The eternal orphan

As the US Orphan Drugs Act enters its 25th year in 2008, an imperative question that arises is whether this legislation has made a difference. Aashruti Kak reviews

Implemented in 1983, the basic intent of the US Orphan Drug Act (ODA) was to stimulate research, development, and approval of products that treat rare diseases. "In the US, these diseases are defined as those which affect less than 2,00,000 patients or those for which cost of development is unlikely to be covered through commercialisation. 'Orphan drugs' are thus used for rare diseases for which there is an unmet medical need," says Dr Chandrashekhar Potkar, Director-Medical and Regulatory Affairs, Pfizer. Examples of these diseases include severe combined immunodeficiency syndrome, cystic fibrosis, hairy cell leukaemia etc. Malaria and tuberculosis also are orphan indications in the US. The concept of orphan drug in the US, apart from covering pharmaceutical or biological products, also covers medical devices and dietary or diet products.

"There is limited commercial opportunity for such drugs. However, research based pharma companies are able to apply their R&D expertise in partnership with government and other medical institutes for orphan indications with unmet medical needs," Potkar adds. Government provides incentives for sponsors undertaking research on orphan indications. These incentives can take form of tax credits for clinical research expenditure, grants in aid for clinical research, design assistance for investigating orphan indications (eg. open protocols for enrolling patients) and seven year market exclusivity. But the definition of orphan drugs and diseases and the incentives attached to them may vary in different countries depending on the prevalence of diseases there and the respective population strengths.

It is the enforcement of this very Act that encouraged other countries, including European Union (EU), Australia, Japan and Singapore to follow suit. So what is stopping India from adopting a legislation similar to the Act? Potkar says that this may be due to the fact that our current legislation is focused on strengthening R&D in India.

Dr Syamala Ariyanchira, author of BCC Research's Global Markets for Orphan Drugs report, opines, "Considering that there are next to none pharma companies in India manufacturing or researching orphan drugs to my knowledge, there will be no incentives for them. However, in 2001, a group of pharmacologists at an Indian Drug Manufacturing Association (IDMA) conference had appealed to the Indian Government to form something akin to the Orphan Drug Act. But I have not heard of any kind of development in this context since then."

Let alone legislation, India does not even have a dedicated organisation specifically looking after orphan diseases. "But we do have national institutes that specifically are focused on research and development on illnesses with high prevalence in India such as malaria, tuberculosis, leishmaniasis etc," informs Potkar. The US has Office of Orphan Product Development (OOPD) under FDA since 1983. More than 250 drugs have been approved since the enactment of the ODA.

Questioning accessibility, affordability and ethics

"Orphan drugs, though may be approved through fast track mechanisms, are still subjected to clinical research testing to understand overall risk-benefit about the product. Orphan drugs are not approved until the regulatory agency is not satisfied of the positive risk-benefit for an orphan indication" - Dr Chandrashekhar Potkar Director-Medical and Regulatory Affairs Pfizer

"The only flaw in the Orphan Drug Act is that they should have some regulation for price control of orphan drugs, so that the affordability and accessibility improves, but that should not clash with the interests of the pharma companies to invest in the segment. There should be a mechanism which brings competition in the segment for established players" - Dr Syamala Ariyanchira Author of BCC Research's Global Markets for Orphan Drugs report

There are quite a few concerns that have surfaced over the years regarding the ODA and most of then are regarding the alleged misuse of the Act by the drug developers themselves.

The biggest issue at the forefront is that of skyrocketing prices of the orphan drugs. Most drug companies argue that taking into account the R&D expenditure on drugs that never reach market, the rewards from successful drugs are justified. But, considering that these companies receive grants and funding from their respective governments and various non-profit organisations, and then, despite the fact that they have exclusivity of almost a decade to reap the benefits, they price the drug excruciatingly high, there is a strong compromise on accessibility and affordability on their part.

Ariyanchira gives the example of Ceredase, a drug from Genzyme, which is sold at a very high price. It is apparently the costliest drug in the world, with treatment crossing $4,00,000 per year. There are a lot of controversies pertaining to the price because there are no rules for pricing an orphan drug, even if the patent expires and the market exclusivity ends. "Genzyme had changed its production process and replaced Ceredase—which is made from human placental tissues—with Cerezyme—which is developed through recombinant DNA technology—which meant that the investment in the manufacturing process had come down, but the prices still stayed high," she says. Judging by this, many would want to see the authorities put a ceiling on revenues from orphan drugs, shorten the exclusivity, or at least reassess the exclusivity when profits cross a certain limit.

