Can we market non-commercially viable orphan drugs?
In our rare disease focus month, Oliver Timmis questions whether the pharma industry can market non-commercially viable orphan drugs.
Rare diseases were historically neglected by the pharmaceutical industry, because it was not commercially viable to develop treatments knowing that the resulting market for those drugs was, by definition, small.
Following increased demand in Europe, a response to changes in US law and lobbying from policy groups, the European Commission enacted a 2000 regulation on Orphan Medical Products, designed to counter-act the disadvantages in rare disease development by granting several incentives on orphan drug designations. The motivations are largely financial, including market exclusivity of up to 10 years, waived fees on protocol assistance and reduced regulatory fees. The introduction of the Committee on Orphan Medicinal Products also meant slight changes to the regulatory pathway.
“…for patients with an orphan disease, the argument that a potentially life-saving drug was too expensive to develop, is not acceptable.”
If you determine success as increased development of orphan drugs, these changes appear to achieve that goal. A total of 871 orphan drugs gained an orphan designation in the EU following the change in legislature. However, only 8% of those (67 compounds) continued through to marketing authorisation. Considering that there are between 6,000-8,000 orphan indications and many do not have an approved treatment, the market is open to new drugs. What, then, happened to the missing 92%?
The drugs that gained an orphan designation, but have not advanced through to marketing authorisation, could be explained due to:
1) Clinical failure of the drug during human studies
2) A scientific inability to study the drug further
3) Long-term research at a stage prior to marketing authorisation
4) Companies dropping a drug after realising that there is no commercial value in continuing its development through to marketing authorisation
The last point is worrying, as for patients with an orphan disease, the argument that a potentially life-saving drug was too expensive to develop, is not acceptable. These are usually patients in desperate search for any avenue of treatment and a financial barrier seems unethical. However, trading pharmaceutical companies need to function in a profitable way and cannot make decisions that would risk damaging their business.
“The major problem seems to be that incentives are directed at a commercial benefit.”
Despite the incentives, it seems many orphan indications remain neglected. The standard pharmaceutical business model just does not adapt well to the development of orphan drugs. There are a few exceptions, but generally it is difficult to make a business case that it is financially worthwhile for profit-making companies to develop orphan drugs.
Delinking commercial incentives
The major problem seems to be that incentives are directed at a commercial benefit. This assumes that all orphan drugs would need to be developed through traditional corporate methods. Ideally, we need a way to address the gap between the commercially viable and commercially non-viable orphan drugs.
There is a method of removing the commercial incentive – through the use of social enterprise. A social enterprise does use commercial strategy, but delinks success from maximising profits, and so can therefore be structured as a non-profit company, typically running alongside a charitable foundation that can provide funding. A pharmaceutical company set up in this way would be much better placed to develop non-commercially viable drugs as it no longer has to focus on the commercial incentive. In this way, a social enterprise can make decisions and follow business plans that could cripple a profit-making company.
This idea is not drastically new. Genethon, based in Paris, France, is a non-profit biotherapy R&,D organisation created and funded by a patient group, L’Association Française contre les Myopathies (AFM), through the French Telethon, a Comic Relief style public awareness and fundraising campaign. Between its foundation in 1987 and 2006, the Telethon raised €101,472,581. In 2011, the non-profit Genethon had a budget of around €28 million, 87% of which came from the AFM. This charitable funding has allowed Genethon to advance to phase II studies of a promising gene therapy treatment.
“Ideally, we need a way to address the gap between the commercially viable and commercially non-viable orphan drugs.”
Genethon is an excellent example of this philosophy of using non-profits to develop the drugs that traditional pharmaceutical companies have deemed commercially not viable. However, due to its foundation by the AFM (a charity supporting muscular dystrophy patients) it is understandably focused on a single disease. Nevertheless, the idea underlying its success is powerful enough that it could be applied to any orphan disease. This is the concept that founded Findacure Development.
Findacure Development is a wholly owned subsidiary of the Findacure Foundation. Its mission is to bring treatments to patients for diseases which are not profitable for the existing biopharma industry. By using academia to promote basic research, and through the repurposing of drugs, a non-profit, such as Findacure Development, can develop commercially non-viable drugs through to marketing authorisation. Any drugs that are deemed commercially viable should be developed by industry as the traditional incentives would still apply for this subset.
Allowing non-profits to develop the drugs that traditional biopharma companies have left behind means a greater proportion of orphan drug designations should continue through to marketing authorisation and provide much-needed drugs to those patients who previously had little hope of treatment.
About the author:
Oliver has a Bachelor’s degree in Natural Sciences from Cambridge University, where he developed an interest in the public understanding of health sciences and so found the role at the AKU Society in science communication appealing. Since working here, he has seen the apparent inequality in rare diseases. They contribute a massive health problem, with millions of people in the UK suffering from diseases that most doctors have never heard of and have little hope for treatment. The scale of the problem is largely misunderstood and in an attempt to get some answers to the question why this is so, he is studying for an MSc in Health Policy at Imperial College London.
How can pharma address the gap between the commercially viable and commercially non-viable orphan drugs?