Neglected no more

There is a renewed focus on rare diseases and neglected tropical diseases, thanks to incentives offered under the US Orphan Drug Legislation and its extension, the Priority Review Voucher scheme. What are the new business models emerging from this strategy shift? Viveka Roychowdhury analyses

Once spurned as low revenue drugs, today big pharma seems to be embracing the 'small is beautiful' mantra. The industry has seen a few recent deals concerning rare diseases like Gaucher disease and Duchenne muscular dystrophy, which impact much smaller populations than blockbuster drugs which were traditionally the bread and butter of big pharma.

Dr Archana Shekher, General Manager & Project Director, Voisin Consulting says that prior to introduction of Orphan Drug Legislation in USA in 1983, most discovery based pharmaceutical companies focused on common diseases, because there were very few resources allocated to the development of therapies for rare /neglected diseases; investment in to R&D to develop effective and safe drugs for these diseases are not commercially viable since the patient pools are very small. For example, there are only a few thousand patients of glioblastoma, a type of brain cancer, compared to millions of patients of hypertension so recruitment of patients can take very long time as awareness levels about the disease amongst physicians and patients also tends to be low.

In fact, this unmet medical need is the subject of a movie which relased end January, Extraordinary Measures, which tells the story of the Crowley family in the US, where the father takes on the pharma industry when he finds that his two younger children have Pompe's disease. This was in 1997 and the industry was not interested in finding a cure for a disease which affects 1 in 40,000 newborns. A healthcare litigation lawyer, Ceowley joined Bristol Meyers Squibb (BMS) while liaising with a team of scientists at a fledgling biotech firm, Targeted Therapy, who were working towards a cure for Pompe's disease. He later left his job at BMS to head the startup, now renamed Novazyme Pharmaceuticals, and focused on sourcing funds for the research. As the science progressed, the company was finally sold to Genzyme Corporation, considered one of the pioneers in the biotech industry which focussed on orphan drugs from the start. Filing for Orphan Disease status was part of the clinical trial strategy used by the Novazyme Pharmaceuticals to expedite trials.

Today, big pharma is using the same strategy. Last December Pfizer licensed the worldwide rights to a treatment for Gaucher disease, a rare genetic disorder, from Protalix Biotherapeutics, an Israeli biotech company. Before that, in October, GlaxoSmithKline announced a deal with Prosensa, to develop drugs for Duchenne muscular dystrophy. And in June, Novartis won approval from the Food and Drug Administration (US FDA) to sell its drug Ilaris as a treatment for cryopyrin-associated periodic syndrome, which is an inflammatory condition caused by a gene mutation and affects only about 300 Americans.

Putting these recent deals into perspective, Sujay Shetty, Sujay Shetty, Head of Life Sciences, PriceWaterhouseCoopers points out that this shift to rare diseases has been happening for some time because the blockbuster model is no longer valid. Now it's the era of specialty, targeted mixed therapies, all sub-billion dollar drugs, which affect very small sub-populations and as these drugs are usually biologics, treatment costs are high. "The reason we are going down this pathway is that now with our increased knowledge of genomics and proteomics, we understand how these diseases work, we know the biomarkers, and how to attack specific pathways. So this is currently the THE area where much of the work is going on", reasons Shetty.

Besides the increased disease understanding and focus on personliased medicine, Venkateswara Rao Gunnam, Senior Consultant, Datamonitor, India also points out that the success of some biotech start ups that focused on orphan drugs (for eg. Genzyme, Genentech, Amgen, Actelion, etc) has increased the interest of global pharma majors in these biotech companies. Some big pharma companies like Novartis have already re-aligned their development focus towards rare diseases. Moreover, health agencies like NICE have started appraising orphan drugs for re-imbursement levels based on their cost-benefit analyses.

Chosen few vs neglected many

"Regulatory attention is focused on detecting and excluding tiny subsets of patients of common diseases for which available drugs already have adequate efficacy and safety" - Dr Archana Shekher General Manager & Project Director Voisin Consulting

"Contract manufacturing or licensing deals centered around tropical disease drugs are expected to spur the Indian pharma industry" - Dipta Chaudhury Program Manager - South Asia and Middle East Pharma and Biotech Practice Frost & Sullivan

"A focused disease specific approach is expected to yield better results, and this is already seen in initiatives like the Medicines for Malaria Venture an the Global Alliance for TB" - Dr Ajit Dangi President & CEO Danssen Consulting

But does this strategy shift include diseases affecting poorer nations, or is it restricted to 'ultra-rare diseases affecting the ultra-rich' as some blogs derisively refer to this trend? Dr Ajit Dangi, President & CEO, Danssen Consulting makes a point that he does not think there is significant increase in research for diseases of the poor as the pharma industry argues that drug discovery is not only expensive but also risky. Hence RoI becomes a priority. But having said that, he does concede that many companies, as a part of their Corporate Social Responsibility (CSR) are doing good work in this area. For instance, the Novartis Institute of Tropical Diseases in Singapore and Astra Zeneca`s R&D center in Bangalore working on Drug for TB are two institutes devoted to this cause. Over 1 million people worldwide are estimated to be suffering from Neglected Tropical Diseases (NTD's) as per WHO.

