With small patient pools and high investment costs, pharmaceutical companies say more incentives are needed to investigate pre-existing drugs and bring about research into rare diseases
With orphan illnesses affecting 30 million people in Europe alone, US and European regulators wish to reward drug companies conducting research into rare illnesses by granting orphan drug exclusivity (ODE) to their medications. To qualify for the ODE status, the illness must be life threatening or cause chronic debilitation and affect fewer than five in 10,000 people.
To encourage research into these rare diseases, pharma companies that bring orphan drugs to market are awarded 10 years of market exclusivity in Europe and seven in the US. This exclusivity begins with marketing authorisation, and can run in parallel to a patent.
But even with the ODE, pharma companies find there is not enough incentive to pursue all the needed research into rare diseases, and that market exclusivity alone cannot compensate companies for their investment.
“Market exclusivity is not really great protection, it is not as robust as you might think,” says the deputy counsel for a pharma innovator company in the US.
One reason ODE protection is not significantly robust is that generics companies usually do not want replicate rare disease medications because of the high investment costs and low returns. With or without market exclusivity, as such, many of these drugs would not face significant competition, which undermines the purpose of ODE protection.
Sources say different IP protection covering second medical use research could be a better way to encourage drug companies to conduct the necessary research into rare diseases.
“There is a fair amount of evidence that the drugs we’ve already got might be useful for these rare diseases,” says the head of IP at a pharmaceutical company in Switzerland. “But it is very difficult, even with the regulation, to incentivise the investment necessary to take an existing drug, even one that is patented, and then re-purpose it for a rare disease.”
“It’s a little bit of a challenge for doctors and researchers who can see potential in an existing product that could benefit these populations, but nobody wants to invest,” he says.
The reason he explains is that with very small patient pools, it can be expensive and time consuming for companies to conduct all the necessary trials. It would also be difficult to protect a second medical use of a rare disease for an off-patented medication.
“It is a real dilemma to take a known medication and repurpose it for a rare disease because you are asking the patient to pay one price for the off-patent indication and to pay a higher price for a different condition,” says the head of IP. “This requires the payer to buy into the concept that they are paying the price to help fund future research into orphan illnesses.”
Drug companies that do obtain ODE protection for their medications also do not always get an adequate return on investment (ROI). Small patient pools lead to higher drug prices because with fewer buyers there is less opportunity to make back the cost developing the drugs.
“High drug prices on orphan drugs are driven by the cost that goes into making the drug and the fact that the opportunity to get a return on investment is limited,” says the US-based pharmaceutical deputy counsel.
The most expensive drug on the market is for an orphan disease. Zolgensma from Novartis, which is used to treats infants with spinal muscular atrophy, costs $2.125 million per treatment because, while the disease is the leading genetic cause of death for infants, it only affects one out of every 10,000 babies.
Despite the lifesaving capacity of drugs such as Zolgensma as well, pharma innovators face hurdles getting them approved by national health insurers because of their high cost. Organisations such as the National Health Service (NHS) in the UK may choose to invest in more common treatments that cost less and can be used to treat more patients rather than therapeutic products that take up a large chunk of the budget and treat far fewer people.
“It can be difficult to impossible for the patient to afford it. Those prices are reimbursed by the national authorities meaning the patient doesn’t have to pay that price,” says the senior patent counsel for a pharma innovator in Sweden.
Part of the explanation for outlier high prices is that one drug has to compensate for all the research costs for extremely rare diseases. The pharma head of IP explains: “It’s not always the case that the product will make back what it costs to develop and bring it to market. There are some products that overcompensate, and then overall we are able to run a business.”
As an added incentive to encourage research, the European Commission grants an extra two years of ODE to companies that conduct paediatric research. But even though 50% of patients with rare diseases are children, the FDA reported 31% of orphan drug approval between 2000 and 2017 included paediatric indications.
Finding the correct IP protection and financial incentives to encourage more investment into orphan illnesses is a challenge for policy makers. Better protection of second medical use patents could be one way forward.
“I’m not sure there is any easy solution to this other than private and public organisations working together, as well as perhaps tax breaks,” says the head of IP.
Money aside, pharmaceutical companies are in the business of developing medications for sick patients who would otherwise not have access to lifesaving medications.
“It is important to cure rare diseases, because without taking our product many of these patients would die. For example, a premature child at birth can now get treatment, so it is very mentally rewarding,” says the senior patent counsel.
To that end, orphan drug development will inevitably continue – but perhaps not at the same pace as drug companies and national administrative bodies would like, unless better incentives are established.