Rare diseases could be big business for the bio/pharmaceutical industry. A changing landscape in the healthcare and pharmaceutical industries is facilitating efforts to enhance the incentives for pursuing research and development for rare diseases. The development of orphan drugs traditionally was pursued by small biotechnology companies, but that is beginning to shift. The blockbuster model is eroding, many best-selling products are facing patent expiration, and companies are trying to diversify. One area being explored is the development of orphan drugs for rare diseases. The marketplace is going to continue to change, especially as healthcare in the United States continues to evolve, says Vincent Milano, president and CEO of ViroPharma. “The rare disease space and addressing unmet needs will be the centerpiece of future development," he says. “The United States has created an advantageous model for companies pursuing orphan drugs; companies receive a reasonable period of exclusivity to enjoy the benefits of success, which hopefully allows them to apply good return to shareholders. The orphan drug platform works because it starts with the patient and moves all the way through to the shareholder. Small companies, like ours, have developed a solid business model around this concept; no doubt the bigger companies will also realize there is a tremendous amount of value in connecting the patient to the shareholder." Jean-Jacques Bienaime, CEO at BioMarin Pharmaceutical, says the Orphan Drug Act has been a positive for the development of drugs to treat rare diseases. “It clearly made it easier for small companies, such as BioMarin, to get started, and the law created incentives to invest resources in R&D, especially when there is no guarantee of intellectual property protection at the end," he says. “The issue with human proteins, which is our focus, is that they cannot be patented. Without the Orphan Drug Act, BioMarin would have had difficulty attracting investors." While executives say the Orphan Drug Act has been successful in bringing some therapies to those with rare diseases, more needs to be done. The FDA has granted market approval to 350 drugs and biologicals with an orphan designation; there are an estimated 6,000 to 7,000 rare diseases. There is a great deal of conversation going on among the various stakeholders to determine how to encourage additional research in this area. In fact, U.S. regulatory officials, working with industry leaders, are trying to address some of the gaps in development for products for rare diseases. (Editor’s Note: See the digital edition for more on the changing regulatory environment for orphan drugs.) “We are in the early stages of putting committees together and are starting to develop the agendas where a number of the gaps and inconsistencies lie," says Peter Saltonstall, president and CEO of the National Organization for Rare Disorders (NORD). “NORD is developing a taskforce working with the FDA and the NIH to make sure that we do everything we can to smooth out the drug development process. At the same time, we want to make sure that there are consistent rules for everyone and the rules are clear. We are doing a lot of work to determine what we can do to encourage additional growth in the space by looking at how to make sure the process works efficiently." Regulatory agency officials recognize the challenges sponsors face, and their goal is to work with them. “Everybody recognizes that the collection of data on safety and efficacy for people with rare diseases is different," says Timothy Coté, M.D., director of the Office of Orphan Products Development at the FDA. “It’s more difficult in many ways than the provision of data for more common diseases." The Market Opportunities The global market for orphan drugs reached $84.9 billion in 2009, up from $80.3 billion in 2008. The market is expected to grow at a compound annual growth rate (CAGR) of 5.7% to reach $112.1 billion by 2014, according to a report from BCC Research. And some large pharma companies, including Johnson & Johnson, Merck, and Novartis, are already active in the orphan drug market. Recently, GlaxoSmithKline and Pfizer began to seriously address rare diseases. In February, GSK announced the formation of a new stand-alone unit specializing in the development and commercialization of medicines for rare diseases. The new unit aims to leverage existing capabilities and partnerships and establish further in-licensing opportunities. And in June, Pfizer announced the creation of a new research unit focused on rare diseases. Company executives say its creation within worldwide research and development represents a significant step in Pfizer’s diversification strategy. “Rare diseases are opportunities for our company," says Ed Mascioli, M.D., VP of orphan and genetic diseases research unit at Pfizer. “There are large, grossly underserved groups of patients." Dr. Mascioli says the unit is in the process of hiring key people, as well as evaluating diseases to tackle and is