The issue of off-label use of orphan blockbuster drugs is also another hot potato, as this contributes to the additional revenue of the company, without having any effect on the price. And nowhere in the orphan-product exclusivity is the off-label use of drugs for highly prevalent diseases prohibited because the orphan drug legislation considers the relevant population for an orphan drug on the basis of the safe and effective action of the drug.

According to a recent article in the Lancet—Does orphan drug legislation really answer the needs of patients?—since the adoption of the ODA in 1983, more than 300 products for rare diseases have received market approval from the US FDA. This number compares with only ten products approved to market in the preceding decade. Although the number of marketed orphan products has increased, there has also been a steady increase in the time and expense needed for product development; yet the overall number of products approved to market has decreased.

The article also explains the importance of market exclusivity in developing older drugs (that may be abandoned) for rare disorders, by citing the example of Thalidomide, which was approved in the USA in 1992 as treatment for erythema nodosum leprosum, and more recently for multiple myeloma. Similarly, companies associated with the development of recombinant biotechnology products have often commented on the importance of orphan-product exclusivity. Any product in development during the entire 17 years of patent-based exclusivity might benefit from the provision of orphan-product exclusivity, since this exclusivity begins only when the FDA and European Union give market approval. Biotechnology companies such as Amgen, Genzyme, and Genentech had orphan products as their first marketed products.

Another apprehension about orphan legislation is whether development actually takes place for the truly rare diseases, or only for the more common ones. "What generally happens is that when the market exclusivity period is on, after some years the rare disease situation is checked by the authorities and if the market exclusivity given is justified, then it may be extended to about 10 years or more," says Ariyanchira.

The final concern about the whole process of developing these drugs is the ethics behind fast track approvals that these drugs get. Doesn't that put the patients at risk, as has been found in certain cases after post marketing approval? "Orphan drugs, though may be approved through fast track mechanisms, are still subjected to clinical research testing to understand overall risk-benefit about the product. Orphan drugs are not approved until the regulatory agency is not satisfied of the positive risk-benefit for an orphan indication," says Potkar.

Ariyanchira adds, "Firstly, when you talk about the clinical trials of orphan drugs, you have to understand that the number of people available for these clinical trials is very less, considering that the research is for rare diseases, hence it takes less time for companies to wrap up with the trials." She goes on to say that fast track approval is not only for orphan drugs, it is also given for serious or life threatening conditions. It is more on a humanitarian line. For instance Europe has accelerated review for special cases. "These regulations are just present ideally, however, there may be companies taking advantage of them," she says.

It is understood that developing a new drug entails years of work, uncertainty and a lot of expense, and the developing company may become overenthusiastic about recovering its investment. However, there have been many cases in which orphan drugs, providing valuable treatment, have little prospect of commercial return despite the market exclusivity (eg, zinc acetate for Wilson's disease). Institute of One World Health (IOWH), a non-profit pharma company, is one successful endeavour, resulting from numerous partnerships with drugmakers, charitable foundations and nonprofits, and accumulating skill (scientists) from all over the world.

One has to appreciate the fact that irrespective of certain inconceivable loopholes in the Act, it is definitely a boon, because without the ODA, development of drugs for many rare diseases might not have taken place. Also because of the ODA, many infectious diseases that are highly prevalent in developing countries are eligible for incentives to develop orphan drugs there, such as in the USA, for instance, tuberculosis and malaria. Drugs that have been given orphan drug status are rifampicin and rifapentine for tuberculosis; and halofantrine, mefloquine, and quinine sulphate for malaria.

Biotech v/s pharma

"Before the Orphan Drug Act came in the picture in 1983, there was no proof at all of such a market segment in the pharma industry. So, the industry only picked up after the legislation was formed," reveals Ariyanchira. Initially, Big Pharma was more interested in drugs with blockbuster potential than the ODA incentives. However, biotech companies seized the opportunity and most of them came up with orphan drugs, which was free of competition from pharma companies. Genentech was the first biotech company to enter the market in 1985 with its growth hormone products—protropin and nutropin. According to BCC Research's Global Markets for Orphan Drugs report, the total market size of orphan drugs in 2006 was $58.7 billion and is expected to grow at a rate of seven percent to reach 81.8 billion by 2011. Biologics accounted for approximately 60 percent of the global orphan drug market, and over 50 percent of the leading orphan drugs. Some of the most promising categories within biologics are monoclonal antibodies, interferons/ interleukins, growth hormones, and plasma products. In the same year, 50 orphan drugs broke the revenue ceiling with profits exceeding $200 million, out of which, 19 were blockbusters.

