Amid Policy Fights, Orphans’ Share May Stabilise
Orphan drugs continue to hold their own. Despite the excitement and dollars surrounding drugs that treat a very un-rare condition, obesity, developing drugs for rare diseases is still a very important, and valuable, industry segment. There remains significant unmet need: recent US spending laws require the FDA to encourage further development of surrogate endpoints for drugs for rare diseases. Peter Marks, director of FDA’s Center for Biologics Evaluation and Research (CBER), recently promised greater use of the accelerated approval pathway for gene therapies for rare conditions. Rare diseases, many genetically-driven, also provide an important early testing ground for newer modalities like gene/cell therapy or gene-edited drugs, some of which may later be tested and used in more prevalent conditions.
Calls to reform the 1983 US Orphan Drug Act have faded amid noisier and more immediate policy battles triggered by IRA. The most vociferous are around the imbalance between exclusivity periods granted to small versus large molecules (9 versus 13 years), which could impact both orphan and non-orphan development programs. Resistance to the IRA’s treatment of orphan drugs takes the form of the ORPHAN Cures Act, introduced in late 2023. Under IRA’s current wording, only single-indication orphans are exempt from Medicare price negotiations. This bill seeks to expand that exemption to those treating “one or more” rare conditions. Industry claims the current wording is discouraging research into follow-on indications.
The ORPHAN Cures Act made it in front of the US House of Representatives’ Energy & Commerce Committee on February 29, 2024. But that hearing was really to “celebrate” and draw attention to rare diseases week, according to a board member at lobby group Biotechnology Innovation Organization (BIO). It's unlikely that this, or any other effort to tweak IRA (another bill seeks to delay price negotiations for some genetically targeted technologies), will see the light of day – certainly not before the US election.
Recall that only the most valuable orphans – those among the top ten or 15 most expensive drugs of any kind for Medicare each year – will fall into IRA’s pricing crosshairs. These ‘orphan blockbusters’ are a key driver behind those seeking changes to the original Orphan Drug Act, whose incentives seem inappropriately generous for drugs like Imbruvica. Some call for an ‘ultra-rare’ designation, and for R&D and exclusivity incentives scaled according to products’ target population size. Appetite for further legislative change seems minimal, though.
Even with slightly slowing growth, orphan drugs are still on a strong trajectory and look set to continue to punch above their weight in value terms.
