syndromes.

In this context, it is important to remem- ber that in Europe, the Orphan Medicinal Products Regulation only allows orphan drug designation if there is no existing treat- ment for that indication on the market, except if the new treatment proposed for designation will have significant benefit for patients. Therefore, the differences in sig- nificant benefit will in fact potentially allow multiple products for the same indication on the market. In that sense, the use of the significant benefit pathway in designating orphan drugs in Europe may be seen as a kind of extension of the use of the clinical superiority clause mentioned above.

There may also be confusion over the period of time for which orphan drug status is granted, in spite of the stipulations in the regulations that market exclusivity is lim- ited to 7 years in the United States and to 10 years (unless reduced) in the European Union. Indeed, the market exclusivity granted to an orphan drug is not unlimited. In the United States, the majority of the approved orphan drugs have reached the end of their market exclusivity period, and market exclusivity for the first orphan drugs approved in Europe in 2001 is also com- ing to an end. Once the market exclusivity period is over, the product no longer benefits from the orphan drug-specific economic incentives, although it may often still be referred to as an orphan drug. There seems to be confusion between ‘orphan drugs’ and ‘products that once received an orphan drug designation and approval’8. In the same recent paper, multiple indications are said to be one of the reasons for an orphan product to achieve blockbuster status. However, it is not mentioned that a separate set of clinical trials — and their associated costs — plus a separate market authorization and a separate reimbursement approval for each indication are needed (see above).

In summary, our view is that if an orphan drug is currently the only product in its mar- ket, it is either because a company was the first to develop a treatment for this disease and competitors have yet to enter the market or because the market is too small to attract competition, rather than because the incen- tives have created a monopoly.

Criteria for orphan drug designations. A misconception with regard to orphan drug designation is that companies can divide diseases into small subsets (sometimes called ‘salami-slicing’) to benefit from orphan drug incentives. Orphan drug designation is granted in the United States by the FDA Office for Orphan Product Development (OOPD) and in Europe by the European Commission on the recommendation of the COMP, which consists of a representa- tive of each member state, plus three patient representatives and three representatives appointed by the European Commission on the advice of the European Medicines Agency. These qualified groups approve or deny orphan drug designation based on disease prevalence (the majority) or finan- cial criteria (very seldom), and in Europe, on the additional criteria of absence of an alternative treatment or significant benefit to patients over existing treatments. The same drug can receive several orphan drug

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designations (and approvals) for different therapeutic indications, but this is a decision of the regulators, not of the sponsors. A product can only be designated if it is shown that the indication for which the des- ignation is sought is a distinct medical entity. In the case of almost all products designated for different indications, the sponsors them- selves presented a different application for each one of the indications (each of these being a distinct medical entity). In rare cases, an application addressing a general or grouped indication was recommended by the regulators to be divided into different single independent medical entities. This remains exceptional.

To protect the value and the impact of the definition of an orphan drug, a strict appli- cation of this definition and clearly defined consequences of designating projects as orphan or not would be helpful.

Success of orphan drug regulations Relative proportion of orphan products to number of designations. A common mis- conception is that orphan drug regulations and incentives have not been successful because a large number of orphan designa- tions have been awarded but few of the designated products have been authorized. However, because orphan drug designa- tion is applied for when a project is in the research phase, the ratio of orphan drug designations to the number of orphan drugs approved is not an appropriate measure of the success of orphan drug regulations.

Indeed, a sponsor can apply for orphan designation at any stage of the typical 10–12 year development period for a drug, regardless of whether the product has suc- cessfully completed the clinical development processes or not. In addition, the legislation encourages a sponsor to apply for orphan drug designation early in the development process to benefit from all potential incen- tives during the development phase. In a small company, management and investors may liken such designation to a stamp of approval for their work. However, most medicinal products in development in gen- eral (for common or for rare diseases) do not reach the market, owing to factors such as insufficient efficacy or serious safety issues.

