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A new report on orphan drugs poses an intriguing question about drugs that aren't orphans. When the US and the European Union introduced their legislation to promote orphans, it was assumed that the incentives for drugs for common diseases were economically sufficient. But, asks Anthony Raeside, the principal author of the report: "Is this still the case? There is certainly the need for mass market drugs to combat problems such as drug-resistant infections, but with the development of drugs for large disease populations now costing potentially billions of dollars, will big pharma take on the risk?" In other words, we may well, he suggests, require new legislation to incentivise treatments for common diseases. At a time when the potential of personalized medicine is increasingly flagged up - but when business models for developing them are increasingly conspicuous by their absence, the question is germane.
Certainly, the report confirms the hypothesis that orphan drugs currently offer a greater return on investment than non-orphans. The current stock of Phase III/ Filed orphan products is expected to yield a return on investment of x10.3, compared to x6.0 for non-orphans, it calculates. The better return is attributed primarily to the fact that orphan drugs require a median phase III trial size of 528 patients, against 2,234 for non-orphans. It calculates the average phase III cost for orphans at $85 million, less than a half of its estimate of $186m for a key phase III trial. In the US, a potential 50% tax credit can reduce the orphan cost to $43m.
The report - "Orphan Drug Report 2013", from EvaluatePharma - estimates that the worldwide orphan drug market is set to grow to $127bn by 2018, at a compound annual growth rate of +7.4% - double that of the overall branded prescription drug market. This will give orphans a market share of 15.9% of the market by 2018, up dramatically from the 5.1% they represented twenty years ago. And much of the growth will come from the US.
Meanwhile, however, in Europe, the attractions of orphan drug designation that correspond to US tax breaks have recently become a contentious issue. Since Europe introduced its own orphan drug rules in 2000, it has offered reduced fees for handling authorisation applications at the European Medicines Agency - until this year, when the advantage was restricted to smaller firms. Many big pharma firms objected vigorously, arguing that their incentives were being eroded. But the agency is standing firm. It has told big pharma that it has little choice at a time of budgetary austerity. However, in a small concession, the agency has recognized the importance of providing incentives to orphan medications to increase research and development, and has agreed to give due consideration to the concerns expressed by big pharma at the next review of fees.
This poses another question. While Europe is at risk of falling behind in orphan development, is European drug development also going to be further disadvantaged if the idea of a ‘Common Disease Drug Act’ takes on any momentum in the US?