Hospital Pharmacist Vol 7 No 6 p165-167
June 2000 Articles

Who wants to adopt an orphan?

By A. Karr, MRPharmS, MBA

Orphan drugs are used in the treatment of rare diseases. This article examines recently introduced EU legislation that could lead to the development of more of these drugs

In spite of the medical advances of recent years, there are still many diseases for which there are no satisfactory licensed treatments available. One possible explanation for this may lie in the significant cost of bringing new chemical entities (NCEs) to the market. Costs in excess of £300m per product are now considered to be the norm. The high cost of new product development means that large markets, such as that for common diseases found in developed countries, will naturally be targeted more closely by the pharmaceutical industry to ensure adequate financial returns. On the other hand, treatments in smaller markets, such as for rare diseases or unprofitable markets, such as are found in the developing countries, receive little attention. Therefore it is worthwhile pondering over questions such as: what approaches are available to society to help patients who suffer from such rare diseases? Can we continue to ignore such diseases and abandon those suffering from them to fate? Supportive legislation to encourage research and development into drugs for treating such diseases already exists in some countries, such as the USA, Japan, Singapore and Australia. In these countries the authorities provide some incentives for the pharmaceutical industry to produce drugs known as "orphan medicinal products" to treat rare diseases. The European Union (EU) has been trying to adopt such a scheme for the past five years and is currently working towards implementing similar legislation. This means that the UK may be required to execute such legislation soon. Now is the time for all the relevant authorities within the NHS to fully understand and evaluate the strategic and operational impact that any legislation will have and then take the necessary steps to complete effectively the processes required.

Pharmaceutical companies in Europe are to be given incentives to develop orphan medicinal products

The USA orphan drug act

The first initiative to specifically target improvements in the number of treatments for rare diseases started in the USA. Here, patient advocacy groups put pressure on the government to promulgate the Orphan Drug Act in 1983. This was the first significant step world-wide, since it provided a range of benefits that should encourage manufacturers to develop orphan drugs. It was, indeed, the Orphan Drug Act that facilitated the rapid introduction of several drugs for human immunodeficiency virus (HIV) infection to the USA market. The Act defined a rare disease as one that is present in less than 7.5 per 10,000 of the population.
Some of the benefits offered to the pharmaceutical industry included a 50 per cent federal tax credit for clinical research costs, exemption from the Food and Drug Administration registration fee, seven years market exclusivity, protocol assistance and congressional grants of approximately $20m.
Data from the first 11 years of the Act shows that over 600 products have been given orphan drug status. Of these, 110 were licensed and are currently used to treat 8m patients. In contrast, only 10 ophan products were developed in the previous decade. Currently, about 20 to 35 per cent of NCEs approved by the USA licensing agency are orphan drugs (see Table 1). Beneficial treatments over recent years have been developed for rare diseases such as Gaucher's disease, cystic fibrosis, haemophilia, HIV/AIDS, multiple sclerosis and Tourette syndrome.

The EU regulation

The EU "Regulation on orphan medicinal products" (No 141/2000) was passed by the European Parliament on March 9, 1999 and adopted at the parliament's plenary session held between December 13 and 17 of the same year. Difficult discussions, involving the possible backdating of the provision and use of manufacturer profits obtained after the period of product exclusivity to finance an orphan drug fund, had lengthened the debate. A Committee for Orphan Medicinal Products (COMP) will be set up to assist the European Medicines Evaluation Agency (EMEA) in administering the process. The EMEA is planning to review 11 applications in 2000, followed by 14 in 2001 and 20 in 2002.
The EU defines an orphan drug as one that could treat a disease with a prevalence of less than five per 10,000 of the population. This approximates to 185,000 cases across the 15 member states of the European Community. A range of rare diseases to which the regulation applies has apparently been identified, but will not generally include tropical diseases.
Orphan drugs in developing countries are considered to be a different management issue. A tropical disease is, in many cases, not considered to be rare. It is the extreme poverty of the affected countries and their ineffective health care infrastructures that make the development of treatments commercially unattractive.
The following incentives will be provided for the pharmaceutical industry under the EU regulations:

