Orphan Drug Development and Approvals Increasing

Two years ago, Amicus Therapeutics, Inc. chief executive officer, John Crowley, attended a Biotechnology Industry Organization board meeting in New York. The members were there to discuss the upcoming reauthorization of the Prescription Drug User Fee Act (PDUFA), but the conversation instead turned, at times, to the state of their companies.

At that time, research and development budgets were reduced, money from venture capital investors for the funding of new companies had declined, and FDA approvals had dwindled.

“We felt like we were sitting around listening to the violins playing while the Titanic was going down,” Mr. Crowley said. “It was such a crisis in the industry of innovation and a lack of risk taking.”

In February, speaking at the same hotel where that earlier meeting took place, Mr. Crowley was in a much more optimistic mood, as were others who joined him on a panel at the Bio CEO & Investor conference.

They were encouraged that the FDA had approved 39 drugs in 2012, the most since 1997, and 21 and 30 drugs in 2010 and 2011, respectively.

Of the 39 approvals, several were for orphan drugs intended to treat rare diseases. The FDA designates orphan status to a drug that treats a disease or condition affecting <200,000 people in the United States or if development of the drug would cost more than any revenue generated from sales of the drug. 

In 1983, Congress passed the Orphan Drug Act after determining companies were reluctant to develop drugs to treat rare diseases, which only affect a small number of people, because the products may not generate enough sales to offset the development costs. The government opted to provide incentives, such as lowered taxes, to encourage companies to research those medicines. Since passage of the Act, >400 drugs have received an orphan designation.

In July 2012, the government signed into law the Food and Drug Administration Safety and Innovation Act (FDASIA), the fifth authorization of PDUFA, in which the FDA collects user fees from companies to fund reviews of their products.

Alvin Shih, MD, chief operating officer of Pfizer’s rare disease research unit, predicted that the FDA will respond to mandates in FDASIA by emphasizing patient-focused drug development, in which the agency will consider the severity of the condition and the current treatment options for the disease.

Orphan drugs are expensive, but they account for approximately 10% of drug costs and 1% of healthcare costs in the United States, according to Mr. Crowley. Dr. Shih said that even though payers are concerned with the safety and efficacy of orphan products, they are also focused on the products’ cost effectiveness.

“I think it is becoming clear that just having an orphan designation does not mean a ‘Get Out of Jail Free Card’ in terms of pricing anymore,” Dr. Shih said. “We really do have to focus on those things that are innovative and address clear unmet needs.”

Aegerion Pharmaceuticals, Inc. chief executive officer, Marc Beer, said payers are paying attention to the rising prices of orphan drugs. Mr. Beer and the company’s executives visited 85% of the health insurers in the United States before the FDA’s December 2012 approval of lomitapide.

Mr. Beer said payers will reimburse the orphan drugs if they are prescribed on-label and if the product’s efficacy matches the data from the phase 3 trial. However, he added, small- and medium-sized insurers are more diligent about whether to restrict orphan drugs and take a longer time to determine whether the product requires prior authorization.

“[The heads of pharmacy and medical benefits for the payers] knew the data of our program – they were so prepared for the meeting,” Mr. Beer said. “It really blew me away because it has been several years since I have launched an orphan product. The evolution of the payer tracking, the data of orphan products coming down the pipeline, and their knowledge of the disease and efficacy was remarkable.”