Taking this reasoning further, Dipta Chaudhury, Program Manager - South Asia and Middle East, Pharma and Biotech Practice, Frost & Sullivan says that as tropical diseases afflict a large population in the world, though in most cases the development and sales of these drugs are charitable in nature, when sold for a profit they bring in volumes rather than the traditional high profit margin per unit. This is an evolving new model for MNC's who have hitherto focused on high value drugs.

Chaudhury points out that there has been a spate of investments for NTD's internationally, especially towards malaria, dengue and TB. This was spurred primarily by the interest shown by the WHO through their Strategic and Technical Advisory Group (STAG) on NTD's along with The Bill and Melinda Gates foundation contribution, and Bill Gates' subsequent inspiring talk about malaria at TED (Technology, Entertainment, Design) Conference 2009. The Obama administration too has a component dedicated to NTD's in the USA health budget.

As Chaudhury says, NTD's have also come to international focus with the increasing incidence of viral infections like H1N1 and Avian Flu over the past years, raising focus on how international health effects people in different geographies, and parasites have hitherto evolved unchecked in developing countries like Sub Saharan Africa can also effect developed nations. Shetty draws attention also to the increasing incidence of some NTD's, specifically TB, in developed countries like the US and this is patient population that you cannot ignore.

Regulatory incentives

There is no doubt that the first push towards these diseases came from governments. As Shekhar avers, the US government was the first to enact Orphan Drug legislation and millions of people with rare diseases have benefited from the program. R&D tax benefits, market exclusivity and preclinical /clinical development assistance are offered by the Government agencies in US and EU to sponsors of orphan drug development. Also payers fully reimburse costs of orphan medicines. Today, US, Europe and New Zealand are the few countries that have an established legal, scientific and IP infrastructure that effectively incentivizes discovery and development of orphan drugs.

As a regulatory consultant aiding companies navigate this complex landscape, Shekhar comments that regulatory attention is focused on detecting and excluding tiny subsets of patients of common diseases for which available drugs already have adequate efficacy and safety. Regulations around orphan drug research mainly focus on the definition of the orphan disease in terms of prevalence, unmet medical need and scientific rationale (basis for mechanism of action, efficacy and safety) of the proposed orphan drug.

Great detail of data on incidence and prevalence is required to show that prevalence is indeed less than 200,000. If there is possibility that the numbers are likely to be higher then a detailed financial work-up needs to be undertaken. The aim is to show that even if the numbers are higher the cost of developing the drug and the risk of failure far outweigh the potential return. It should be well defined disease with clear pathophysiology, signs, symptoms and diagnostic tests (biomarkers etc).

Shorter timelines, lower R&D costs

"R&D costs for orphan drugs was found to be, on an average, 75 percent lower than those incurred for a standard drug (Bastianelli et al., 2001) and significant number of drugs gained conditional approvals before the end of the complete clinical trials" - Venkateswara Rao Gunnam Senior Consultant Datamonitor, India

Gunnam makes the important point that there is a cost advantage opportunity that is being identified by some of the niche and big players as R&D investment in rare indications see shorter developmental periods and relatively lower costs of development since the patient population required for clinical trials is significantly smaller. Speedy approval for drugs for rare diseases is also an important consideration. Since 1983, US FDA has granted orphan status to about 2,000 drugs. Quoting a study he says that R&D costs for orphan drugs was found to be, on an average, 75 percent lower than those incurred for a standard drug (Bastianelli et al., 2001) and significant number of drugs gained conditional approvals before the end of the complete clinical trials.

On the sales and marketing side too, Gunnam says that there is the potential for enormous savings as instead of maintaining a large field/ marketing force with higher annual costs, companies can focus on niche patient segments targeting specialist physicians and patient advocacy groups.

Extracting value

Despite all these factors, the fact remains that for an industry used to blockbuster revenues, orphan drugs offer a limited market and low returns. Hence pharma companies are now intent on extracting maximum value. As Gunnam says, "Companies are focusing on increasing the number of indications for these drugs either by applying for additional orphan indications with higher patient populations (thereby increasing the exclusivity period in the niche market) or by expanding into a non-orphan indications or through off-label prescription."

