The “Rare” Or “Orphan” Disease Market Opportunity
Rare diseases affect 30 million people in the USA. And more than 300–400 million worldwide. They often cause chronic illness, disability, and premature death… A large number of rare disease patients [estimated 65-75%] remain undiagnosed for years and many even die without an accurate diagnosis.
“Orphan Drugs” are defined as drugs with a target patient population of less than 200,000 people or more than 200,000 people, but with a finding that research and development costs are unlikely to be recovered. They are usually developed to treat rare diseases.
For developers of orphan drugs for rare diseases, this determination is made at an early point in time when estimates of total market size are least known. But, it isn't reversed if subsequent work by the drug manufacturer and other stakeholders in the distribution chain uncover broader opportunities to recover R&D costs. Title 21, section 316.29(c) of the US Code provides that a drug designated as an orphan drug because its patient population is less than 200,000 does not lose that status if the target patient population exceeds 200,000, as long as the applicant for such status did not omit or misstate any material facts in the application process.
Total approved orphan indications, since the passage of the Orphan Drug Act (1983), reached 838 by the end of 2019 and were awarded to 564 distinct drugs.
Certain rights attach to orphan drugs, among them are:
7-year exclusivity in marketing after FDA approval
25% tax credit for expenses incurred after orphan designation
Exemption from user fees
Clinical trial subsidies
Congress wants to help patients with orphan conditions. And wants to make sure that pharmaceutical companies are properly compensated for development of orphan drugs.
Insurance payers and self-insured employers health plan costs are skyrocketing. Between 2010 and 2019, orphan drugs rose from 6% to 11% of all invoicing from pharmaceutical companies.
Orphan drugs average $32,000 and ⅓ cost more than $150,000 per patient. Many have multi-year costs well in excess of these totals.
Payers are starting to increase co-pays and deductibles. Fewer patients can afford these, especially as health plans raise co-pays and deductibles to keep annual premium increases lower.
Patients are trying to access pharmaceutical company Patient Assistance Programs, which puts the burden back on the pharma companies to foot the bill for lower-income patients. Approximately 36 million Americans have accessed Patient Assistance Programs over the past decade.
Pharmaceutical companies suspect that health plans are “gaming the system” by pushing more patients onto Patient Assistance Programs to relieve themselves of financial liability for increasingly expensive treatments. There are websites which provide health plans and patient assistance.
WhileI assessing future revenue opportunities, we looked at the risks of price controls by Congress on pharmaceutical companies. Another risk factor is more aggressive (Congressionally mandated) access to Patient Assistance Programs.
The impact of these factors could increase if Democrats retain control of Congress, especially in our current hyper-inflationary times. Data from organizations like PhRMA would give us the best visibility on whether the industry feels a particular threat from price controls.
In a Congressional election year, the likelihood of legislation of this magnitude is low, but the composition of Congress after the midterms will determine whether this is a longer-term threat. Several members of the MakeUSWell Network who work actively on health policy issues give us an in-depth understanding of the prognosis for pharmaceutical price control legislation.
Some patients turned down by pharmaceutical companies are turning to “medical crowdfunding” platforms. This is a new and underdeveloped, but growing market. Gofundme.com is one of the larger crowdfunding platforms for this phenomenon. And many are also adding their payment information on Instagram, TikTok, and Twitter.
Revenue Opportunities For Pharmaceutical Companies Considering Development Of Orphan Drugs
Awareness regarding such diseases is essential to train clinicians to diagnose individuals affected with these disorders and to develop National/International Registries, which will serve to give information about the disease prevalence, its natural course, treatment, and management options available to the medical fraternity.
Five ways to assess and increase market opportunity for orphan drugs are:
Do broad-based physician education to get them to recognize conditions for which an orphan drug may provide a solution. Cancer and genetic disorders are areas where orphan drugs are used most.
Create or more effectively market disease registries to increase the known targeted patient populations.
Tap more genomic medicine testing to identify undiagnosed orphan diseases best identified through genetic testing.
Partner with orphan disease advocacy organizations.
Develop better and broader data sources that, while imperfect, are improvements over data sources used today. Examples:
Take estimates from other countries with more advanced earlier diagnostic and treatment capabilities for the particular rare disease and apply them to the United States.
Spot misdiagnosis patterns from diseases, where data exists. The National Commission on Orphan Diseases estimates the frequency of misdiagnosis of rare diseases is over 50% today, higher than it was in 1989, so the opportunity is growing if misdiagnoses can be reduced. For example, osteoporosis is a credible, but wrong diagnosis for many afflicted with Gaucher disease, a rare disease. The question is: how many osteoporosis cases end up as Gaucher disease cases? That single data point can help define a larger market for an orphan drug.
Identify opportunities to prescribe safe, effective off-label drugs to children diagnosed with the same rare disease as adults for whom the drug is already approved and effective. For example, Tumor Necrosis Factor inhibitors (TNF) are used to treat severe inflammation, a major symptom of Juvenile Idiopathic Arthritis. Drugs approved for adults with idiopathic arthritis are considered “off-label” for children, because they have not been tested in a clinical trial with children. Getting clinical trials done with children is so complicated that most pharmaceutical companies do not attempt it. Basic tests, such as blood and urine tests, are more difficult to administer to children. After age 7, children must separately consent; if they refuse to do so, parental consent is inadequate to enroll them in a trial.
Expensive Specialty and Orphan Drugs
Who Pays For Expensive Speciality And Orphan Drugs?
Health plans try to shift more of the responsibility to pharmaceutical companies’ Patient Assistance Programs.
Pharmaceutical companies want health plans to have better coverage for patients with conditions that require expensive specialty or orphan drugs.
Health Policy Issues On Rare Diseases
From a policy standpoint, 30 million Americans have rare diseases, but the cost to develop treatments under the orphan drug legislation and regulations is far greater per patient than the cost to develop treatments for more common conditions. That is why the Orphan Drug Act provides not only a 7-year period of marketing exclusivity, but other financial incentives and subsidies for orphan drug developers.
Health Equity Issues
Americans of Black and Hispanic race/ethnicity die of more rare diseases. It is unclear whether these demographics have a higher disease incidence rate or whether they are less likely to be treated. So these are variables we want to analyze including Metropolitan Statistical Area and zip code data.
For example, acne inversa—long considered a rare, but debilitating, disease—has a 1.3% prevalence among Black Americans, versus .75% for White Americans and .07% for Hispanic Americans.
Part of the opportunity for developers of orphan drugs is to focus on underserved lower income Black and Brown populations, which likely are not getting diagnosed and treated for conditions like this as quickly as they should be. Although it was considered a “rare” disease, evidence is mounting that it is still under-diagnosed among sub-segments of these demographics.