Why I Fear the Bubble, Part 2: A Crash at the Intersection of Personalized Medicine and #RareDisease Research?

Posted Thursday January 10, 2013 by Melissa

Orphan Drugs Launched 2002-11

For Part 1 of this series: Why I Fear the Bubble, Part 1: The Pricing of #RareDisease Drugs


One thing I took away from the World Orphan Drug Congress last year is that orphan drugs do not necessarily equal rare disease drugs and rare disease drugs do not necessarily equal ultra rare disease drugs.

My dinner companions and I one night had quite an interesting discussion on this. What is rare? What is ultra rare? Does it matter?

For good reason, rare disease organizations are often hesitant to parse their membership into ultra rare versus rare, but is that inquiry valid nonetheless?

A summary of our discussion:

Orphan disease or drug: This category is an artificial creation of the Orphan Drug Act of 1983 which includes drugs which are intended to treat conditions affecting fewer than 200,000 people in the United States. The Act included a number of incentives to develop these drugs and bring them to market, including seven-year market exclusivity, tax credits, grants, fast-track approvals, and a waiver of significant fees, now under PDUFA.

Rare disease or drug: Our dinner discussion revolved around the idea that “rare disease” was possibly one which affected maybe the 200,000 number of the ODA or maybe something less, say 50,000, but that they specifically are chronic diseases as opposed to other conditions which may fall into “orphan disease” but which are likely not genetic or chronic.

Ultra rare disease or drug: Now here, we ran into more debate. There are clearly different challenges in a disease that has 50 patients worldwide and one that has 200,000 patients in the U.S. and maybe a million worldwide. We settled somewhere in the realm that less than 5,000 patients worldwide is probably ultra rare and less than 500 patients worldwide is our own little “ultra ultra rare”.

Orphan Drugs Launched 2002-11

The Use of Medicines in the United States: Review of 2011, Report by the IMS Institute for Healthcare Informatics

Why does this matter?

Am I just writing an exercise in theory? I don’t believe so. This matters because big pharma is now in orphan drugs and they are in them big-time. Understand that if a drug can treat say, only one subset of a type of cancer (or pick any condition), and this type can be specifically distinguished as being in less than 200,000 patients in the U.S., then the drug can be given orphan drug designation and the benefits and exclusivity that goes with it.

What’s wrong with that? Nothing in theory. When we begin treating subsets of more common conditions based on genetic or other factors, that becomes what is known as Personalized Medicine and it often fares much better for the patients. Personalized Medicine is the practice of customization of healthcare, with decisions and practices being tailored to the individual patient by use of genetic or other information. It has been done for a relatively long time in cancer care, by testing for genetic, protein, and mutations from cancer tumor cells to better define the prognosis in these patients and to suggest treatment options that are most likely to succeed.

But as the model of personalized medicine continues, pharmaceutical companies tap into that market by developing drugs that are specifically tailored to certain patient tumors or other conditions, which will likely be a much smaller market than say, an old school chemotherapy drug, possibly a market under 200,000 in the U.S.

It should be noted that in 2011, 11 of the 30 approved drugs/biologics were for designated orphan drugs and 7 of that 11 were for cancer drugs. In fact, there were 8 approvals for cancer drugs, so 7/8 of the cancer drug approvals were orphan drugs. Not that all cancer drugs are prime examples of personalized medicine, but they do support a trend.

Percentages and Trends of Drug Designations

M. Hogan analysis; data from The Use of Medicines in the United States: Review of 2011, Report by the IMS Institute for Healthcare Informatics

The very existence of Kalydeco, a cystic fibrosis drug, showcases the intersection of rare disease and personalized medicine. Cystic Fibrosis is estimated to only affect 30,000 patients in the United States, so a drug to treat it would likely qualify for orphan designation. Kalydeco, however, is designed to treat a genetically identifiable subset that comprises only about 4% worldwide (estimated to be 70,000) of cystic fibrosis patients. The FDA recognized this unique intersection when it noted in its FY 2012 Innovative Drug Approvals report that, “Kalydeco is an example of the promise of personalized medicine—targeted drugs that treat patients with a specific genetic makeup.”

Whether in connection with personalized medicine or otherwise, orphan drug designations represented 13% of launched drugs in 2002; but that has increased to 35% in 2011, representing a compound annual growth rate of 17% by number of drugs. Compare that with a CAGR of 7% for drugs with a new mechanism of action and -4% for existing mechanisms of action. The trend has orphan drugs continuing their climb toward 40% of newly launched drugs.

As more and more drugs are focused toward personalized medicine and orphan drug designations, that designation becomes commoditized.

In the face of the high pricing of orphan drugs, the climbing percentage of orphan drug designations as a part of overall drug approvals, and the healthcare crisis in the U.S., I find it unlikely that the orphan drug structure can continue as it stands indefinitely. This is not what I wanted to write in this, the year of the 30th anniversary of the Orphan Drug Act.

I fear there is a bubble.

A bubble of orphan drugs that will pop, and rare and ultra rare could be the sacrifice if the entire Orphan Drug Act schematic were to be rewired or abandoned.

If companies lose their incentives to create drugs for rare and ultra rare diseases, will we revert back to pre-1983 status, where little or no research in ultra orphan diseases was happening?

Although my looking glass might reveal the problem, it is not clear enough into the future to reveal the solution. It might be a lowering of the 200,000 patient threshold. Or, it might be a reduction in the orphan drug incentives. Or a sliding scale of incentives relative to some yet-to-be-determined data. Or a control on orphan drug pricing.

Whatever it may be, based on the shift in research focus in the pharmaceutical and biotech industry and the increased focus on personalized medicine in healthcare generally , I don’t see a way to avoid the crash of the two. Unfortunately, the trains have left their proverbial stations.

Do you agree/disagree? Any suggestions for our path ahead?


For some additional reading on this issue, I recommend:

Copyright © 2013, Melissa Hogan. All rights reserved.

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