considering different technology platforms. “Pfizer has a strong presence in protein therapeutics and small molecules," Dr. Mascioli says. “Many rare diseases are amenable to protein therapeutics, and this is certainly a strength we’ll apply to development in this arena. We have a broad mandate in terms of the types of assets that we will apply to some of these diseases." Wendy White, founder and president of Siren Interactive, says the reason companies are now looking to bring orphan drugs to market is because of technology; there is now potential return for these products. “Companies know the era of the blockbuster is over, and they are looking at ways to diversify," she says. “Solutions for niche patient populations are good areas to explore. Less than 10% of rare diseases have treatments available, and 80% of these diseases are genetic in origin. In many cases, the cause of the disease is known, the patients can be diagnosed with certainty, and molecular targets are clear. Clinical trials can be small with clear endpoints, and the recruitment for trials is facilitated by expert physicians and patient groups." The number of orphan drug designations is increasing, reflecting this growing interest by pharmaceutical and biotech companies in developing products to treat orphan diseases, according to a study by the Tufts Center for the Study of Drug Development. There are 583 orphan drugs in active development; cancer is the leading indication, with more than 100 products in active development in the United States alone, according to a report from Business Insights. But executives whose companies are already in this space caution that developing drugs for rare diseases is a very specialized area with challenges of its own. Sylvie Grégoire, Pharm.D., president of Shire Human Genetic Therapies, says development of orphan drugs is a tailored process. “There are no standardized processes with a lot of these therapies," she says. “To compete with this business model, companies have to be flexible and nimble. They need to have skilled executives overseeing the work, people who are able to assess programs, make judgments, and use hands-on experience in operations." Dr. Grégoire says these development programs are very close to the patient, and at the moment, the expertise for successful development for products for rare diseases resides with smaller, more specialized companies. “Larger companies that want to compete in this space will have to be able to build these capabilities internally," she says. Mr. Milano agrees, saying treatments for rare diseases require much more one-on-one interactions with physicians and patients. “Larger companies have to be willing to think about development and marketing differently," he says. “It is not about leveraging the existing infrastructure, which is what big companies typically try to do. With rare diseases, companies need to build a very specific team dedicated to the task of serving a discrete patient population. A large infrastructure isn’t necessarily going to be as useful in these disease states as it is for the more traditional primary-care market. There needs to be a different mind set and an allocation of resources that serves the objectives of the patient populations, which is not the same as in the large-volume primary-care market." For Shire, it’s a business strategy the company developed through acquisition. “Shire is a specialty pharma drug company, but in 2005, we wanted to diversify from the existing specialty business and add something that was clearly unique that could differentiate us from other specialty pharma companies," Dr. Grégoire says. “TKT, which was acquired by Shire in 2005, was already working in rare diseases, and it had a human cell line enzyme replacement therapy. There is a lot of opportunity to grow this business model with the existing platform technology and provide a diversification of risk within Shire and for investors. This has allowed us to bring life-changing therapies to patients who have a high unmet need and to become global in nature. Shire didn’t have a worldwide presence previously. With the orphan drug business, we now have a presence in 28 countries." Challenges of Developing Orphan Drugs About $2.5 billion was invested in R&D for neglected diseases in 2007. The major funders were the National Institutes of Health and the Bill & Melinda Gates Foundation, according to a 2008 report from The George Institute. Almost 80% of the funding was directed toward three disease areas: HIV/AIDS, malaria, and tuberculosis. The next five disease areas, including pneumonia and diarrhea (No. 1 and No. 2 in terms of mortality), each receive from 1% to 5% of the total funds. Industry experts say the small patient population of these diseases is often the biggest challenge for developing orphan drugs. Dr. Grégoire says patients are often dispersed all over the globe, and they are not a homogeneous group. “All patients have a different course of their disease," she says. “To develop a drug in a reasonable amount