1. Orphan Drugs - specific pharmaceutical agents treating rare diseases.
Criteria:
• Provide evidence that less than 200,000 individuals in the US (30 million people or 1 in
10 Americans) have a rare disease/condition.
• Proof of non clinical and/or clinical data to show efficacy.
Incentives:
• Market exclusivity - 7 years.
• Tax credits and fee exemptions in the development process for drug commercialization.
• Prescription Drug User Fee Act (PDUFA) fee waivers.
Orphan Drug Act - major success since instillation– 3611 designated orphan drugs.
M.S. Biotechnology Program - Spring 2016
Economics of the Orphan Drug Industry
Shivai Gupta1, Malia Segar2, MS, Susan Carter2, MSc
1Georgetown University Medical Center, Department of Biochemistry & Molecular & Cellular Biology
2Cote Orphan LLC, 8630 Fenton Street, Suite 724. Silver Spring, MD 20910
Orphan Drugs and Orphan Drug Act
Challenges and Opportunities in the Orphan Drug IndustryAbstract
Worldwide Orphan Drug Sales & Share Prescription of Drug Market 2020
Discussion & Conclusion
The development of orphan products is the most rapidly growing area of pharmaceutical
research today. Observing the current scenario of the drug market with lapsing patents of
blockbuster drugs, there is a shift in focus to rare diseases which have a broader scope for
development, smaller target populations, higher revenue generating potential, and a greater
return on investment. Further advantages in orphan drug research include government and
financial stimulus, along with added regulatory benefits.
Orphan drugs are currently an area of research and development that have the advantage
of economic drivers, tax credits, and other government incentives. As a result, by 2020 the
expected increase in FDA orphan designations is estimated to be 12%. It is one of the best
areas of investment with great potential and estimated to be a $178 billion drug industry
by 2020.
The main success of the industry lies in the clinical drug development costs for orphan
products being half than that of non-orphan products. With a Compound Annual Growth
Rate (CAGR) from 2015 to 2020 of +11.7%, almost double overall prescription drug
market growth (6.5%), orphan drugs are set to make 20.2% of worldwide prescription drug
sales by 2020 (excluding generics). The average orphan drug cost to patients is $111,820
(2014) with a median orphan drug cost of $66,057. Soliris® was the highest revenue
generating orphan drug of 2014 and Celgene is predicted to be number one in orphan drug
sales by 2020. Alexion and Vertex are two companies that are set to march up the orphan
sales ranking table.
Analysis of the economics of the orphan drug space provides insight to analyze shifting
market trends and understanding the interest shown by companies in rare diseases. Any
company, small or large, has the capability to bring an orphan drug to market.
Small companies, as opposed to large companies, typically do not have in-house
regulatory expertise. Cote Orphan is a regulatory consulting firm in the orphan drug space.
The money invested by a company in a regulatory consultancy assists an orphan drug to be
designated with the ultimate goal of the drug reaching market approval and gaining
exclusivity. Cote Orphan provides services to small, medium, and large firms that:
(A) have no regulatory affairs department;
(B) have incomplete regulatory framework;
(C) need expert opinion for the regulatory approval process;
(D) have applications held in abeyance; and
(E) work on strict timelines and are not able to devote enough time to regulatory needs.
There is currently a lack of efficacious treatment for patients with rare diseases, thus
leading to research and providing orphan drugs for treating the diseases. The lucrative
appeal of orphan drugs lies in the lack of alternatives for patients, lower R&D costs,
defined patient populations, and the ability to command higher prices, thus making them a
sought after segment in the pharmaceutical industry.
Developmental Hurdles Commercial and Policy Benefits
Drug development inconsistent PDUFA fee waived
Difficulty in recruiting patients R&D grants phase I-III ($30 m)
Increasing competition 50% tax credits
Non clinical pharmacology (lack of animal
models) & clinical efficacy (lack of validated
endpoints)
Longer exclusivity
Benefits vs. risks Lower marketing costs/premium pricing
Top 10 Predicted Orphan Drugs for 2018
Manufacturers Drug Pharma Class
Projected
Sales for
2018
Estimated
Average
Cost of Rx
Roche Rituxan® (Rituximab) Anti –CD 20 IMA $6.9 billion $63,000
Celgene Revlimid® (lenalidomide) Immuno-modulator $6.6 billion $153,093
Alexion Soliris® (eculizumab)
Anti complement factor
MAb
$3.4 billion $490,000
Novartis Afinitor® (evermlimus) mTOR inhibitor $2.9 billion $90,000
Novartis®
Tasigna®
(nilotinib hydrochloride)
Signal Transduction
Inhibitor
$2.6 billion $106,000
J&J® / TakedaVelcade® (bortezomib) Proteasome Inhibitor $2.4 billion $80,000
Biogen Idec
Avonex®
(interferon beta 1a)
Interferon Beta $2.1 billion $38,000
Eli Lily
Alimta®
(pemetrexed sodium)
Thymidylate Synthase $2.0 billion $150,000
Bristol Myer
Squib
Yervoy® (ipilimumab) Anti CT LA4 Mab inhibitor $2.0 billion $130,000
Bristol Myer
Squib
Sprycel® (dosatinib) Tyrosine Kinase inhibitor $1.9 billion $84,000
Acknowledgements
I extend my gratitude to my mentors Ms. Malia Segar and Ms. Susan Carter, Ms. Kritika
Khurana and Mr. Jared Pottruck for their guidance and support and Dr. Timothy Cote for
an opportunity to work in his company. Ms. Nontanovan for her help and Dr. Jack G.
Chirikjian for not only the valuable classroom lessons but all the values he instils.
References: Moore T. EvaluatePharma® Orphan Drug Report 2015.
Reuters T. THE ECONOMIC POWER OF ORPHAN DRUGS; 2012.
Kumar Kakkar A, Dahiya N. The evolving drug development landscape,Drug Dev Res. 2014 Jun;75(4):231.
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Orphan Drugs: Designation Requests, Designations Granted, and Drugs Approved
Designations Requests Orphan Designations Approved Orphan Products