With regard to the United States, divid- ing the total number of designations by the total number of approved products indi- cates that ~15–20% of products that have been granted orphan drug designation are approved. Given the length of the research to market cycle is 10–12 years, compared with the average time from filing for marketing

authorization to its approval, it is expected that the number of orphan drug designa- tions will always greatly exceed the number of marketing authorizations for orphan drugs. EURORDIS3, the European umbrella rare disease patients’ organization, provides a figure for the likelihood of obtaining mar- keting authorization following orphan drug designation in the United States and arrives at 17% of approved orphan drugs versus designations. Those designations that have not yet resulted in an approved product may have been abandoned, the company may have disappeared or the projects may be delayed but still in development. Little research has been carried out on this topic to date. Closer interaction with the regulators at the time of development of the drug and the experience of sponsors in designing and conducting clinical trials are crucial factors for obtaining regulatory approval. Orphan drug development incentives are insufficient for extremely rare diseases and new incen- tives and other initiatives will be required14.

A suitable indicator of the success of orphan drug regulations is the number of orphan drug approvals before and following the enactment of the regulations. For example, as noted above, there were only 10 orphan drugs approved in the United States in the decade before the ODA, but more than 350 have been approved in the 26 years since it was passed8. In the European Union, 8 orphan drugs were approved before orphan drug regulation was enacted15 in 2000 compared with more than 60 now16.

Orphan drug numbers and health-care budgets. Some have suggested that the growth in interest in orphan drugs could lead to a surge in the number of approved products, which could be a threat to future health-care budgets given their high costs. This concern is often linked to the trend towards more personalized health-care for common diseases based on the identification of patient subpopulations whose size could be compatible with orphan drug status.

However, according to EURORDIS, the authorization in the European Union of the 100th orphan drug product may occur in 2012–2014 and of the 200th product in 2017 (REF. 3). Data have been reported indicating that an average of approximately 10–12 new orphan drugs are approved annually in the European Union3 and approximately 15 new orphan drugs are approved annually in the United States8. These data do not suggest that a surge in the number of orphan drug approvals is imminent. Also, although the

price of some orphan drugs can be very high, these prices relate to the rarity of the disease. Consequently, the number of patients treated will be small and therefore the impact on the health-care budget will also be relatively small.

Furthermore, the evolution of the use of orphan drugs will depend on technology, on competition entering when a market exists, but also on society learning about the cost of disease versus the cost of treatment. Weeding out inefficiencies may also be more effective in controlling costs than denying orphan drug reimbursement as, at least in Europe, orphan drugs receive regulatory approval based on their uniqueness or their significant benefit for patients, and this is accepted for most (if not for all) products by the member-state authorities.

It is true that, based on new scientific findings, common diseases and syndromes are being divided into smaller patient sub- populations and that these subpopulations may be eligible for orphan status. However, size alone is not the key determinant; as discussed above, the regulators are the decision-makers on the acceptance or not of a certain therapeutic indication, filed for by the sponsor for orphan drug designation. Moreover, such evolution allows for more predictive and targeted treatments, with ear- lier intervention and improved patient out- comes. Whether this will ultimately be more costly for society will depend on how society chooses to adapt to this new paradigm and whether new pathways for drug develop- ment could actually reverse the current trend of spiralling drug development costs, as discussed further below.

Drug pricing, access and reimbursement Pricing and profit. Orphan drug prices are often substantially higher than those of other drugs, and one common view is that this is so that developing companies can make high profits compared with those for other drugs. Indeed, some consider that orphan drugs should only be allowed on the market when they make no or marginal profits.

However, this view misses the key point that in the absence of profit potential, those orphan drugs would most probably not have been developed. A company exists through the support of its shareholders and investors, and profit drives both further research and further investor support, which is vital to creating new successes. Many companies involved in the field of orphan drugs therefore set up strategic programmes consisting of several orphan drug projects. The number of patients to be treated is not

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known upfront and neither is whether or not reimbursement will be granted and where. As a consequence, profits cannot be reliably predicted per product and must instead be estimated for the entire programme. Moreover, products will be in different phases of development or marketing and will create different returns depending on their status in a given year.

Ultimately, the price of a drug and the corresponding cost per patient is determined by the size of the patient population requiring therapy and by the risk taken to develop the product, which is reflected in the profit potential. Generally, higher-risk projects need higher profit potential to find enough investor support. In a study carried out for the European Commission in 2004, the independent consulting firm Alcimed17 con- firmed that the price of an orphan drug is a function of the rarity of the treated disease. In the event that the market size increases, competition will enter, introducing both pricing pressure and potentially better thera- pies. If the market remains small, then little or no competition will enter because the clinical problem has been addressed or the market is simply not large enough to attract other companies. In both cases, the overall cost to society remains small.