of time, we have to refine the age group and inclusion criteria. For example, for the drug Elaprase, which is for Hunter’s syndrome, we had to conduct the trial in 17 countries, which lasted a year and a half. This included six months to recruit patients and then a year to do the trial." She says often patients have to travel — even to other countries — to be managed, diagnosed, or followed up with. “Patients could receive their infusion where they lived but then had to travel to a larger site for assessment," Dr. Grégoire says. “Assessments in 17 different countries would introduce variability that would go beyond the very small population." Mr. Milano says another challenge is that because there are no therapies available, clinical endpoints haven’t been established. “Regulatory involvement is critical in helping to establish criteria and ways in which these studies can be conducted, which is often different from the 10th cardiovascular or the 12th anti-infective for the same bug," he says. “It takes more ingenuity and a balanced approach between sponsors and regulators." Another challenge, Mr. Milano says, is once a drug or therapy receives approval, by the very nature of these diseases, patients may not be diagnosed yet. “One of the challenges that we all have is how meaningful is the business opportunity when there is no way to predict the numbers of patients who have, or may develop, the disease," he says. Pharmaceutical companies also have to consider that orphan drugs may have special handling requirements, says Craig Kephart, president and CEO of Centric Health Resources. “The typical product profile of these drugs involves infusion or injection, although we are starting to see more oral solids, and there may also be the need to comply with cold chain handling requirements," he says. “Also, many of these drugs may have associated REMS mandates from the FDA, so this adds a layer of complexity. Because of these requirements, companies need to connect with and follow every patient." Mr. Kephart says servicing these patients, keeping them on a drug, and keeping them in a treatment program over time is challenging. “Orphan drugs are expensive, and there is often a high reimbursement hurdle to overcome," he says. “There are still a lot of challenges around patient copays and deductibles. When the cost of a drug is $150,000 a year per patient, the way companies think about that patient has to change, including assumptions about the marketplace." Best Practices for Development Mr. Milano says the key success factors in the rare disease arena involve working with patient advocacy groups and key opinion leaders. “Many people might say these are the keys to success in every field, but these two influential stakeholders are even more important for the success of products for rare diseases," he says. “The numbers of patients are few, the distance between them is far, and the ability to be able to design a study that answers the question whether the drug has a benefit for these patients is that much more complicated." He says there are well-versed key opinion leaders in each rare disease state. “The key is to find out who they are and spend time with them to understand what might be the best chance for success in designing a study," he says. Dr. Grégoire says, in addition, trials for rare diseases require more careful monitoring. “For trials with larger populations, patient or trial site variability can be managed by volume," she says. “A best practice for orphan drug development is constant monitoring. These trials are not always placebo controlled so there has to be feedback on the mechanism of action, more so than in other trials." Hari Nagaradona, Ph.D., director of regulatory affairs at Kendle, stresses the importance of working with regulators before beginning clinical research for an orphan drug. “Many orphan drug developers are relatively small companies with relatively small financial support so planning ahead makes the process more efficient and saves companies time and energy in the long run," he says. “It can be disastrous for a company to head off down the wrong path only to find that the FDA has different expectations. Companies might have to repeat trials that they couldn’t afford in the first place." Dr. Nagaradona says it’s important to be clear about regulatory expectations for the orphan drug development process. “Sometimes there is a misunderstanding on the side of the sponsors," he says. “Companies might assume that obtaining an orphan drug designation means going through the regulatory approval process very quickly. This is not quite true; orphan drug status helps, certainly, but the drug development and approval process is comparable to any investigational drug." Ms. White says drugs for rare diseases require a different marketing strategy as well. “It makes no sense to push the message and do lots of advertising," she says. “It’s all about providing value for patients and supporting them to find information and to connect with each other." She