DefinedHealth

Nabil Mouline, MBA & Michael C. Rice, MS, MBA

The genesis of the Orphan Drug Act was to encourage investment in what were thought to be less commercially attractive markets. How-ever, a number of biotech companies have turned certain rare diseases into a significant source of revenue. While the National Organiza-tion of Rare Diseases (NORD) database includes literally hundreds of what are relatively very low incidence diseases and disorders, it turnsout that just a handful of Orphan Diseases and products accounts for the vast majority of WW sales in this sector.

It appears that Orphan Diseases are largely, if not entirely, the domain of Biotech firms, and perhaps less suitable and appealing to BigPharma. It might be argued that this is due to the utility of large molecules in the majority of these diseases, along with a number of otherconfounding factors. These include the economic challenges of the requisite investment in difficult scientific research and the huge disparitybetween the typical annual cost of therapy for lesser margin large molecule drugs used in a few, as compared to high margin small moleculeproducts used in millions.

Will Pharma’s recently heightened interest in large molecules bring Orphan indications to the fore? Will Pharma reconsider its threshold ofattractiveness given the dearth of conventional blockbusters in the pipeline and the prospect of downsized markets to accommodate FDAmandates and personalized medicine approaches? Are Orphan indications valid options for shortened development and life cycle manage-ment strategies, and/or can the Orphan approach be a tool to help restore Pharma’s perpetually negative public image?

Alternatively, willadditional exceptional cases in the future spur a negative reaction from legislators and the public, potentially reducing the appeal of invest-ment in this space? In this installment of our Insight Series executive briefings, Defined Health will review past strategies and examine the commercial chal-lenges and strategic implications of launching the next marginally differentiated small molecule product to treat the masses vs. launching thenext novel Orphan compound to treat the minority. We will break down the key issues, including the evolving impact of managed care andthe eventual entrance of biosimilar products, and look at how participation in the Orphan category just might be an attractive opportunity forthe pharma industry.