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What are orphan drugs and orphan diseases?
Orphan drugs have had a sharp rise to popularity and are the subject of significant investment for research and development, but how did the term “orphan” come to be used? The term “orphan” was first used in the context of therapeutic drugs in 1968, to describe a lack of research and study into the development of drugs to treat children, often due to limited profitability. This made these children “pharmaceutical orphans”1. The term is now used to define rare diseases that affect a small number of individuals, so called “health orphans”2.
The definition of an orphan disease is more nuanced however, as the definition varies by country based on parameters such as the prevalence of the disease. For example, EU legislation defines an orphan disease as people per 10,0003, whilst the US Orphan Drug Act 1983 defines an orphan disease as one affecting <200,000 individuals nationally. Although being integral for the treatment of rare diseases, there are a number of challenges and ethical considerations that must be addressed to continue the success of orphan drug launch and help patients receive access to treatment. This article will therefore discuss orphan drugs, incentives and challenges for their development, and strategies for their market access.
Understanding orphan drugs
To be classified as an “orphan” drug in the EU, the drug3:
- Must be intended for the treatment, prevention, or diagnosis of a life-threatening or debilitating condition
- Must have a prevalence of 5 in 10,000 sufferers or must be unlikely that marketing would generate sufficient returns to justify investment
- Must be for a disease with no satisfactory method of diagnosis, prevention, or treatment, or the orphan drug must be of significant benefit to those affected
Whilst the prevalence for these individual diseases is low, a significant number of individuals collectively suffer from rare diseases, with 30 million suffering in the EU alone4. Globally, there are an estimated 4000 to 5000 rare diseases that exist without available treatment5, highlighting a significant need for interventions. As such, the development of orphan drugs has seen rapid increase, with FDA analysis demonstrating orphan drug designations to have more than quadrupled between 1990-20106, highlighting the popularity of their development and suggesting an increasing trend in the development of orphan drugs6. A primary contributing factor for this is the incentives given to manufacturers to promote their development.
Incentives for orphan drug development
Getting drugs to patients is a long process, taking on average 10 years from discovery to marketing authorisation, in a process costing several hundreds of millions of pounds. Orphan drug development is associated with even greater complexities and risk of failure. Because of this, historically, there has been less development within these disease areas. However, in recent years, stakeholders have introduced incentives to support orphan drug development. Therefore, pharmaceutical companies must be incentivised to bring orphan drugs to market to meet the desire for the treatment of rare diseases. The nature of the incentives offered to pharmaceutical companies however, varies between countries. These incentives include:
- Attractive pricing
- Patent extension
- Reduced data requirements
- Fee reductions
- A period of market exclusivity
In the UK, drugs with orphan status will benefit from 10 years of market exclusivity from similar products in the indication7, and drugs for very rare diseases (1 in 50,000 population) can be routed to NICE’s highly specialised technology appraisal process (provided that other criteria are also met), where the cost effectiveness threshold is raised from £20,000-30,000 to £100,0008. In Germany, orphan drugs with sales of less than €30 million per year can benefit from an abbreviated AMNOG procedure and will not have to provide comparative data9. Finally, in the US, orphan drugs may be eligible for tax cuts on clinical trials and 7 years of market exclusivity10. Manufacturers are now keen to seek orphan drug designation due to incentives increasing profitability, with statistics demonstrating that the orphan drugs market is significantly outpacing and experiencing double the growth of the non-orphan drug market11. However, with the ongoing growth of the orphan drug market, healthcare systems are beginning to resent the inflated prices set, resulting in developing challenges in market access for orphan drugs.
Orphan drugs and challenges in market access
With the increasing popularity of orphan drug manufacturing, challenges have arisen in effective market access for orphan drugs which, if not addressed, risk negatively affecting the drug during its launch and lifecycle. One such challenge is the high developmental cost of orphan drugs. The specialised expertise, complex manufacturing processes, and extensive pre-clinical and clinical research needed with low population sizes results in significant costs prior to launch. Contributing to developmental costs, with 4000-5000 rare diseases, patient populations for these diseases are often limited, presenting a challenge in research, and increasing the investment needed. The small patient population for these orphan drugs combined with high developmental costs presents as a significant hurdle early in the lifecycle of the drug and often renders the drug unlikely to generate enough financial return to justify the investment needed for development12.
