Orphan Diseases Open Opportunity for Pharma, Biotech Drug Developers

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Orphan Diseases Attract Increasing Attention Across the Board

As patents expire and generic competition increases, more drug companies are investing in the development of therapeutics for orphan diseases. Although the pool of patients for an orphan disease is small, the economic potential of an expensive biologic administered over the lifetime of a limited number of patients presents an attractive commercial opportunity that is a savvy alternative to the en mass selling of lower-priced small molecule compounds which are the mainstay of the industry.

Pharma / Biotech Economics: 7,000 Orphan Diseases, 200 Treatments

Thomson Reuters reports that in the U.S. alone, rare diseases afflict an estimated 25 million people, representing approximately 8% of the total population[i]. According to the National Organization for Rare Disorders (NORD) nearly 7,000 orphan diseases have been categorized already and that number continues to grow year by year as new discoveries are made. Nevertheless, only about 200 of these have FDA approved treatments, leaving the market wide-open to newcomers.

In 2011, orphan drugs represented one third of NMEs approved by the FDA. The same year the orphan drug market was estimated at over $50 billion, accounting for roughly 6% of all pharmaceutical sales. In 2012, approximately one quarter of the 39 new drugs approved by the FDA had orphan status. This pattern continues, as a recent analysis reports that nearly 1,800 of the 5,400 drugs currently in development have received orphan status[ii].

In addition to tantalizing premium prices, which can range from $100,000 to over $400,000 per patient annually, growth is driven by government incentives including tax credits, grants, and regulatory fee waivers as well as shortened approval times and higher probability of approval. Faster uptake, lower marketing costs and longer market exclusivity are also key drivers of growth. In addition, patient organizations often raise funds for research, lowering R&D spend.

Hurdles to Drug Development

Though the lucrative profit potential of these drugs is alluring, success in the orphan market is not without its own set of challenges. Lack of education and awareness among patients and providers alike, along with sometimes poor diagnostic methods hinders identification of the target patient population. Rare disorders are often cryptic, leaving patients misdiagnosed or undiagnosed for long periods of time which can span many years. For example, it is not uncommon for patients suffering with Hereditary Angioedema (HAE) to wait up to 10 years before receiving an accurate diagnosis[iii].

Locating and recruiting patients poses logistical problems to organizing and carrying out clinical trials, resulting in increased costs. Nevertheless, companies have proven successful in overcoming these obstacles and expanding the patient population through utilizing social media, engaging patient advocacy groups and spearheading awareness campaigns and educational programs.

While the economic burden of leaving the population untreated typically outweighs the costs of treatment due to improved patient outcomes, as interest in high-priced, specialty drugs continues to grow, so does the potential for payer pushback. At present, the jaw-dropping costs are largely covered by government programs, health plans and company-sponsored payment assistance programs in order to ensure access to affordable care for patients.

Nevertheless, as patient phenotyping and personalized medicine further characterize more common diseases into specific indications, the number of diseases that meet the criteria for orphan status will continue to expand, placing even greater burden on the healthcare system.

Worthwhile Opportunity for Pharma and Biotech Drug Developers for the Foreseeable Future

For the moment however, it appears the benefits of orphan drug development far outweigh the cost for industry and payers alike, creating a stable and growing market ripe with opportunity.


[i] “The Economic Power of Orphan Drugs” Thomson Reuters Report, Aug 2012

[ii] “Innovation in the Biopharmaceutical Pipeline: A multi-dimensional view” Analysis Group, Jan 2013

[iii]  Lunn, M. L., C. B. Santos, and T. J. Craig. “Is There a Need for Clinical Guidelines in the United States for the Diagnosis of Hereditary Angioedema and the Screening of Family Members of Affected Patients?” Annals of Allergy Asthma & Immunology 104.3 (2010): 211-14.

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