For NTDs, the revenue model is different. Giving his company's perspective, Ranjit Shahani, Vice Chairman & Managing Director, Novartis India says, "Companies typically have different models to combat the issue of improving access including private public partnerships, donation programs, at cost and co-pay models. In the case of research in to neglected diseases which are usually prevalent in the developing world Novartis is looking at an 'at cost - no profit' model."

Dangi points out that a focused disease specific approach is expected to yield better results, and this is already seen in initiatives like the Medicines for Malaria Venture an the Global Alliance for TB. Besides this he points out that a differential pricing approach which involves higher pricing for drugs for developed countries and lower pricing for underdeveloped country may also help. This has worked well in case of some vaccines.

Opportunity for Indian pharma

"Companies typically have different models to combat the issue of improving access including private public partnerships, donation programs, at cost and co-pay models. In the case of research in to neglected diseases which are usually prevalent in the developing world Novartis is looking at an 'at cost - no profit' mode" - Ranjit Shahani Vice Chairman & Managing Director Novartis India

"Charity begins at home and since domestic pharma players already have a familiarity with the Indian disease profile and the healthcare delivery scenario, they have an advantage when it comes to developing medicines for this patient population" - Sujay Shetty Head of Life Sciences PriceWaterhouseCoopers

As Shetty wryly points out, 'charity begins at home' and since domestic pharma players already have a familiarity with the Indian disease profile and the healthcare delivery scenario, they have an advantage when it comes to developing medicines for this patient population. Though they will most probably have no presence in rare disease research as this involves biology research, where we do not have the expertise or the deep pockets required at the moment, NTDs offer tremendous opportunities, points out Shetty. Also, the cost of treatment of rare diseases is mostly borne by governments or insurers if they feel the drug is adding value, and this is not the scenario in India. But the infrastructure for delivery and payment of NTD treatments is fairly well established. Shetty points out that as they are mass afflictions, like TB, kala azar, etc treatment takes the form of national immunization programs, sponsored projects, etc so companies can partner with government agencies and NGOs involved in public health. They can also sell in the private market to recover some part of the costs. From a deal point of view, Gunnam says, "The participation of Indian players in this deal activity is almost negligible. The only player that entered into an agreement is Ranbaxy Laboratories in 2006 with Debiopharm for the marketing of Sanvar being developed by Debiopharm for the treatment of acute esophageal variceal bleeding (EVB). Currently the product is in approval stage."

Echoing Shetty's analysis, Gunnam too points out that most of the collaborations by the international companies with institutions or pharmaceutical companies in India are focused on neglected diseases such as malaria, tuberculosis, leishmaniasis, etc. Genzyme had entered into a research collaboration with International Centre for Genetic Engineering and Biotechnology (ICGEB), New Delhi and Advinus Therapeutics in 2008 with major focus on neglected diseases like malaria.

Chaudhury makes the point that as a large component of field research and drug development in NTDs has to take place in disease-afflicted areas, this ensures a huge scope for research and education institutions in India like The Center of Tropical Diseases in Calcutta and the Jamnalal Bajaj Tropical Disease Research Centre and Department of Biochemistry (JBTDRC) in Sevagram, Maharashtra which are some of the government supported research institutes which work on developing cures for tropical diseases.

"Again, NTD's demand low-priced drugs in high volumes. India is known for its expertise in the manufacturing of high quality cheap drugs. We at Frost & Sullivan expect major multinationals to capitalize on the same and source the final product from Indian manufacturers/manufacturing sites located in India. Contract manufacturing or licensing deals centered around tropical disease drugs are expected to spur the Indian pharma industry," she avers

Future trends

While Gunnam says that it is early to comment on how well the inherent low cost development advantage of the Indian and Chinese players is likely to reflect on co-development or contract research agreements with global pharma companies for development of orphan drugs, there will be an increasing focus of on the development of drugs for neglected diseases in these markets. "This is largely because the patient population having some of these neglected tropical diseases is significant: Leishmaniasis (around 500, 000 new cases are reported in India); Chagas disease (~16-18 million are infected every year and most of them are in Latin America)," according to him. He gives some examples to buttress this observation: Some Indian companies like Ranbaxy, Shantha Biotech, and Bharat Biotech have turned towards development of such drugs with the help of grants from international agencies (mainly Bill Gates Foundation). Shantha Biotech has recently launched a cholera vaccine in Indian market which is one of the NTDs; and Ranbaxy has an anti-malaria drug in late stage of drug development. Chaudhury points out that the highest selling Orphan Drug till date is Erythropoietin, developed and marketed by Amgen, with sales of $2.4 billion.

This is a very good example of an Orphan Drug turning into a blockbuster over time and it is this potential and need for drugs addressing the needs of smaller but vital patient populations that will finally drive research into rare diseases. Developing nations like India who are looking to climb the R&D and innovation learning curve speedily could find this a crucial stepping stone to move to the next level.

viveka.r@expressindia.com