Developmental costs and limited patient populations are also linked to regulatory challenges. Limited populations can make it difficult to design trials that meet the regulatory requirements for safety and efficacy, and although some regulatory incentives reduce the quantity of data needed for approval, different agencies may have different requirements. This requires the manufacturer to navigate different national and subnational HTA processes with the limited data they are able to collect. HTA bodies present another challenge in that HTA assessment is often geared towards common disease models and may overlook issues unique to orphan drugs. This happened previously with Biogen’s Spinraza (nusinersen) which was not recommended by NICE due to a lack of cost effectiveness, despite it being the first drug ever approved for spinal muscular atrophy in the EU13. The assessment was considered to be unbalanced due to its lack of consideration for the benefits of the novel therapy for the population of SMA patients.
Like regulatory challenges, pricing and reimbursement challenges have arisen as a result of the prices set by manufacturers intending to make use of the incentives offered for orphan drug development. Payers perceive the budget impact of high-price products, the growing number of orphan indications, and the growing number of treatment eligible patients to be reaching a “breaking point” in which the impact cannot be ignored. In addition to the refusal to approve drugs such Spinraza, regulations are coming into place that have a wider impact on orphan drugs as a whole, evidenced by the orphan drug revenue limit for AMNOG being reduced from €50 million to €30 million9, Although healthcare budgets are steadily rising in most high-income countries, these budgets will not increase in the short-term, and may result in an increasing number of rejections and restrictions for orphan drugs with prices too high to be considered cost-effective14.
Current market access strategies and future outlook
The ethics behind orphan drug development has steadily become a growing point of consideration, as the incentives provided combined with the lack of therapeutic alternatives has allowed for the inflation of prices in a market with limited existing competition, therefore limiting access to treatment. Whilst a necessity to ensure the quality of life for individuals that have little access to other treatment, reimbursement of these drugs is becoming unsustainable as their financing within a publicly funded healthcare system leads to cuts in other areas of healthcare15. This presents a situation in which both a lack of these drugs and the presence of these drugs in the way they are currently priced is problematic, creating a situation that has no clear-cut solution. To ensure access for patients with life threatening diseases in a way sustainable to healthcare, there must be trade-offs between economic incentives and ethical imperatives16, and manufacturers should alter global market access strategies to address these points to navigate challenges and ensure optimal access.
One strategy for the successful market access of orphan drugs is patient engagement and patient advocacy. With patient voice becoming increasingly prominent across all stages of therapeutic innovation, cooperation between manufacturers, researchers, and patient advocacy groups will benefit decision making in rare disease clinical trials and treatments. This cooperation will allow companies to demonstrate burden of disease, highlight rare diseases to be considered during policymaking, and allow the collection of data on benefit-risk17. Patient engagement is also fundamental to the orphan drug commercial model and has resulted in the development and adoption of public policies18.
Although difficult due to small population sizes, a strategy focusing on the generation of robust data on clinical outcomes, patient-reported outcomes, and the consideration of innovative pricing models, will align the interests of payers, HTA, and manufacturers, increasing the likelihood of orphan drugs being perceived positively. Moreover, developing coordinated engagement plans with public bodies looking to address access challenges for orphan drugs will allow for the alignment of regional and national strategy to navigate assessment and regulatory approval, thus reducing the impact of hurdles in the process.
The orphan drug sector continues to experience rapid growth, continuously generating interest for pharmaceutical companies to invest in development. However, as the prices for these drugs grow, the willingness of payers to reimburse decreases. To continue successful growth and access to life-saving treatments, manufacturers should continue to demonstrate benefit whilst considering appropriate pricing strategies to reduce the chance of rejection and increase sustainable access.
Updated September 2023
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2 – Aronson, J. K. 2006. Rare diseases and orphan drugs. British Journal of Clinical Pharmacology. 61(3), pp: 243-245. DOI: 10.1111/j.1365-2125.2006.02617.x
3 – Orphan designation: Overview. European Medicines Agency. https://www.ema.europa.eu/en/human-regulatory/overview/orphan-designation-overview. Accessed 4th August 2023.