In summary, it is because of the lack of return on investment without incentives in the field of rare diseases that governments introduced orphan drug regulations in the first place. The success of a development programme cannot be guaranteed, but for each successful orphan drug, our view is that a market should be guaranteed through reimbursement, to provide incentives and the money that companies need to invest in further product developments and to attract further companies to develop products. Ultimately, this should also decrease prices owing to competition — in part because the second company developing an orphan product analogous to the pioneer product is facing substantially less risk and uncertainty, as illustrated for second-generation enzyme replacement therapies — but this will require time and patience (BOX 1).

Access to orphan drugs. It is often said that the reason that patients do not get access to approved orphan drugs is because compa- nies are not registering for reimbursement or because they are simply not active in a country. In this section, we explain briefly a few of the factors affecting the activities of a company with an approved orphan drug in attempting to provide patients with access to such a product.

before marketing authorization, the devel- opment cost for an orphan drug is totally borne by the sponsoring company and the risk associated with it can only be rewarded when the product is approved. At that stage, reimbursement is a prerequisite for compa- nies to achieve a return on their investment in its development, as orphan drugs are in most cases not affordable for individual patients. Reimbursement is not guaranteed upfront and so the risk taken by the company continues after regulatory approval until reimbursement has been granted. In Europe, some member states provide reimbursement on approval, whereas others may wait up to 4 years, while requiring the company to provide the product for compassionate use in the meantime, because rare diseases are often serious diseases. Such compassionate-use materials could be a substantial proportion of company resources, especially for smaller companies. Furthermore, in some countries or even parts of Europe, reimbursement may not be granted at all or reimbursement may only be granted for a smaller subpopulation than the authorized indication.

because it is needed to receive return on investment, companies would like to apply for reimbursement of an approved product speedily and globally, but launching products requires substantial personnel resources, finance, knowledge and skills, and is compli- cated by the wide range of reimbursement sys- tems across the globe. For example, in Europe alone, there are 33 different national reim- bursement systems, not to mention the many regions that have autonomy to approve — or refuse — reimbursement (BOX 2).

Cost-effectiveness and reimbursement. Some consider that because many orphan drugs have not been shown to be cost-effective, they should not be reimbursed. However, at present, the cost-effectiveness of orphan drugs, especially those for very rare diseases, cannot be established with the standard methods used by health technology assess- ment bodies to inform reimbursement authorities. As an example, the standard cost limit for reimbursement recommended by the UK’s National Institute for Health and Clinical Excellence (NICE) is generally ~UK£30,000 per quality adjusted life year gained. Most reimbursement authorities cur- rently accept that it does not make sense to use such standard methods for orphan drugs, at least not those for very rare diseases, based on the rarity of the underlying disease, the unknown costs of not treating these patients and the fact that they are affected by a life- threatening or chronic and serious disease.

At the same time, more research into the impact of rare diseases on society, both from an epidemiological and from a financial perspective, should be supported and the social, ethical and legal aspects of treating rare diseases examined. For example, the fact that most patients with a rare disease require much support from their families, and that most rare diseases are genetic and therefore may affect other members of the family, should be factored into the financial equa- tion. In addition, a dialogue is starting on the input of payer considerations into clini- cal trial design, and some regulators believe that this will have an effect on the evaluation of orphan drugs18.

A second concern expressed by some related to the reimbursement of orphan drugs, in particular in view of their high costs per patient, is that it occurs at the expense of therapies for patients with more com- mon diseases and that it risks bankrupting health-care systems in the future as more orphan drugs are approved, as noted above. In this respect, the European Commission published in 2006 that orphan drugs repre- sented less than 1% of the national health- care spending in the European Union and are a low percentage of the cost of medicines in general19. because of the growing number of approved products, the impact of orphan drugs on health-care budgets will increase. At the same time, the goal of the orphan drug regulations was to make more treatments for rare diseases available so they can contribute to cost savings and provide social returns.

Unfortunately, these returns have not yet been calculated. Crude predictions have been made about the number of patients with rare diseases who require treatment, such as in the EPPOSI report20 of 2007. This states that: “Overall, one estimate is that if there were treatments for all orphan diseases in the categories of rare diseases where there are already orphan medicinal product desig- nations, about 1.6% of the population could be defined as treatable patients. Knowing that only 1 in 10 medicinal products in development successfully reach the market, the figure becomes 0.16% of the population. but given that medicines will not exist for most theoretically treatable orphan diseases for a long time and that many treatable patients are not diagnosed, the number of treated patients will be even smaller.”

