Orphan drugs, as their name suggests, are those for which the disease or disorder they are designed to treat is estimated to affect a small number of individuals, so the conditions often have a dearth of treatments, and the drugs exist alone in relative isolation.

A soft definition would be:

Orphan: ȯr-fən – Referring to the loss of a relative advantage.

In this case, what’s the relative advantage? According to NIH National Cancer Institute:

“An orphan disease is a rare disease or condition that affects fewer than 200,000 people in the United States [or about 6 cases per 10,000 population]. Orphan diseases are often serious or life threatening. In 1983, the U.S. government passed a law, called the Orphan Drug Act (ODA), to give drug companies certain financial benefits for developing orphan drugs that are safe and effective.”

So, the relative advantage is a lack of a large patient population, compared with other drugs’ targets. By lacking this large patient population, the Orphan Drug Act leads to some clear advantages for Sponsors.
According to the FDA, orphan drug designation qualifies sponsors for incentives including:

• Tax credits for qualified clinical trials;
• Exemption from user fees; and
• Potential seven years of market exclusivity after approval.

In Europe, things are a bit different, and haven’t been harmonized. The European Medicines Agency (EMA) defines a drug as “orphan” if it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically and seriously debilitating condition affecting not more than 5 in 10,000 EU people. The EMA also qualifies a drug as orphan if, without incentives, it would be unlikely that marketing the drug in the EU would generate sufficient benefit for the affected people and for the drug manufacturer to justify the investment.

The orphan drug landscape
When you look out across the vista of orphanity, it doesn’t actually look too lonely—contrary to what the name would have you believe. There are hundreds (>900, in fact) of orphan drug therapies currently under evaluation in various stages of the clinical trials process. In fact, 5,100 drugs (including biologics) have received orphan drug designation. Associatedly, five hundred and seventy indications for orphan drugs have been granted. The top therapeutic areas for orphan drugs are well carved-out as:

• Oncology
• Neurology
• Infectious diseases

The fastest growth therapeutic area for orphan drugs has continued recently to be pediatric indications of various sorts, and will likely continue.

Some types of treatment that exist within the orphan drug space include:

• Cystic Fibrosis – the first drugs to treat CF were developed with help from the ODA;
• Familial Hypercholesterolemia – which won a Nobel Prize in 1985 and led directly to the development of statins, and in particular rosuvastatin (Crestor);
• Wilson’s Disease;
• Phospholipase 2G6-associated neurodegeneration; and
• Transthyretin-related hereditary amyloidosis – an interesting footnote for this treatment is that the RNA lipid nanoparticle delivery system was later used for Pfizer-BioNTech’s and Moderna’s COVID-19 vaccines.

Orphan drugs on the regulatory chessboard
Two reasons why orphan drugs have a sort of regulatory advantage: Naturally smaller and less extant competition. Because of this, the cost of clinical trials for orphan drugs is substantially lower than for other diseases. Clinical trial sizes are naturally much smaller than for more diseases with larger numbers of patients. That, coupled with minimal competition place orphan agents at an advantage in regulatory review.

The upside at commercialization has been, however, that by Sponsors pursuing multiple indications in recent years, orphan drugs have been able to be used by more patients in need; Just this year, more than 90% of cystic fibrosis patients are eligible for medicinal therapies to target their condition, whereas in 2013, only about 5% (1 in 20) were eligible for these treatments.

Getting these treatments to market has involved high-profile philanthropic funding, as well as tax incentives on orphan drugs to reduce the cost of development. What do these incentives look like? Tax credits of up to 50% of R&D costs, R&D grants, waived FDA fees, and protocol assistance. Some Sponsors may also qualify for clinical trial tax incentives. CBS News reported back in 2015 that the price of orphan drugs, such as eculizumab, was not related to research, development, and manufacturing costs, and that their price is arbitrary and that they have become more profitable than traditional medicines.

If we look at the public spending on orphan indications, they accounted for approximately 11% of the United States’ $518 billion in invoice billing in 2019 (IQVIA, 2021). If orphan drugs represent 11% of drug spend, that isn’t in concurrence with the idea of ‘rare’; This is one dollar for every 9 dollars spent on medications across the nation. In addition, orphan drugs aren’t typically inexpensive as individual treatments, either. Thirty-nine percent of the invoice billing was for orphan drugs that cost more than $100,000 per annum (xbar ~ $32,000, which is itself about six times that of non-orphan drugs). Biogen’s Spinraza (for spinal muscular atrophy, SMA), for example, can cost up to $700,000 per year.

Pandemicity’s effect on orphanity
As with everything else in our collective medico-social universes, the COVID-19 pandemic has also dramatically influenced uptake and use of orphan drugs (in a mostly negative way), where new prescription starts are down 20% compared with prior to the pandemic. This represents about 50,000 new therapy starts which never took place, negatively impacting the long-term prognosis from the orphan disease population. As the immunized in the population begin to attenuate new cases of COVID-19, patients will feel more comfortable seeking care for other critical conditions for which they’ve been deferring treatment.

What’s next?
As patients begin to resume their treatment in a post-pandemic world, and more-and-more therapies move through clinical trials, FDA’s Office of New Drugs (OND) has reorganized to create some efficiencies to debottleneck the regulatory process. Over the next several years, the seeds planted in the clinic within the major therapeutic areas mentioned above (oncology, neurology, infectious diseases) will begin to disproportionately reap approvals, compared with other therapeutic areas. These are, therefore, investment areas, but expanded indications also will make existing therapies more competitive in the market and also more lucrative for developers.

Governmental committees have met on and challenged notions of orphan drugs and rare diseases over the past couple of years, though sweeping changes are not nearly developed nor will they be any time soon, especially given the current Presidential Administration’s quagmire on drug pricing discussions. Rest assured that in the meanwhile, the free market economy will continue to allow demand elasticity to help establish pricing, along with other controls, and those drugs which are in clinical trials now will continue on their persistent march through the Phase 1-Phase 3 process for new drugs.

In this way, the future looks very much like a reflection of the present—or the recent past. For those with rare diseases, who have been more effectively and better treated the last few years because of novel therapies on the market, this is a very good thing indeed.

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Ben Locwin
Contributing Editor, Healthcare Futurist, Public Health Task Force Member

Ben Locwin has been providing guidance to companies with orphan status drugs for over a decade, as well as working closely with investors on the future of medicine. He has worked on the discovery and development of new molecular entities for rare diseases, and seen several of these drug therapies get approval to market. He has frequently been quoted by The Wall Street Journal, Forbes, USA Today, Der Spiegel, The Associated Press, and other top-tier media.