says frequently the primary driver of diagnosis and treatment in a rare disorder is a patient or a caregiver, not the physician. “Often there is little information available for rare diseases, which means there is an opportunity for a brand to have a direct relationship with a patient," Ms. White says. “But there is a distance problem, so most of what should be done to market a product for a rare disease should be online. This is where people are talking, this is where people are finding their information, and this is where they are connecting with each other. These are empowered patients looking for information. If companies listen to how patients talk to each other and about what their greatest unmet needs are, then brand managers can meet thos needs through appropriate channels. And if brand managers can provide valuable information to them, patients will opt in for a relationship with the brand." Mr. Kephart says because the marketplace is moving aggressively toward value-based medicine, it’s not enough to show that a product has a therapeutic benefit. “Companies have an opportunity in these small markets because they can work with a more limited distribution where they can touch the patients," he says. “They have an opportunity to expand beyond just supporting a drug to supporting patients living with a rare disease." F PharmaVOICE welcomes comments about this article. E-mail us at [email protected]. Rare diseases could be big business for the bio/pharmaceutical industry. A changing landscape in the healthcare and pharmaceutical industries is facilitating efforts to enhance the incentives for pursuing research and development for rare diseases. The development of orphan drugs traditionally was pursued by small biotechnology companies, but that is beginning to shift. The blockbuster model is eroding, many best-selling products are facing patent expiration, and companies are trying to diversify. One area being explored is the development of orphan drugs for rare diseases. The marketplace is going to continue to change, especially as healthcare in the United States continues to evolve, says Vincent Milano, president and CEO of ViroPharma. “The rare disease space and addressing unmet needs will be the centerpiece of future development," he says. “The United States has created an advantageous model for companies pursuing orphan drugs; companies receive a reasonable period of exclusivity to enjoy the benefits of success, which hopefully allows them to apply good return… Sidebar: Orphan Product Designations More than Double Rare Disease Research Efforts Experts on this topic Jean-Jacques Bienaime. CEO, BioMarin Pharmaceutical Inc., which develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. For more information, visit bmrn.com. Timothy Coté, M.D. Director of the Office of Orphan Products Development, Food and Drug Administration, which is responsible for ensuring the safety of foods, cosmetics, human and veterinary drugs, biological products, and medical devices. For more information, visit fda.gov. Sylvie Grégoire, Pharm.d. President, Shire Human Genetic Therapies (HGT), a biopharmaceutical company engaged in the research, development, and commercialization of therapeutics for genetic diseases caused by protein deficiencies. For more information,visit shire.com. Craig Kephart. President and CEO, Centric Health Resources, a patient-centered health management organization, serving patients with rare, orphan, ultra-orphan, and chronic genetic disorders. For more information, visit centrichealthresources.com. Ed Mascioli, M.D. VP of Orphan and Genetic Diseases Research Unit, Pfizer Inc., which has a diversified global healthcare portfolio that includes human and animal biologic and small molecule medicines and vaccines. For more information, visit pfizer.com. Vincent J. Milano. President and CEO, ViroPharma Inc., an international biopharmaceutical company committed to developing and commercializing products for patients with serious diseases. For more information, visit viropharma.com. Hari Nagaradona, Ph.D. Director, Regulatory Affairs, Kendle, a global full-service clinical research organization. For more information, visit kendle.com. Peter Saltonstall. President and CEO, National Organization for Rare Disorders, which is dedicated to helping people with rare orphan diseases. For more information, visit rarediseases.org. Winifred (Wendy) White. Founder and President, Siren Interactive Corp., a firm focused on relationship marketing for rare disorder therapies. For more information, visit sireninteractive.com. We are developing a taskforce to work with the FDA and NIH to make sure we do everything we can to smooth out the drug development process for drugs for rare diseases. Peter Saltonstall National Organization for Rare ­Disorders We saw an opportunity for our company to develop needed drugs for rare diseases. There are large, grossly underserved groups of patients with uncommon diseases. Dr. Ed Mascioli Pfizer

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