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European Biopharmaceutical Review

An Age of Orphans

Emerging science, new policies and the changing environment for reimbursement are driving a transition from ‘one-size-fi ts-all’ blockbuster drugs to niche products

When Pfizer’s $13 billion-a-year cholesterol drug Lipitor lost patent protection at the end of 2011, many viewed it as a symbolic end to the blockbuster era. In fact, 2012 represented the steepest part of the patent cliff as drugs with an estimated $33 billion in annual sales lost patent protection, opening them up to competition from generic alternatives. Lipitor, the biggest selling drug of all time, benefi ted from an army of as many as 38,000 salespeople and a marketing budget in excess of $3 billion a year at its peak.

However, for most patients, the drug was of limited benefit. In fact, as press reports noted, while Lipitor reduced the risk of a heart attack by 36 per cent, clinical studies showed that three per cent of patients in a control group using a placebo died of a heart attack, compared to two per cent of patients in the study using Lipitor. Further studies of Lipitor and other statins suggest that they only benefi t a limited number of patients at best; so the question remains – how can we tell which ones work ahead of time?

Making Substitutions
Pfizer has a lot of work ahead to find new drugs that can replace the revenue that Lipitor has lost to generic competition. In the fi rst quarter of 2012 alone, sales of the drug dropped by 71 per cent. Among the drugs that will be fi lling the gap for Pfi zer are Xalkori, but don’t expect it to capture millions of users as Lipitor did. The Food and Drug Administration (FDA) approved Xalkori in 2011 to treat certain patients with late-stage, non-small cell lung cancers who express a mutated anaplastic lymphoma kinase, or ALK, gene. Only about fi ve per cent of patients with non-small cell lung cancer, or about 9,000 people a year with the disease, have the mutation. Xalkori was approved with a companion diagnostic test that will help determine if a patient has the abnormal ALK gene.

Even though Xalkori will never gain as many users as Lipitor has, it is still expected to reach impressive sales levels. In fact, Xalkori is projected to become a blockbluster drug with peak sales of $2.5 billion a year. The drug costs $9,600 a month or $115,000 for patients who use it for a year. As pharmaceutical companies face increasing pressure from payers and regulators to establish the value of their products, they have come to embrace orphan indication – indications with 200,000 patients or fewer in the US – not just by targeting rare disease, but through targeted therapies for the sub-populations of a disease.

As payers increasingly demand proof of value for new therapies, and regulators seek greater certainty about the safety and efficacy of drugs, drug developers are focusing more on drugs that address unmet medical needs as a better route to clinical, regulatory and economic success. The blockbuster era is not dead. It is only the era of the ‘one-size-fi ts-all’ blockbuster that is coming to an end.

Mass Versus Niche
A 2012 study in Drug Discovery Today from Thomson Reuters and Pfi zer makes a strong economic case for pharmaceutical companies to develop drugs for rare or orphan diseases. The financial incentives put in place to encourage the development of drugs for rare diseases, such as the US Orphan Drug Act 1983, provide tax breaks, R&D offsets, R&D grants, waived FDA fees, accelerated approval, and an extended period of exclusivity. Orphan drugs can also generally command higher prices than drugs for non-orphan disease. As personalised medicine redefi nes diseases by their underlying molecular mechanisms rather than their outward manifestations, it is breaking disease groups into smaller sub-populations, turning one-time broad diseases into sub-types that by defi nition constitute rare diseases.

Commenting on the rare diseases sub-sections, Kiran Meekings, lead author of the Drug Discovery Today study and life sciences consultant at Thomson Reuters, says: “We’re not just talking about the typical rare disease; what we are also talking about are the emerging sub-diseases. You can take something like lung cancer; whereas before it might have been regarded as one cancer, typically pharma would try something to stick into lung cancer, [but] now it’s being talked of as 15 or 20 individual, small sub-diseases.”

She adds: “If we look at crizotinib [Xalkori], approved last year, that is an orphan drug because it is targeting a very small population of a larger disease. This type of patient stratifi cation or more personalised medicine approach is actually opening up new markets, which are smaller populations of larger diseases.”

The Thomson Reuters study found that orphan drugs represent “an increasingly important component of the pharmaceutical market and have equal revenue-generating potential to nonorphan drugs.” The authors state that orphan drugs make up 22 per cent of total drug sales, and that the cumulative annual growth rate of the orphan drug market totalled 25.8 per cent between 2001 and 2010. Compare that to a 20.1 per cent annual growth rate for the matched non-orphan control group.

In fact, the study found that the mean annual economic value of orphan drugs, in 2010 terms, reached $637 million, compared to $638 million for non-orphan drugs. While the value of non-orphan drugs remained roughly constant between 2000 and 2010, the value of orphan drugs nearly doubled during that period. The study found that the higher prices, increased market share and longer exclusivity afforded to orphan drugs that reached high unmet medical needs could offset the fact that they are targeting smaller patient pools.

Legislative Push
Helping support the pharmaceutical industry’s embrace of rare disease drugs and targeted therapies are new incentives contained in the US Safety and Innovation Act, which reauthorises the FDA to collect user fees from industry to fund drug reviews. The big winner in the Act may have been the rare disease community, which saw a list of pending bills forged by patient advocates folded into the fi nal legislation. Rare disease advocates succeeded in getting five separate pieces of legislation approved, aimed at creating incentives for drug companies to develop new therapies for rare diseases, speed up the regulatory review process, and allow a greater role for patients in FDA discussions about the review of medical products.

