The Dilemma with Orphan Drugs

Orphan drugs for rare diseases are a major area of investment for pharmaceutical companies, but are they becoming too expensive for Europe to afford them?
Aug 01, 2013

Rare diseases present an area of substantial unmet medical need. In Europe, a disease is defined as rare if it affects less than five people per 10,000 (1). More than 6000 different rare diseases have been identified to date, and it has been estimated that approximately 30 million people living in the EU suffer from a rare disease (2). Most rare diseases are caused by genetic defects, but environmental exposure during pregnancy or later on in life, often in combination with genetic susceptibility, could also be a cause (1).

Addressing unmet medical needs

Most pharmaceutical companies have shown little interest in developing drugs for rare diseases because these drugs were unlikely to generate sufficient return on investment. As a result, treatments for these disorders became known as 'orphan drugs'. To stimulate research in this area, a number of governments developed specific orphan-drug legislation, which provided incentives to companies who invested in this area. The types of incentives included are reduced fees for marketing-authorisation applications, scientific advice or protocol assistance, and protection from market competition once the drug is authorised (2). In 1983, the US adopted the Orphan Drug Act, with Japan and Australia implementing a similar legislation in 1993 and 1997, respectively. Europe followed relatively late in 1999 when it adopted Regulation (EC) N° 141/2000 on orphan drugs, but the legislation has been widely considered to be successful. Since its introduction, the European legislation has resulted in the review and approval of 69 treatments for some 55 different conditions (2, 3).

Despite improvements in the situation for patients with rare diseases and their families, efforts are continually being made by stakeholders to raise awareness of the condition, widen access to treatment and ensure appropriate medical representation. Due to the political make-up of the EU, competencies for healthcare are split across countries; hence, the authorisation of a particular orphan drug does not necessarily mean that it is available to all patients in the region. A key annual event to raise awareness is Rare Disease Day, which is held on the last day of February (2). A main coordinator of this event is the European Organisation for Rare Diseases (EURORDIS), which represents 585 rare disease patient organisations in 54 countries covering over 4000 diseases (4).

A market too successful?

A controversial issue regarding orphan drugs is their pricing. Although they receive incentives to develop orphan drugs, particularly market exclusivity for 10 years in the EU, companies argue that they must still charge high prices to guarantee sufficient return. European healthcare systems are already struggling to cover the costs of treatment for citizens and there is a concern that orphan drugs are now placing too much pressure on the system.

Although the need for orphan drugs is recognised, critics argue that industry is taking advantage of the incentivised system to maximise profits and that healthcare systems cannot cope with such pricing in the long term. In the past, small specialised companies focused on orphan drugs, but in recent years, a growing number of large pharmaceutical companies have moved into this field. Thomson Reuters Life Sciences estimated that the current global market for orphan drugs is worth US$50 billion and growing at 6% per year (5).

Companies continue to state that it costs around US$1 billion to develop a new drug and that they need substantial revenue to cover the costs of developing drugs that fail during R&D (5). However, many observers believe that a number of the orphan drugs on the market have exceeded the costs of their development by a wide margin. A report by the BBC in January 2013, based on the views of Dr Carl Heneghan, director of the University of Oxford's centre for evidence-based medicine, suggested that approximately one in 10 orphan drugs has generated more than £620 million of revenues (6). Furthermore, the pricing of these drugs in relation to the patient population appears to be very high. For example, nine of the most expensive orphan drugs on the market, which cost more than £125,000 a year, treat diseases afflicting fewer than 10,000 patients (6). Soliris (eculizumab), used to treat patients with paroxysmal nocturnal haemoglobinuria and atypical haemolytic uraemic syndrome, was approved in 2007 and is frequently cited as one of the world's most expensive drugs, at £250,000 a year (6, 7). Nevertheless, the manufacturer, Alexion, believes that the price is fair. It states that one third of patients died within five years before Soliris was available (5).

One of the harder arguments for companies to justify in today's cost-conscious healthcare environment is when an existing therapy has been modified and adapted to become an orphan drug. In the BBC report, Dr Heneghan cited the example of oral ibuprofen, which costs approximately £0.08 per gram (6). The drug also exists on the market as an intravenous form (Pedea) for the treatment of the orphan disease patent ductus arteriosus, where it costs £6575 per gram (6). To account for this price variation, Orphan Europe, the manufacturer, explained that the drug was specially developed for a rare-disease population and should not be compared in such a straightforward manner with ordinary oral ibuprofen (6).

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