PharmExec Blog

Creating Hope For Orphan Diseases

The Creating Hope Act of 2011, along with advancements in science and a shift in focus for Big Pharma, means that rare and pediatric orphan diseases may finally get the attention they deserve.

“As a society, as we’re having this big debate around healthcare, everyone agrees portrait_kephartthat there’s a certain baseline of people that we have to take care of,” says Craig Kephart (pictured right), president and CEO of Centric Health Resources, a direct-distribution company focused on specialty pharma and orphan diseases. “And I put people with rare and pediatric orphan diseases in that bucket. Their condition isn’t based on a health or lifestyle choice—they just lost the genetic lottery.”

According to the National Organization for Rare Disorders (NORD), of the nearly one in 10 Americans with rare diseases (those diseases affecting under 200,000 patients in the US), approximately two-thirds are children. “Many of these rare pediatric diseases are very serious and treatments are desperately needed,” said NORD president and CEO Peter L. Saltonstall in a statement. But, until recently, those desperately needed treatments weren’t exactly on the radar for Big Pharma.

For some orphan diseases, the marketplace may be only 500 or 1,000 patients, so pharma’s opportunity to recoup its investment in bringing a drug to market is very limited, resulting in the need to charge a very significant amount of money for the therapy. Historically, what this has meant for the orphan disease population—especially for diseases that affect less that 6,000 patients, which Kephart calls ultra-orphan diseases—is that pharma never bothered to research possible treatments because the prospective ROI just wasn’t there; or perhaps even worse, a drug did reach patients but was priced unreasonably high to compensate.

“Right now we seem to be going through this foolish-thinking phase where the knee-jerk reaction by managed care is to raise the patients’ financial burden, saying ‘Oh, we’ll cover the drug, but we’re going to make it a Tier 4.’ So the patient will have a much higher out-of-pocket expense,” adds Kephart. “When you look at the impact of these types of rare and neglected diseases, not only are they personally catastrophic for the families and patients affected; they can also be economically devastating.”

However, new science, new laws, and new interest from Big Pharma may point to a light at the end of the tunnel, says Kephart. “We are seeing a tremendous focus—all in the past few years—on these ultra-orphan diseases,” he says. “There are a couple of driving factors behind this shift. One of them is certainly all the talk about patent cliffs, the lack of blockbuster drugs, and the R&D pipeline not being as strong as it once was. Pharma companies are naturally looking for new places to grow—and if there aren’t any more big markets to grow in, you have to grow in a bunch of smaller markets.”

Although the changing landscape of Big Pharma has played a part in putting ultra-orphan and rare pediatric diseases back on the map, much of the credit should go to developments in science, particularly in genomics. Kephart says that often, scientists and pharma companies tell him that these rare diseases are easier to crack, because they tend to be isolated to one specific genetic defect or one section of the gene that’s got a mutation, so they can more easily try to create therapies for it.

In the interest of trying to get Big Pharma to put all this newfound scientific and technological insight to good use, US Senator Bob Casey (D—PA) introduced in March the Creating Hope Act of 2011—a bipartisan bill that would encourage the development of new treatments for rare and neglected diseases that disproportionately affect children. But where’s the incentive?

Essentially, the law tells pharma companies that if they focus on a rare or neglected childhood disease and try to bring a drug to market there, they’ll get a voucher for one of their other non-rare drugs to qualify for expedited review through the FDA—thus cutting up to five months off the review process.

So by working on ultra-orphan drugs under this new law (which has not passed yet), a pharma company could then significantly decrease the time to market for one of its other, bigger money-makers. “The idea here is that if you cut four or five months off your review time and get your drug to market sooner, that’s four or five months of revenue that you weren’t counting on,” says Kephart. “That’s just good economic sense.”

In order for treatments for these ultra-orphan diseases to come to market and be accessible to the patient, all the planets need to align perfectly. Pharma needs to be interested; the clinical trials and other R&D costs need to be recouped; investors need to see a strong potential for ROI down the line; and value needs to be evident in more than just (millions of) dollars and cents.

“This is one thing I talk about often to companies and potential clients—they need to focus on the value equation,” explains Kephart. “If your drug is just sort of a nice-to-have convenience, then patients and payers aren’t going to value it. You need to start looking early on, to collect the outcomes that prove your product is making a difference. You need to consider other measures beyond cost—is your drug keeping people out of the hospital, or do the results of taking this drug allow people to go back to work?”

To succeed going forward in this new, leaner, more competitive climate, says Kephart, “Those are the things I think pharma companies have to get used to focusing on, and they’re going to have to make that a part of the deal.”

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One Comment

  1. Posted June 9, 2011 at 7:04 am | Permalink

    Frankly, the US CDER (Center for Drug Evaluation and Research, the arm of the FDA that approves new drugs) has slowed down considerably over the past 10 years in their review time for new drugs. How can they promise accelerated review? This will penalize start up companies that don’t have blockbuster drugs pending review (and there are few of those anyway), only smaller or a only one or a few drugs in development. They will be put on the “back burner” as the big companies get the priority review time and access to attention by the FDA.

    I am not optimistic that this Act will be approved. If I were an anti-trust lawyer, I would be all over this as being “monopolistic”.

    In addition, let’s get real. The first 4 – 5 months of sales of any drug are usually negative – pipelines for distribution are being filled, Mds and others are being informed and educated, etc. etc. The idea that you get 4 to 5 months more in VALUE would be minimal. Right now, most “non-orphan” drugs don’t make $100 million in their first year. But they cost $800 – 2000 MILLION to develop. For 1/3 a year, that means $33 million in potential additional revenues. At that point, there is no more economic advantage or ROI. At an optimistic 5% “use of money” (cost of working capital), that means a financial benefit to companies of about $1.7 million ROI for these additional 4 – 5 months of approval (which is a hypothetical time advantage anyway – what’s the benchmark???).

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