The success of the rare disease community in its legislative push is credited to a well-coordinated grassroots campaign involving a wide range of organisations advocating for specifi c rare diseases and the involvement of a large number of people from the patient community. The effort included an email campaign from patients to members of the US Congress as well as a lobbying day organised by the Rare Disease Legislative Advocates – a collaborative group that supports rare disease advocacy – which brought 70 patient advocates to the nation’s capital in support of the legislative initiatives.

Accelerated Approvals
The provisions folded into the legislation included the creation of an incentive for drugmakers to pursue rare disease drugs. Under the Act, companies that bring a rare disease drug to market are granted a voucher that provides accelerated FDA review of another drug, an incentive that could be worth hundreds of millions of dollars for large-market drugs. The legislation also includes language to provide for accelerated approval of treatments for rare diseases by allowing the FDA to use surrogate endpoints for determining the efficacy of a drug.

In addition to this, it directs the FDA to ensure that rare disease experts have greater input into the FDA review process, making it easier for staff to access such experts to help them understand the risks and benefi ts of therapies under review. At the same time, the legislation pushes the FDA to increase its engagement with patient advocates in reviewing medical products.

While the number of product approvals for the last decade has increased by only 15 per cent over the previous 10-year period, the number of orphan drug designations has grown at a much faster rate, according to a Burrill & Company analysis. There were only 650 orphan designations between 1993 and 2002. This number increased to 1,500 during the last 10 years. Today, the FDA issues 150-200 such designations annually, and nearly half of the new drugs approved by the FDA in 2013 had orphan drug status.

Branching Out
Though biotechnology and speciality pharmaceutical companies continue to be the richest sources of orphan drugs, there are indications that Big Pharma has embraced the area of rare disease and orphan drugs. That can be seen by such events as Sanofi’s $20.1 billion acquisition of Genzyme in 2011, and the establishment of rare disease divisions within leading Big Pharma companies.

Some companies, such as GlaxoSmithKline, see orphan drugs as buffers for downturns during the business cycle, at least for now. Mike Diem, director of business development for GSK’s rare diseases unit, was quoted as saying that the immediate goal was not to replace blockbusters with orphan drugs, but to provide stable revenue: “If you have 10-15 orphan diseases in the portfolio, you can weather the business cycle quite well,” he said. Currently, GSK lists only three orphan clinical programmes in its portfolio.

Other companies, such as Novartis, view the area with greater potential. Novartis knows that orphan drugs can be profitable. Its chronic myelogenous leukaemia drug Gleevec was first approved in 2001. Over the next 11 years, Gleevec was approved for an additional six rare oncologic indications, establishing a lucrative franchise. Novartis generated $4.6 billion in Gleevec revenue in 2011.

Rather than viewing rare disease as merely a buffer, Novartis has integrated rare disease research into all of its R&D, according to Mark Fishman, president of the Novartis Institutes for Biomedical Research. Novartis is currently targeting more than 40 rare diseases, and discoveries made in the orphan setting are expected to pay dividends for indications that are more common. Fishman points to the example of Afinitor, which was approved in 2009 for treating advanced kidney cancer. Similarly to Gleevec, Afinitor has since been approved for a number of other indications: prevention of organ rejection (2010); astrocytoma associated with tuberous sclerosis (2010); progressive or metastatic pancreatic neuroendocrine tumours (2011); and hormone-receptor-positive, HER2-negative breast cancer (2012).

Pfizer is also putting great effort behind its rare disease drug development work. The company’s Orphan and Genetic Disease Research Unit is actively seeking academic or commercial collaborations in at least 11 target areas. Not surprisingly, it is interested in chaperones and other modifiers of protein trafficking, misfolding or degradation, as these mechanisms appear to be common among a number of orphan diseases. Finding a method to reverse the course of one condition may lead to a solution for another. Pfizer may see a larger potential pay-off in orphan drugs. By tackling, for example, Huntington’s disease, a modifying therapy may be found for a disease such as Alzheimer’s – a condition far from being orphan, with more than five million affected Americans.

That’s a big lure: developing drugs for small markets with unmet medical needs can provide a pharmaceutical company with a faster path to market, as well as a greater chance of winning regulatory approval, premium pricing and minimal competition. The potential to expand indications for these drugs, though, can unlock even more lucrative markets ahead.

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G Steven Burrill has been involved in the growth and prosperity of the biotechnology industry for more than 45 years. He is currently the Chairman of AliveCor and serves on the board of directors of Catalyst Biosciences, Depomed, NewBridge Pharmaceuticals, Novadaq Technologies, Targacept, and XDx. He has received the Richard Bolte Sr Award for Supporting Industries from the Chemical Heritage Foundation, a Lifetime Achievement Award from Scrip, the BayBio Pantheon DiNA Lifetime Achievement Award for his biotech leadership worldwide, and the Alan Cranston Living Legend Award for advancing biomedical research globally. In 2002, he was recognised as a biotech investment visionary by Scientific American magazine.
G Steven Burrill
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