Orphan drugs, because of their generally high cost per patient, which increases with increasing rarity, also face higher scrutiny in ensuring that the right patient is getting the right treatment. For many orphan products, additional post-marketing requirements are

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imposed by the regulators, such as further studies and the setting up of patient regis- tries. before reimbursement is granted and patient access is allowed, a confirmed diag- nosis is required. It is also recommended in most cases that treatment be supervised by a specialized physician, to ensure — especially for injectable drugs and because of the seri- ous nature of the disease — higher adher- ence. As few patients with rare diseases are being treated per country, follow-up infor- mation is gathered in longitudinal disease registries and clinical data is collected on an international basis so that treatment guide- lines can be adapted. Another result of the high price per patient is that national orphan drug budgets are being predetermined and strictly followed.

If the trend points to the introduction of more orphan drugs in the future, it is because there are many unmet medical needs in the field of rare diseases, which can now be addressed through advances in biomedical research. The further trend towards personalized medicine shows the need for treatment with better patient out- comes, fewer side effects, higher adherence and greater effectiveness in general. This may be what orphan drugs offer as a model for the future: better control, less waste and more predictable health-care budgets, in spite of higher prices. However, whereas rare diseases and orphan drugs share some fea- tures with personalized medicine, they are also different in other aspects. Rare diseases may still not be economically interesting, are

characterized by low awareness and expertise, and are highly heterogeneous. by contrast, personalized medicines are aimed at subgroups of mostly well-known large patient populations often already addressed by the health-care systems and with well-established infrastructures.

When generic versions of many of the most widely used drugs for common dis- eases become available, this may also provide more financial room and scope for innova- tion in the treatment of rarer diseases. Also, even before patent expiry, products that have shown commercial success in broad popula- tions could be applied in rare diseases. One example is provided by sildenafil, which has achieved blockbuster sales in erectile dysfunction. It has subsequently received orphan drug approval for pulmonary arte- rial hypertension. With the aim of catalysing the repurposing of drugs for rare diseases, the FDA has recently launched a database of products that have received orphan designa- tion and are already approved for the treat- ment of some other disease21.

Ideally, a sustainable health-care system should be capable of caring for all patients, including those with rare diseases. The com- ponents of the system would include educa- tional programmes to ensure a high level of awareness among patients and health-care providers, expert centres where patients can be evaluated by knowledgeable care-givers with access to appropriate testing and, ulti- mately, with access to the best therapies. Most companies developing orphan drugs are willing to work in partnership with the health-care authorities, making life-saving drugs available to patients in advance of reimbursement and supporting the develop- ment of a system that can deliver expert care to rare disease patients. Ultimately, however, a sponsor and its shareholders who have supported the development of an orphan drug will need to have a return on their investment, with higher potential returns for higher-risk projects.

Outlook In the past 25 years, orphan drug regula- tions, started in the United States and boosted by a host of coordinated health policy actions in the European Union, have increased interest in rare diseases as a health priority and have catalysed a sharp increase in orphan drug development. Nevertheless, it is estimated that only ~10% of rare diseases have an available treatment (also including food supplements, devices and nutraceuticals in addition to drugs), and such treatments can often still be improved.

Box 2 | Orphan drug issues specific to the European Union

country-specific policies on access to approved orphan drugs The European Union is a community of member states, and its committees, such as the Committee for Orphan Medicinal Products (COMP) and the Committee for Medicinal Products for Human Use (CHMP) at the European Medicines Agency, are made up of experts from each member state. The European Union parliament of elected representatives of all European Union member states has unanimously approved the orphan medicinal products regulation, and the European Commission decides on the designation and approval of orphan drugs, upon recommendation of the COMP or CHMP, respectively.

With regard to access to approved orphan drugs, although each member state has authority over its health-care system and its finances, the European Commission’s communication in 2008 (REF. 22), the High Level Pharmaceutical Forum’s paper on “Improving access to orphan medicines for all affected European Union citizens”23 and the European Council’s recommendation on the field of rare diseases14 each have strong recommendations for all stakeholders to work on this in practice. The recommendations provide for conditional pricing and reimbursement and the collection of clinical added value data for review of such reimbursement after a few years, which may provide a path forward to improve access.

