Fighting a Global War on Rare Diseases
Are we winning the war against rare, or “orphan,” diseases? A casual observer could be forgiven for thinking so, given the drumroll of news. The crescendo came in 2011, when the U.S. Food & Drug Administration (FDA) approved 26 drugs in this category, meaning for illnesses that afflict fewer than 200,000 people. It was the highest number since Congress passed the Orphan Drug Act in 1983, offering incentives to companies that entered the rare-disease field. The same year, the agency granted a record 199 requests from companies seeking an “orphan” designation for their products.
In 2012, there was a stream of orphan-related announcements from Pfizer, GlaxoSmithKline, Sanofi and other industry giants – a break from the past, when orphan diseases were the turf of small companies. Last week, a columnist in this space fretted that the excitement over rare diseases might one day lead to a reduction in research into hard-to-treat ailments such as cancer or Alzheimer’s, which affect many more people.
Yet despite the frenzy – and as the columnist duly noted – we are a long way from winning this war. Around the world, an estimated 60 million people suffer from some 7,000 rare diseases. Fewer than 5 percent of orphan diseases have treatments approved by the FDA.
For all the enthusiasm on the part of Big Pharma, it is small and midsize players that are stewarding most orphan drugs on the market today or in the pipeline. Strapped for cash, most of these companies don’t try to expand beyond their local market. In short, companies on which the world depends to fight this war typically license away the opportunity, and the responsibility, to treat the vast majority of their target patients.
I am intimately familiar with their predicament. Until this week, I was among their ranks.
My company, Bedminster, NJ-based NPS Pharmaceuticals (NASDAQ: NPSP), sells teduglutide (Gattex), a newly-approved medicine for patients with a debilitating rare condition called short bowel syndrome. A second NPS drug in late-stage development helps people who produce too little parathyroid hormone. After years entrusting all global business to a licensed partner, NPS this week retrieved international rights to both drugs. We’re not the first midsize company to take this step. For reasons I will discuss below, I’m hoping many others decide to do the same.
The chief incentive for seizing the reins overseas is also the most obvious: the wide world is where the patients are. Short bowel syndrome has an estimated addressable patient population of 3,000 to 5,000 patients in the U.S., and the illness doesn’t respect geographic boundaries. Europe has a population of about 500 million, so the patient cohort is probably double or triple that of the U.S. We haven’t made plans for Japan, Latin America, China or India, but each beckons with opportunities to do good and to prosper. The most cursory glance at a world map reveals the moral and business imperatives of an ex-U.S. strategy.
Having lived and worked most of my life outside the U.S., I understand the hurdles a small company faces. In Europe, our top priority outside the U.S., regulators have tried to clear the path for orphan drugs. Products go through a “central process” for review by the European Medicines Agency (EMA) and are approved in 30 countries in one shot.
Regulatory approval is just the beginning, however. The process of setting a price and negotiating reimbursement starts afresh at each border. The product’s value proposition is critical to the success of reimbursement, and each country has individual criteria and timelines. How wisely the company sequences the markets on price and reimbursement has important consequences. If it accepts drastically lower prices in Portugal, Spain or Italy, it will soon confront parallel imports in Germany or France.
Such complexities aside, patients in Europe who suffer from rare diseases desperately need medicines, and many forces work in the drug companies’ favor. Target patient populations are limited in number, as are the physicians, groups, researchers and other key opinion leaders with specialized knowledge on which orphan drugmakers rely. Patient advocacy groups like EURODIS are very active in supporting rare-disease causes in Europe and help advocate for research and access to therapies. It doesn’t take a sales force of hundreds to reach these individuals. What’s required is expertise, and Europe boasts an abundance of executives with dual degrees in business and science.
Relevant academic networks are transparent and well supported. In February, the European Union committed roughly $187 million in new funding for 26 research projects aimed at rare diseases. This brings the EU’s tally for collaborative projects on such illnesses to 100 in just the last six years – efforts funded to the tune of $650 million.
There are peripheral benefits of a midsize biopharma company holding onto the helm in global strategy. Having an international organization helps your business development team identify underappreciated assets and spot opportunities for in-licensing, as well as making your company more attractive as a development and commercialization partner. A good example of this is Exton, PA-based ViroPharma (NASDAQ: VPHM), a biotech company with sales of $427 million in the U.S. and Europe that specializes in orphan diseases. Colin Broom, one of our board members, is Viropharma’s chief scientific officer.
Other orphan drug companies have scaled comparable hurdles, sometimes to stunning effect. Cheshire, CT-based Alexion Pharmaceuticals (NASDAQ: AXLN) is looking at more than $1 billion in worldwide sales of its blockbuster drug, eculizumab (Soliris), for a rare form of anemia. Investors have pushed up shares of San Rafael, CA-based BioMarin Pharmaceuticals (NASDAQ: BMRN), which is managing global development of pipeline products on its own, as well as a key drug, galsulfase (Naglazyme), a recombinant form of an enzyme to treat a rare condition.
As a newcomer to these ranks, I salute midsize pharma companies that take charge of their fate in global markets. At considerable risk, they succeed in doing well by their shareholders. What’s more, they’re laying the foundation for serving patients with no other access to medicines that may change their lives.