An orphan drug is a pharmaceutical agent that is developed to treat certain rare medical conditions. An orphan drug would not be profitable to produce without government assistance, due to the small population of patients affected by the conditions. The conditions that orphan drugs are used to treat are referred to as orphan diseases. The assignment of orphan status to a disease and to drugs developed to treat it is a matter of public policy that depends on the legislation (if there is any) of the country. Designation of a drug as an orphan drug has yielded medical breakthroughs that might not otherwise have been achieved, due to the economics of drug research and development. For example, in the U.S. and the EU, it is easier to gain marketing approval for an orphan drug. There may be other financial incentives, such as an extended period of exclusivity, during which the producer has sole rights to market the drug. All are intended to encourage development of drugs which would otherwise lack sufficient profit motive to attract corporate research budgets and personnel.
Definition
United States According to the US Food and Drug Administration (FDA), an orphan drug is defined as one "intended for the treatment, prevention or diagnosis of a rare disease or condition, which is one that affects less than 200,000 persons in the US" (which equates to approximately 6 cases per 10,000 population) "or meets cost recovery provisions of the act".
Europe In the European Union (EU), the European Medicines Agency (EMA) defines a drug as "orphan" if it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically and seriously debilitating condition affecting not more than 5 in 10,000 EU people. EMA also qualifies a drug as orphan if – without incentives – it would be unlikely that marketing the drug in the EU would generate sufficient benefit for the affected people and for the drug manufacturer to justify the investment.
Japan In Japan, drugs and medical devices are given the designation as an orphan drug or device based on the Act of Securing Quality, Efficacy, Safety of Pharmaceuticals, Medical Devices, Regenerative or Cellular Therapy Products, Gene Therapy Products, and Cosmetics if they are intended for use in less than 50,000 patients in Japan for which there is a high medical need.
Global statistics As of 2014, there were 281 marketed orphan drugs and more than 400 orphan-designated drugs in clinical trials. More than 60% of orphan drugs were biologics. The U.S. dominated development of orphan drugs, with more than 300 trials, followed by Europe. Cancer treatment was the indication in more than 30% of orphan drug trials.
Number of orphan drugs in clinical trials: 40 Number of orphan drugs in phase 2 trial: 231 Number of orphan drugs in U.S. clinical trials: 350 in the pipeline from research until registration
Effect on investment, sales and profit According to Thomson Reuters in their 2012 publication "The Economic Power of Orphan Drugs", there has been increased investment in orphan drug research and development, partly due to the U.S. Orphan Drug Act of 1983 (ODA) and similar acts in other regions of the world driven by "high-profile philanthropic funding". According to a 2012 article in Drug Discovery Today, the years 2001 to 2011 were the "most productive period in the history of orphan drug development, in terms of average annual orphan drug designations and orphan drug approvals". For the same decade the compound annual growth rate (CAGR) of the orphan drugs was an "impressive 25.8%, compared to only 20.1% for a matched control group of non-orphan drugs". By 2012, the market for orphan drugs was worth US$637 million, compared with US$638 million for a control group of non-orphan drugs. By 2012,
the revenue-generating potential of orphan drugs [was] as great as for non-orphan drugs, even though patient populations for rare diseases are significantly smaller. Moreover, we suggest that orphan drugs have greater profitability when considered in the full context of developmental drivers, including government financial incentives, smaller clinical trial sizes, shorter clinical trial times and higher rates of regulatory success. According to a 2014 report, the orphan drug market has become increasingly lucrative for a number of reasons. The cost of clinical trials for orphan drugs is substantially lower than for other diseases because trial sizes are naturally much smaller than for more diseases with larger numbers of patients. Small clinical trials and minimal competition place orphan agents at an advantage in regulatory review. Tax incentives reduce the cost of development. On average the cost per patient for orphan drugs is "six times that of non-orphan drugs, a clear indication of their pricing power". The cost of per-person outlays are large and are expected to increase with wider use of public subsidies. The 2014 Orphan Drug report stated that the percentage of orphan drug sales as part of all prescription drug sales had been increasing at a rapid rate. The report projected a total of US$176 billion by 2020. Although orphan disease populations are the smallest, the cost of per-patient outlays among them are the largest and are expected to increase as more people with rare diseases become eligible for subsidies – in the U.S., for example, through the Affordable Care Act.
Legislation Orphan drugs generally follow the same regulatory development path as any other pharmaceutical product, in which testing focuses on pharmacokinetics and pharmacodynamics, dosing, stability, safety and efficacy. However, some statistical burdens are lessened to maintain development momentum. For example, orphan drug regulations generally acknowledge the fact that it may not be possible to test 1,000 patients in a phase III clinical trial if fewer than that number are affected by the disease. Government intervention on behalf of orphan drug development takes several forms:
Tax incentives Exclusivity (enhanced patent protection and marketing rights) Research subsidies Creating a government-run enterprise to engage in research and development as in a Crown corporation A 2015 study of "34 key Canadian stakeholders, including drug regulators, funders, scientists, policy experts, pharmaceutical industry representatives, and patient advocates" investigated factors behind the pharmaceutical industry growing interest in "niche markets" such as orphan drugs.
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