Orphan drugs and why everyone wants one!

One of the joys of working on the PII (IDEA Pharma’s Pharmaceutical Innovation Index; more details at the end of this article) is looking at the best ranked companies and their products and realizing just how many of their products IDEA had significantly influenced in terms of positioning or optimal path-to-market programs.

Then, on reading an article on orphan drugs, I realized how much of an overlap there was between that list and the best-selling orphan drugs. This was particularly surprising to me as when I moved from sales management into marketing (in the 80s), orphan drugs was NOT where you wanted to work. High unmet needs, yes. But high risk, low patient numbers, lack of interest from senior management: I wanted to work on the blockbusters!

Spooling forward, the projected list of top-selling orphan drugs by 2022 includes several agents that I suspect you might not even realize are orphan in status, including Revlimid ($13.5 billion sales in 2102)), Opdivo (11.1), Imbruvica (8.2), Keytruda (8.0), and several others.

Several other drugs are technically “orphan” as their indications include rare or orphan diseases. Would you normally regard the likes of Avastin, Enbrel, Herceptin, Humira and Remicade? No, as the convention, certainly from a sales analytic viewpoint, is that an orphan drug should have a rare or orphan disease as its first licensed indication, and that rare or orphan diseases should total more than 25% of their sales. But as we’ll see, orphan indications can form an important part of the development program for otherwise non-orphan drugs.

Next up, how do we define a rare or orphan disease? It’s done on the basis of the number of patients with a particular rare disease or disorder:

  • Prevalence: number per 10,000 of population: US <6.36, EU <5.0, Japan < 4
  • Giving patient populations of US <200k, EU <250k, Japan <50k

(Legislation first enacted in US in 1983, Japan 1993, EU 2000)

Given that orphan drugs used to carry greater R&D cost, and a higher risk, than non-orphan drugs for potentially small patient populations, it is to the credit of legislators world-wide that they have done so much to encourage their development, including:

  • Market exclusivity – 7 years from approval in the US, 10 years in the EU
  • Reduced costs for R&D (only showing US incentives) – R&D costs gain 50% Tax Credit, R&D grants for Phase 1-3 trials ($30M per year), User fees ($50M) waived
  • Free scientific advice (protocol assistance) –from the relevant review division at the FDA
  • Regulatory tools to accelerate drug approval

(For more details of orphan drug incentives across the US, EU and Japan, see:

Attractive are these are, there must be other reasons to explain the astonishing sea-change which has seen orphan drugs moving from being the domain of small biotechs pinning everything on diseases most of us have never heard of, to the situation now where 7 of the top 10 orphan players are top 10 biopharma companies in their own right. That list of 10 in order of orphan drug sales is Celgene, BMS, Novartis, Roche, J&J, Shire, Abbvie, Merck &Co, Alexion, Pfizer.

A record number of applications for orphan designation were made to the FDA in 2016.

In terms of defining then why orphan drugs are increasingly attractive to the big players, I would suggest the following:

  • Orphan drug study programs are both quicker AND cheaper than non-orphan e.g. Average Phase III trial sizes are much smaller for orphan than non-orphan (2,100 vs 6,300, based on 2014 approvals)
  • Legislation has mitigated the risks traditionally associated with orphan drug programs re cost of R&D, patent life, pricing incentives, time to approval
  • Average drug sales are higher for orphan drugs (projected 5 year sales for drugs launched in 2014 are $1.33B for orphan vs $1.16 for non-orphan, a difference of $170M per annum)
  • Having an orphan lead indication allows companies to get a brand to market faster, become established with payers and HTAs, and gain (if required) premium pricing
  • Finally, and most importantly, higher returns!!
    • The orphan drug market is set to grow at more than twice the rate of the overall prescription market as shown in the chart below
    • Payers are currently willing to fund, and HTAs support, the use of orphan drugs
    • Of the top 100 drugs in the US, the average cost per patient per year for an orphan drug was $140,443 in 2016, compared with $27,756 for a non-orphan

In 2008, orphan drugs constituted 10.1% of worldwide prescription drug sales and this is projected to double to 21.4% by 2022 Looking to the immediate future, the projected growth rates from 2017-22 are startling:

  • Overall prescription drug market 5.3%
  • Orphan drug market 11.1%
Despite limited rumors of abuse of the US Orphan Drug Act, and also not knowing how the new president intends to reduce US drug pricing, it is difficult to see the upward rise in orphan drug development and sales doing anything other than continuing.

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  • View the PII table published recently
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