Profitability and market exclusivity of orphan drugs One misconception is that orphan drugs can lose their market exclusivity in the European Union after 6 years based on ‘sufficient profitability’. However, this is only true if financial criteria were involved in gaining orphan designation, and the European Union has now published a guideline for the application of Article 8.2 of the European Union orphan drug regulation EC 141/2000 (REF. 24). The conclusion is that the vast majority (>99.5%) of orphan drug designations are granted based on prevalence and not on financial criteria. So, for almost all orphan drugs, market exclusivity cannot be reduced based on financial criteria, such as the measurement of profitability of an orphan drug. Market exclusivity for prevalence-designated orphan drugs can be lost if the criteria for orphan drug designation are no longer met, including the existence of alternative treatments that are of higher benefit to patients. Over the years of European discussion on this topic, defining ‘sufficient profitability’ has proved to be impossible. It should also be noted that market exclusivity can also be lost based on the inability of the sponsor to supply sufficient quantities of the medicine.

organization of reimbursement systems for orphan drugs An important misconception is that the regional, rather than national, reimbursement systems would be better for patients with rare diseases, because they would be closer to the patients. However, setting up orphan drug systems for a small population is not practical, which is why the European Union set up regulation at the European Union level. Similarly, once an orphan drug is approved, setting up the infrastructure for diagnosis and treatment may not be viable for a small population. Given that awareness and expertise for these diseases will be similarly rare at the level of the clinical and reimbursement authorities, for the patients it would make sense to organize reimbursement decisions regarding orphan drugs at the highest geographical level — at least member-state level in Europe. Because Europe decided to collaborate on the issue of orphan drugs and rare diseases as a health priority at the European Union level, it would not make sense to regionalize the consequences of such policies.

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So, the medical need in the field of rare diseases remains high. Commonalities between rare and common diseases are being researched, and in the future, rare diseases may be increasingly investigated as models for treatment of more common diseases. This is not only the case in the field of oncology, but also in other disease areas, such as neurology and respiratory diseases, and generates increasing interest from large pharmaceutical companies in the field of rare diseases.

Looking at the current orphan drug legislation, it is noteworthy that so far it has dealt with the regulatory aspects of the devel- opment and the approval of orphan drugs, and the economic incentives for such devel- opment. The prioritization of research, or issues related to diagnosis and access, are not covered by such regulations. With an increas- ing number of orphan drugs available, these aspects are gaining in importance. It would be worthwhile to also develop incentives for the repurposing of medicines that are already approved for a more common disease into a new rare disease indication (as discussed above). In this respect, the first aspect that needs attention is the documentation of off- label use of both orphan drugs and drugs approved for common diseases for a rare disease indication. based on such documen- tation, it will become clearer which drugs will be worth developing for such new indications and what incentives are needed.

Two contradictory perspectives are cur- rently expressed on orphan drug regulations. The first is that orphan drug regulations have not (yet) lived up to their promise; there is much more to do and time is of the essence, so regulations should be revised to provide more and improved incentives for industry, possibly combined with a stricter regulatory regimen and better priority- setting for development. The second is that orphan drug regulations have provided too many economic incentives for industry and should be revised, so that companies would not be able to create a lucrative monopoly by combining market exclusivity (sometimes for multiple indications per orphan drug) with high pricing. both of these perspectives include some of the misconceptions and questions discussed in this article. However, as industry is nearly the only provider of orphan drugs, important questions about the role of industry in pricing, access and in set- ting development priorities are unavoidable. In order to proceed from here, several mis- conceptions will need to be addressed and industry will have to play a major part in this process. It is also clear that all stakeholders

will need to increase their efforts to better implement the spirit of the regulation, to collect more data and to look positively at the achieved results.

Stakeholders, including industry, will need to communicate more clearly on sev- eral topics. For example, the challenge of developing a given treatment should be bet- ter explained, including clarification on the role of industry, and on some of the risks and pitfalls of the orphan drug regulations. This will help to build social consensus on the topic. It will also help to set proper expecta- tions for patients about access to an orphan drug and for sponsors about return on their investments when reimbursement is denied.