Market exclusivity Products will be allowed 10 years' market exclusivity by the EMEA or member state. The licensing authority will not accept a marketing authorisation application for a "similar medicinal product" having the same therapeutic indication. Subsequent applications may only be successful if the original applicant provides consent, is unable to supply the orphan drug in sufficient quantities, or, if it could be demonstrated that the new product is "safer, more effective or otherwise clinically superior". An assessment of the application should take place after six years.
In contrast to the USA Orphan Drug Act, the privileged monopoly position can be withdrawn if the criteria which led to the product originally gaining orphan status are no longer being met, or if unreasonable profit has been gained by the company marketing the drug.

Regulatory assistance Additional assistance in the form of free advice will be given by EMEA staff in overcoming any difficulties encountered while preparing clinical trial plans. Such difficulties are likely to be due to the natural limitation in numbers of patients entering clinical trials for safety, quality and efficacy.

Fees The EMEA's executive director, usually after consultation with the Committee for Proprietary Medicinal Products (CPMP), may grant a reduction in registration fees or waivers "in exceptional circumstances and for imperative reasons of public health". Since 1996, 620,000 Euros have been spent on fee reduction for seven products. The sum of 200m Euros¹ has been earmarked to offset the EMEA's fees in the first year, although these funds have not yet been made available.
Individual EU member states can provide further incentives, including research and development support and possible tax breaks.

Implications

Much of the detailed implementation process has yet to be clarified by European representatives. However, there are already many interesting issues that perhaps require closer examination as they may have wider repercussions on health care organisations and the pharmaceutical industry.

Managing future competition An orphan drug will be given a period of market exclusivity, provided no other drug is proved to be "clinically superior". The definition of "clinically superior" is being drafted and includes terms such as "greater safety" and "greater efficacy". But certain issues are yet to be resolved, such as how the definition will be applied, how comparative evidence will be assessed, the meaning of the term "similar medicinal product" and the effect of minor enhancements. For example, beta-interferon (Rebif), a potential orphan drug manufactured by Serono for multiple sclerosis, does not have an FDA licence in the USA. The manufacturers were not awarded a licence because market exclusivity had previously been given to a competitor product until 2003. Serono now has to prove that its product is superior in efficacy or safety to the other product before an FDA licence can be obtained for Rebif. However, clinical benefits are often difficult and expensive to determine, especially with small patient numbers and in the early trial phases of product development.²
The lengthy exclusivity terms in the Orphan Drug Act may cause considerable delays for pharmaceutical companies wishing to license useful competitor products. The benefits of being first in a market are therefore greater with orphan drugs. Fortunately, such companies can, as things stand, make a return on their investment by taking advantage of the large European market. Under the new EU legislation this may change in the future.

Cost and funding The cost of introducing orphan drug legislation has not yet been fully determined. Apart from the implementation cost that should be shared by other European countries, there could be significant additional costs:

Financial incentives Financial incentives for the UK pharmaceutical industry, such as tax credits, licensing fee reductions or grants, could be considered by the government as a way of winning back industry confidence lost through years of implementing cost control systems.

Prices The prices of orphan drugs are expected to be high to the NHS. Already, some smaller companies have seen opportunities to enter this niche market. Some suppliers may not develop their own products but market products by simply licensing versions of drugs that are currently being prescribed on an unlicensed basis. The licensed version will inevitably be more expensive than the unlicensed form and specialist centres that treat rare diseases, in particular, will most probably be asked to take on the cost burden exclusively. For example, the estimated additional costs associated with two orphan drugs purchased by two specialist paediatric hospitals will be approximately £250,000. A new mechanism of funding should be developed to reduce cost pressures. Without such a focus, specialist centres will suffer significant funding problems, which may lead to problems such as post-code prescribing or rationing.
Hopefully, additional government funding will be made available, but how is it to be distributed? If no money is available we may well have to consider the suggestion by the Italian Pharmaceutical Industry Association that an orphan drug development fund be financed by the national lottery.³

