Researchers have identified more than 7,000 rare diseases. A rare disease is one that affects fewer than 200,000 people in the United States.
Biotechnology and pharmaceutical companies don't often develop treatments for such small patient populations. Because of this, 95 percent of rare diseases have no available treatment options. The lack of treatment options creates a significant unmet need for the estimated 30 million Americans living with a rare disease.
What does orphan drug designation mean?
An orphan drug treats, prevents, or diagnoses a rare disease. Orphan drugs have limited uses because they are intended for niche patient populations. These drugs are expensive and time-consuming to develop. This offers little incentive for drug developers.
The U.S. Food and Drug Administration (FDA) passed the Orphan Drug Act (ODA) in 1983. The goal was to encourage new drug development for rare diseases.
Benefits of orphan drug designation for developers
Orphan drug designation allows developers to recuperate costs under the ODA. This encourages research into niche areas that may otherwise have no treatment options. The ODA also covers drugs that treat diseases affecting over 200,000 people if there is no commercially available treatment.
More than 500 drugs received orphan status since the ODA passed in 1983. Though 217 are no longer protected, only 116 have competitors. Lapses in patents lead to generic drug competition more often than ODE lapses lead to biosimilar competitors.
Market exclusivity for orphan drugs
Under the Orphan Drug Act, drugs are allowed market exclusivity for 7 years. No other company can develop a generic or biosimilar drug in that time.
A lack of competition gives developers time to profit from their unique drug. The small rare disease markets do not leave much room for profit. A 7-year exclusivity is a draw for researchers. In this way, exclusivity benefits patients that are otherwise overlooked.
Orphan drug costs
Price growth for orphan drugs peaked in the late 1990s and early 2000s, but evened out over the last decade. Growth of non-orphan drug costs actually outpaced orphan drugs from 2009 to 2017. Worldwide, orphan drugs make up one-fifth of total drug spending.
Rare diseases treated with orphan drugs
Of the 7,000 rare diseases that could be treated by orphan drugs, the five most common are:
- Cystic fibrosis
- Amyotrophic lateral sclerosis (ALS)
- Spinal muscular atrophy
- Huntington's disease
The first FDA-approved treatment for ALS was approved in December 1995. This drug, Riluzole, is now one of just three approved treatments for all forms of ALS. According to Definitive Healthcare data, Riluzole accounted for more than $1 million in payments in 2019 alone.
Access to medical claims data enables a deeper understanding of the pharmaceutical market. This data shows there are six FDA-approved drugs that treat cystic fibrosis. Two of these drugs, Orkambi and Kalydeco, accounted for over $200,000 in combined payments in 2019.
Identifying rare diseases with the fewest or most expensive treatments highlights new opportunities.
How to identify pharmaceutical market opportunity
Finding new orphan drug opportunities can be broken into three essential steps:
- Understanding the current orphan drug market
- Identifying high-cost drugs currently on the market
- Pinpointing your ideal patient population
Orphan drugs are developed for small patient populations, with few exceptions. But even with approved treatment, only 10 percent of rare disease patients use orphan drugs.
The biggest hurdle for most patients is getting diagnosed. On average, patients wait 4.8 years to receive an accurate diagnosis. Patients are likely referred to physician specialists who order a variety of tests and treatments.
Many of these interventions are ultimately unnecessary but cost valuable time and money. Rare disease specialists are often familiar with such complex patient journeys. These specialists can serve as key opinion leaders (KOLs) for drug developers.
KOLs can highlight ideal points in a patient journey for pharmaceutical intervention. Drug effectiveness can help spur patient diagnosis and lead to widespread drug adoption.
Platforms like Definitive Healthcare's PatientFinder allow drug developers to easily find their markets. Users can input combinations of symptoms and diagnoses based on information from KOLs. Drug developers can then target patients who are not diagnosed with a rare disease but show common symptoms or misdiagnoses.
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