In our view, the first and most important aim to achieve is a shorter time to diagno- sis of rare diseases. This can only be done by creating diagnostic and treating centre networks and by educating physicians, in addition to the appropriate screening for rare diseases, primarily in children. Without timely diagnosis, no care plan or treatment can be effectively put in place. Then, price transparency in practice should be defined, to provide greater clarity on the returns for economic incentives. Such a clear consensus definition would then allow different stake- holders to work out what level of transpar- ency is required and what will be possible in practice. However, because industry will have many other investment options, this is a difficult equation.

From a regulatory perspective, a clearer definition or interpretation of the definition for an orphan drug would help avoid possible misunderstandings, especially for products approved in Europe using ‘significant benefit to patients’ as one of the approval criteria. Indeed, if the definition of an orphan drug could be universally accepted to mean a product to treat a life-threatening or serious and chronic rare disease that meets a high medical need and has no suitable alterna- tive, discussions with payment authorities about the reimbursement of orphan drugs would already be made easier and the value of orphan drug designation strengthened. In order to achieve such strengthened value, the differences between the interpretation of and the use in practice of the definition of what an orphan drug is at the European level, and its interpretation at the member state level in terms of uniqueness, significant benefit and/or level of innovation for each approved orphan drug, should be scrutinized and where possible, reduced or eliminated (see above). In addition, at present, the significant benefit of some orphan drugs is questioned in some member states in the European Union

and reimbursement for the orphan drug in question denied, and this issue should be investigated. Then, if such a clear definition is accompanied by a system of conditional reim- bursement, it would allow orphan drug access for patients while additional data on clinical added value are collected, which would go a long way to addressing patients’ needs.

At the global level, increased international regulatory and health policy collaborations and exchange of information would avoid duplicate work and ensure the best use of rare disease expertise. This would also allow cost savings for sponsors and authorities, and pro- vide earlier access to patients. The European Union and the United States should take the lead in sharing their experience and expertise further than they are today.

The field of rare diseases is a ‘societal laboratory’ that is predicting future trends in patient-centred human health care, and as such it is a model for personalized medicine for some aspects. Therefore, it is important that societal consensus is maintained for solutions in this area, and multi-stakeholder platforms, including policy makers, regula- tors, patient groups, treating physicians, researchers, industry and payers, should work on improving communication and awareness of rare diseases by collabora- tion and by sharing expertise. The platform model (examples of which exist in the Netherlands and in belgium) would be an excellent setting in which to discuss lowering costs, defining issues such as price transpar- ency and applying best practices using all available expertise, and such models should be cherished and nurtured.

Erik Tambuyzer is at Genzyme, Ikaroslaan 53, B-1930, Zaventem, Belgium.

e-mail: [email protected]

doi:10.1038/nrd3275 Published online 9 November 2010

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Acknowledgements The author would like to thank M. Dooms, Pharmacist, University Hospital of Leuven, Belgium, for helpful sugges- tions and C. De Bie of Genzyme Corporate Communications for editing the text.

Competing interests statement The author declares competing financial interests: see web version for details.

FURTHER INFORMATION ePPOsi (european Platform for Patients’ Organizations, science and industry): http://www.epposi.org european commission (the Orphan drugs strategy): http://ec.europa.eu/health/rare_diseases/orphan_drugs/ strategy/index_en.htm eUrOrDis: www.eurordis.org icOrD: http://www.icord.se National institutes of Health, United states: http://rarediseases.info.nih.gov NOrD: http://www.rarediseases.org The Orphanet database: www.orpha.net

All links Are Active in the online PDf

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  • Abstract | Sustained advocacy efforts driven by patients’ organizations to make rare diseases a health priority have led to regulatory and economic incentives for industry to develop drugs for these diseases, known as orphan drugs. These incentives, enacted in regulations first introduced in the United States in 1983 and later in Japan, Europe and elsewhere, have resulted in substantial improvements in the treatment for patients with a range of rare diseases. However, the advent of orphan drug development has also triggered several questions, from the definition of rarity to the pricing of orphan drugs and their impact on health-care systems. This article provides an industry perspective on some of the common questions and misconceptions related to orphan drug development and its regulation, with the aim of facilitating future progress in the field.
  • Rare disease characteristics
  • Orphan drug research and development
  • Box 1 | Enzyme replacement therapy
  • Incentives for industry
  • Success of orphan drug regulations
  • Drug pricing, access and reimbursement
  • Outlook
  • Box 2 | Orphan drug issues specific to the European Union