In the 1990s, a visionary named Bill Aliski sparked an interest in rare diseases as he created a go-to-market approach that put Genzyme on the trajectory for its $20-plus billion acquisition by Sanofi in 2011. Bill figured out how to build a sustainable business with an enzyme replacement for Gaucher disease, a lysosomal storage disease that affects less than 10,000 patients worldwide. The National Institute for Health and Care Excellence (NICE), an advisory agency for the British National Health System, used the term “ultra-rare” for a disease with prevalence of less than 1:50,000 lives1. Hence, drugs that target these conditions are ultra-orphans, and Cerezyme, the successor to Ceredase, which was the first of these drugs marketed by Genzyme, is one of those drugs. Its prices exceed six figures on a patient per annum basis, and Bill designed a systematic approach for leveraging third-party coverage to connect patients to treatment. Genzyme’s success inspired BioMarin, Shire, Alexion, ViroPharma and others to develop and commercialize orphan drugs, and their collective success has given a glimpse of the potential value for a truly transformative therapy, even when the afflicted population is very small.
Popular Misconceptions About Orphan Drugs
Their success also spawned misconceptions about the orphan designation.
The fact is that the orphan designation means simply that there will be fewer than 200,000 patients in the U.S., and that the manufacturer will have access to tax breaks and other financial incentives. The only marketing benefit: Seven years of exclusivity for the particular indication named in the orphan designation, which often is less than the intellectual property estate the manufacturer holds on the asset already. Orphan status does not mean carte blanche when it comes to pricing options or other commercial dynamics, nor does it confer value in and of itself. Value is indifferent to orphan status, Rather, it is imbedded in the commitment given by the manufacturer, the caregiver, the provider and the payer to the patients afflicted by the disease that the drug targets and in the drug’s ability to deliver transformative efficacy within acceptable safety standards.
Valuing the Community
Confusing the orphan designation as the source of value instead of the community’s commitment to the patients and their treatment can lead to bad decisions—and poor alignment between the drivers of growth and the expectations for growth. The commercially savvy company will seek to understand and address a very challenging, yet potentially rewarding opportunity. “Bad disease” is redundant and vague but gets at a critical imperative that value is framed by the agreement on the extent of the unmet need in a market—and these rare diseases are the epitome of unmet need. But the value of their treatment is not a given—value must be communicated and comprehended.
A proactive patient and advocate community, fueled by the efforts of an intelligent biopharmaceutical company, will influence the way the burden and severity of the disease is understood—the way value will be perceived. This is best done through natural history and registry trials, complemented by meta-analyses, case studies and even editorials in the lay media. Demonstrating efficacy for a bona fide clinical endpoint in a disease that historically has only had palliation requires a carefully designed and rigorously implemented clinical plan. And powering and recruiting a trial from a disease with a genetic prevalence estimated to be less than 10,000 is much different than for a disease of one million currently diagnosed patients. Everything about these diseases is different from more typical markets—except the cost of developing new treatments.
Both providers and payers expect a clearly articulated medical value proposition for the treatment, most of which will be derived from carefully designed and rigorously implemented phase II and III trials. Importantly, payers look at price, especially the prices of these ultra-orphan drugs, and they expect to be given a reason to believe that the patient will experience improvement in health in exchange for their coverage approval.
Becoming Part of the Community
As has been said, these are not markets but instead are communities, and a company must become part of that community to thrive. It is the community’s ability to advocate with confidence and passion coupled to the clarity and compelling nature of the evidence for the drug’s ability to solve a medical problem that convinces the providers to prescribe, the patients to take and the payers to pay for these medicines. The orphan designation is coincidental to these real value drivers.
The market has its own intelligence and understands that without high prices, no company could afford to develop drugs that target fewer than 10,000 patients. A drug that is priced at $16 per day is a $6 billion blockbuster if there are a million patients taking it and a respectable franchise of $600 million with 100,000 patients. However, $16 per day for a drug that addresses a population of 1,000 patients won’t generate enough money to keep the corporate lights on. Opportunity costs for programs with low revenue potentials will force the company and its owners to turn in other directions.
Why Does the Overall Market Rally around Treatments for Ultra-rare Diseases?
A number of reasons have been proposed:
1. As humans we are moved by what is known as “the rescue imperative” whereby we are more likely to disproportionately expend resource to save a very small group of people than we would for a very large group (think of the dollars and man-hours we expend searching for a lost hiker or mountain climber)
2. The market understands that without these prices the patients would go without treatment.
3. These disorders are usually fatal within a few years and as a society we will do more to save a life than we would to just relieve symptoms—so lifesaving medication will usually be paid for. In essence, we have an agreement that we will “buy time” for people, often in the unspoken hope that a cure will be found or that other and less costly treatments will emerge.
4. There is an understanding that a large portion of the money that is made from these drugs will keep the company in business so that they can stand by their commitment to serve patients with comprehensive support programs including providing the drug to the temporarily or chronically uninsured. Essentially these markets come with the obligation of “no patient left behind.”
Whether these are the actual reasons for the success of these products or not, the fact is that healthcare systems across the world have made allowances for their patients with very rare diseases to gain access to very high-cost services. Whether that continues is vigorously debated within the industry. But it is not debated by the community of rare diseases, which has too much to do to ensure that the innovation is recognized and rewarded by the healthcare system, so that patients can get connected to transformative therapies—and hope for the future. For biopharmaceutical companies one thing remains true: If you are not prepared to be an active member of the community that surrounds and supports the patients with that disease, then please transfer the product to a firm that is willing and able to provide that level of commitment. No such commitment is necessary in other markets, “orphan” or otherwise.
1. National Institute For Health And Clinical Excellence; Social Value Judgements: Principles for the Development of NICE Guidance; Second edition.