4 – Hendrickx, K. and Dooms, M. 2021. Orphan drugs, compounded medication and pharmaceutical commons. Frontiers in Pharamcology. 12. DOI: 10.3389/fphar.2021.738458
5 – About orphan drugs. Orphanet. https://www.orpha.net/consor/cgi-bin/Education_AboutOrphanDrugs.php?lng=EN. Accessed 4th August 2023.
6 – Miller, K. L., Fermaglich, L. J., and Maynard, J. 2021. Using four decades of FDA orphan drug designations to describe trends in rare disease drug development: substantial growth seen in development of drugs for rare oncologic, neurologic, and pediatric-onset diseases. Orphanet Journal of Rare Diseases. 16(265). DOI: 10.1186/s13023-021-01901-6
7 – Orphan medicinal products. GOV.UK. https://www.gov.uk/guidance/orphan-medicinal-products-in-great-britain#:~:text=On%20grant%20of%20a%20marketing,the%20product%20in%20Great%20Britain. Accessed 4th August 2023.
8 – Interim Process and Methods of the Highly Specialised Technologies Programme updated to reflect 2017 changes. NICE. https://www.nice.org.uk/Media/Default/About/what-we-do/NICE-guidance/NICE-highly-specialised-technologies-guidance/HST-interim-methods-process-guide-may-17.pdf. Accessed 4th August 2023.
9 – Germany significantly tightens Drug Pricing and Reimbursement Laws. Covington. https://www.insideeulifesciences.com/2022/10/26/germany-significantly-tightens-drug-pricing-and-reimbursement-laws/. Accessed 4th August 2023.
10 – Designating an Orphan Product: Drugs and Biological Products. U.S. Food & Drug Administration. https://www.fda.gov/industry/medical-products-rare-diseases-and-conditions/designating-orphan-product-drugs-and-biological-products#:~:text=Designating%20an%20Orphan%20Product%3A%20Drugs%20and%20Biological%20Products,-Share&text=Orphan%20drug%20designation%20qualifies%20sponsors,of%20market%20exclusivity%20after%20approval. Accessed 4th August 2023.
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13 – Market access of orphan designated therapies at risk due to payer assessment of value. Pharmaceutical Technology. https://www.pharmaceutical-technology.com/comment/market-access-orphan-drug-at-risk/#catfish. Accessed 4th August 2023.
14 – Eichler, H., Kossmeier, M., Zeitlinger, M., and Schwarzer-Daum, B. 2023. Orphan drugs’ clinical uncertainty and prices: Addressing allocative and technical inefficiencies in orphan drug reimbursement. Frontiers in Pharmacology. 14. DOI: https://doi.org/10.3389/fphar.2023.1074512
15 – Zimmermann, B. M., Eichinger, J., and Baumgartner, M. R. 2021. A systematic review of moral reasons on orphan drug reimbursement. Orphanet Journal of Rare Diseases. 16. DOI: 10.1186/s13023-021-01925-y
16 – Rodriguez-Monguio, R., Spargo, T., and Seoane-Vazquez. 2017. Ethical imperatives of timely access to orphan drugs: is possible to reconcile economic incentives and patients’ health needs? Orphanet Journal of Rare Diseases. 12(1). DOI: 10.1186/s13023-016-0551-7
17 – Nguyen, C. O., Alba-Concepcion, K., Palmer, E. E. et al. 2022. The involvement of rare disease patient organisations in therapeutic innovation across rare paediatric neurological conditions: a narrative review. Orphanet Journal of Rare Diseases. 17(167). DOI: 10.1186/s13023-022-02317-6.
18 – Dunkle, M., Pines, W., and Saltonstall, P. L. 2010. Advocacy groups and their role in rare diseases research. Advances in experimental medicine and biology. 686, pp: 515-525. DOI: 10.1007/978-90-481-9485-8_28.
19 – Challenges for orphan medicines entering the European market – Part 4: Operational challenges. Mtech Access. https://mtechaccess.co.uk/orphan-medicines-europe-operational-challenges/. Accessed 4th August 2023.