Rare Disease Drug Development: A Thriving Business Model

By Chris Garabedian

Of the approximately 7,000 rare diseases that have been identified, fewer than 5% have drug therapies available, and many of these provide limited benefit. With the advancement of diagnostics and corresponding patient stratifications, “rare” diseases should be a high priority therapeutic area for our industry, especially when considered as a single, collective patient population.

The birth of a viable business model for rare disease drug development can be traced back to the Orphan Drug Act of 1983, which established the definition of an orphan drug as treating a disease that affects less than 200,000 patients in the United States. Since then, the FDA has approved 398 orphan-designated drugs, while prior to the Orphan Drug Act, the agency had only approved about a dozen such drugs. Today, momentum for orphan drug development is accelerating to an unprecedented level, fueled by the convergence of several factors, including:

• a high unmet medical need combined with an increased understanding of rare disease biology and the advancement of the technology that can address it;
• an evolving regulatory environment and proactive legislative agenda;
• an increasingly influential patient and disease advocacy community;
• a supportive reimbursement environment enabling a viable business model.

Together, these factors make the rare disease business model more attractive than ever, creating a wellspring for the discovery and development of promising drugs.

Advancements In Science And Technology
Historically, the interest in seeking treatments for rare disease has been limited by knowledge of the etiology of many rare diseases and/or the technological approaches — which were lacking or immature — to effectively treat these diseases. Advances during the last several decades in biotechnology, combined with knowledge gained since the mapping of the human genome, have significantly enhanced our understanding of the origin and genetic makeup of many of these diseases. Furthermore, the technological approaches that may be most effective in treating these diseases have also advanced and matured.

This convergence of factors has increased the interest in conducting discovery research against rare disease targets. Since there are no effective treatments for most rare diseases, there is often a quick pathway to establish proof of concept for a new technological approach and to demonstrate if a given treatment will have a meaningful effect.

One example of the increasing interest in rare disease research is an NIH-sponsored initiative called the Therapeutics for Rare and Neglected Diseases (TRND) program. The TRND program provides funding for new therapeutics to cross the gap from basic discovery research to testing in humans — often termed “the valley of death” of drug development. This program is intended to speed the development of new drugs for rare and neglected diseases by establishing partnerships with academic research institutes, biopharmaceutical companies, and other nongovernmental organizations.

Evolving Regulatory And Legislative Agenda
While the number of orphan drug designations has risen every year, the number of orphan drug approvals has not. To realize the promise of scientific and technological advances, the regulatory environment has to provide a clear and achievable path of drug development that reflects both the risk-benefit tradeoff that exists with many rare diseases, as well as the practical limitations of clinical studies, given the low prevalence of these diseases. The Orphan Drug Act of 1983 established incentives for orphan drug development, such as seven years of market exclusivity, tax credits on development costs, expanded access to the Investigational New Drug (IND) program, and, through later amendments, waiver of the Prescription Drug User Fee Act (PDUFA) application fee. In the last decade, drug development for small markets has been made even more feasible by the Rare Disease Act of 2002 and the Brownback/Brown Amendment of 2010. Respectively, these legislative acts instituted the Office of Rare Diseases as a federal entity and established a dedicated FDA review group composed of rare disease experts.

Looking ahead, the reauthorization of PDUFA V later this year will likely include legislation that will expand the application of the accelerated approval pathway to orphan diseases. These legislative acts, called the Faster Access to Specialized Treatments (FAST) Act and the Transforming the Regulatory Environment to Accelerate Access to Treatments (TREAT) Act, would add clarity to the accelerated approval pathway by requiring the FDA to publish dedicated guidance.

Accelerated approval provides faster access to therapies for patients with severe diseases that have no other options by allowing initial evidence of clinical benefit to be confirmed in later post-approval studies. To truly streamline the regulatory path for orphan drugs, the current spirit of collaboration between the FDA, rare disease researchers and clinicians, the biopharmaceutical industry, and advocacy groups must yield greater alignment on meaningful clinical endpoints. Greater clarity in this area will correspond to greater clarity in the regulatory pathway.

Drug development for rare diseases also can come with greater FDA flexibility. Of the 135 orphan drugs that have been FDA-approved since the Orphan Drug Act of 1983 (excluding drugs for rare cancers), only 1/3 were approved on the conventionally viewed standard level of evidence, commonly referred to as “two adequate and well-controlled studies,” according to a 2011 white paper written by Frank Sasinowski, chairman of the board for NORD. According to the paper, the remaining approvals were based on some degree of FDA flexibility in applying the statutory standard for evidence of effectiveness.

Influential Patient And Disease Advocacy Community
In the 1990s, the determination and organization of AIDS activists led to the acceleration of drug approvals for the treatment of HIV, and redefined the influence that an organized disease advocacy effort can have on drug development and access to therapy. This set in motion a number of other patient and disease advocacy efforts that recognized the power of a willful patient voice to partner with industry in drug development. Advances in many disease areas can be linked in part to these collaborations, from the Cystic Fibrosis Foundation’s support of Vertex’ recent drug approval to the Multiple Myeloma Research Foundation’s support of Celgene’s approved and investigational drugs for that disease. These groups have influenced drug development and the regulatory pathway in an effective and lasting manner through their knowledge of the disease, an organized approach, and, in many cases, their deployment of capital from their fundraising efforts. Thus, they have earned a place alongside industry, the FDA, and the research community and now have a critical voice in shaping the biopharmaceutical industry’s efforts towards drug development.

A Viable Business Model
Historically, the pharmaceutical industry has used the prevalence of a disease as a key criterion in determining the commercial viability of pursuing research and development of a particular treatment. Today, many of the innovative drug therapies that were developed to target highly prevalent diseases and conditions are now generic, such as cardiovascular treatments for hypertension or hypercholesteremia, antibiotics, and antidepressants. Consequently, the unmet medical need has been reduced while the ability to gain reimbursement at a high price point for incremental improvement has proved challenging. In rare disease drug development, the industry can focus on areas where there is still a high level of unmet medical need, and thus, the opportunity to create therapies that will produce a significant societal benefit.

The success of Genzyme in gaining reimbursement for rare lysosomal storage disorders such as Gaucher disease, Fabry disease, and Pompe disease, is proof of the ability to derive returns from drugs that have a big impact on a small-disease population. High reimbursement levels can be attributed to the ability of these therapeutics to dramatically lower costs to the healthcare system, leading to a new generation of companies that have achieved success in the rare disease space. For example Alexion, with the drug Soliris, currently holds one of the highest market capitalizations among biotechnology companies that have become commercial entities in the last decade. Investors have also supported the rare disease business model through companies like Amicus, Raptor, Aegerion, Enobia, Synageva and AVI BioPharma.

About The Author
Chris Garabedian is the president and CEO of AVI BioPharma, a company focused on the discovery and development of novel RNA-based therapeutics for rare and infectious diseases.