Such highly successful orphan drugs have played a crucial role in changing the industry's perception about orphan drugs. Considering this, biotech companies world over should be thriving, but surprisingly, it is not the same scenario anymore. "People used to think that whatever orphan drug research was happening worldwide was being done by biotech companies, which was true initially. But now if you see the number of orphan drugs that have received orphan drug designation from the US FDA, they belong to the top five pharma companies ie. Johnson & Johnson, Novartis, GlaxoSmithKline, Bayer and Pfizer. One would expect players like Amgen, Biogen, Genentech, Genzyme etc to be on the top," reveals Ariyanchira. She explains, "What has happened here is that the big pharma companies have taken over the respective biotech companies and acquired their orphan drugs. Because during that time a lot of mergers and acquisitions were happening, and finally J&J got a lot of bulk drugs and biotech companies, which is why it has the most orphan drug designations amongst the pharma companies."

The only biotech company topping the orphan drug approval list is Amgen, with the highest market share in orphan drugs, while the rest are pharma companies. It seems that Big Pharma was not sleeping after all. The BCC report states that Big Pharma accounts for 53 percent of the orphan drug market, while biotech companies account for 37 percent in 2006. Small and medium-sized pharma companies account for the rest. By using strategies of acquisitions and collaborations with biotech companies, pharmacos very smartly skipped the investment in early stages of discovery or development of an orphan drug, which worked well for biotech companies as well, as it is a good funding strategy to take the development forward. Ariyanchira agrees, "It is tougher for biogeneric companies to manufacture these drugs because they have to conduct clinical studies in order to prove that their product is a biosimilar—with similar effects—and is devoid of harmful effects. Pharma companies do not invest as much on a drug as biotech companies do. Otherwise, With so much investment involved, the biosimilar companies will rather make monoclonal antibodies related to cardio, cancer or diabetes."

After acquiring the orphan drug portfolio, there was no looking back for pharmacos, as they had other ingenious strategies up their sleeves to ensure benefits other than those enlisted in the ODA. One such strategy that completely eliminates generic competition in the long run is to expand to multiple orphan and non-orphan indications over a long period of time. Ariyanchira elucidates, "You develop a drug and then you expand the indication with R&D and block within the disease various indications so that it cuts your competition for the market exclusivity period and beyond." The best example is Glivec, a kinase-targeting drug for chronic myelogenous leukaemia, which is already a blockbuster drug with more than $2.5 billion in revenues and is projected to grow at a rate of 10-12 percent generating more than $4 billion in sales by 2011. With seven separate approvals for Glivec, Novartis has blocked a range of multiorphan indications, leading to an enormous increase in sales. "Companies already have done the toxicology studies. The only thing left to do is clinical studies. Hence, the development process does not take as much time as it took the first time for a different indication. They just have to expand and keep on blocking and there will be minimum loopholes for competitive companies to find," she says.

Waiting on the world to change

Ariyanchira states in the BCC report that "the future of the orphan drug industry will depend heavily upon the entry of biogenerics. The biopharma market is highly attractive to generic companies and legislation permitting biogenerics will come sooner rather than later. Such legislation will have a tremendous impact on the orphan drug market. With reduced profitability, attracting investment in areas with low economic return will become a challenge."

"The only flaw in the Orphan Drug Act is that they should have some regulation for price control of orphan drugs, so that the affordability and accessibility improves, but that should not clash with the interests of the pharma companies to invest in the segment. There should be a mechanism which brings competition in the segment for established players," suggests Ariyanchira. Companies should also try and tie up with NGOs, and take research initiatives. Although there are pharma companies promoting universities by funding them, the above listed cannot be the ultimate solution because there is no competition, she says. There can be more companies like IOWH which take the initiative and get funding.

All said and done, the bottom line is that there needs to be more public funding and better legislation to increase the market-driven research on orphan drugs. The latter can be taken care of through public-private partnerships in developing countries, where the private sector (pharma companies and non-profit foundations) joins the public sector (government and universities) to coordinate and fund research projects for rare diseases in developing nations. There can also be collaborations between international scientists, healthcare workers, and nonprofit organisations. Till then we keep on waiting, waiting on the world to change.

aashruti.kak@expressindia.com