Excessive profits The COMP may undertake duties similar to the UK's Pharmaceutical Price Regulation Scheme (PPRS), which monitors profitability within the pharmaceutical industry. COMP may have problems interpreting the term "excessively profitable" as used in the legislation. After all, how will manufacturers be adjudged to have made excessive profits? Fortunately, the USA experience has turned up only a small number of orphan medicinal products deemed to be excessively profitable for the manufacturer. So far there are four products with sales of over $100m. They are Genentech/Lilly's growth hormone, Glaxo Wellcome's zidovudine, Amgen's erythropoietin and Genzyme's alglucerase. Further control systems will be required to prevent an abuse of the regulation. Such systems may include limiting the profit margins or reducing the period of exclusivity. Locally, the PPRS may need to take account of this product group when they determine supplier's profit margins during their accounting processes.

Changes in orphan population levels Pharmaceutical companies will have to demonstrate that the disease for which they are proposing to market a product affects no more than five per 10,000 of the population within the EC. Difficulties in defining orphan drugs and determining their precise prevalence are apparent.
In addition, the growing science of pharmacogenetics, which is the development of drugs tailored to the genotype of the patient (or the patient's tumour or pathogen), may drive disease populations into smaller groups. The EU may therefore allow a number of patient subsets of a pathology that on the whole is not rare, for example, HIV infection in paediatrics. Some manufacturers may deliberately limit the indications for their products, in line with the EU prevalence criteria so as to take advantage of the legislation.
There are approximately 5,000 rare diseases out of the 30,000 known to the World Health Organisation. This raises a number of questions, such as:

• How will COMP identify and maintain data from the population in each country?
• How will regional statistical variations be taken into account, for example, is multiple sclerosis a rare disease, when it is predominantly found in northern Europe?
• How can single member states intervene if orphan population levels exceed EU limits?
• Should the licensing of drugs for treating orphan diseases be prioritised?

Licensing and cost-effectiveness evaluation There are inherent difficulties in undertaking large clinical trials for orphan drugs due to the limited patient numbers. For example, the USA has licensed L-carnitine for genetic carnitine deficiency in 16 patients. What are the problems or consequences of using orphan licensed products with minimal clinical trial data? Should post-marketing surveillance schemes be applied as a matter of course? The National Institute for Clinical Excellence will undoubtedly have major problems in determining the value of a product where clinical studies may never be available to demonstrate clear outcomes.

Hospital pharmacy Many orphan products are "born" from research projects originating at individual hospital specialist centres. The research is then often lost to commercial organisations with production and marketing capabilities. On many occasions, this happens without the originating organisation obtaining adequate remuneration. Some hospital pharmacy departments, particularly those with production units, may see the new regulation as an opportunity to license their own products either on their own or in collaboration with industry. The NHS may have innovative trusts which could gain significant financial advantages from this type of commercial venture. The NHS should be seen to benefit from its intellectual property.

Summary

The introduction of orphan drugs legislation may well provide patients with the critical niche drugs they need and deserve. The concept of providing exclusivity, although difficult to define under the regulations, is particularly useful for encouraging innovator companies. However, will the introduction of EU legislation increase the number of orphan drugs or could it have the opposite impact?
The USA and Japan are the two largest single pharmaceutical markets in the world. Both countries have existing legislation that already promotes the development of orphan drugs. Will there be any additional benefits from extending the process further? The risks associated with coming second in the race to bring a new orphan drug to the market place are more significant than with other drugs and it remains to be seen whether this will deter some manufacturers from entering the race to produce an orphan drug in the first place.
A new and complex process such as this will inevitably have many ramifications. These should all be fully explored to ensure effective implementation. A delicate balance will need to be found between providing sufficient incentives to encourage developments and bearing their high costs to health care. Many sophisticated data-recording, monitoring and control systems will be required for close scrutiny of orphan drugs if the pharmaceutical industry is to be prevented from taking advantage of loopholes. Setting up these systems may take time and resources and an unco-ordinated approach may lead to poor management of this important pharmaceutical development. Adoption of orphan drugs should be planned carefully and properly, in the manner of all good parents.

Mr Karr is pharmacy business services manager at University College London hospitals NHS trust

References