Through the first week of December, 14 drugs came to market this year with orphan status in the country of their initial launch. The list included Jakafi (ruxolitinib), from Incyte Corp., of Wilmington, Del., which last week became the first drug approved by the FDA in the orphan indication polycythemia vera, a chronic type of bone marrow disease. The drug – the first JAK inhibitor to get a nod from the FDA – was previously approved to treat the orphan indication myelofibrosis. (See BioWorld Today, Nov. 17, 2011.)

One more with orphan product designation, Amgen Inc.'s Blincyto (blinatumomab), which received accelerated approval from the FDA last week in relapsed or refractory Philadelphia chromosome-negative precursor B-cell acute lymphoblastic leukemia, is expected to launch by year-end. (See BioWorld Today, Dec. 4, 2014.)

Ann Graul, senior content manager for Thomson Reuters Disease Briefings, who compiled the table on p. 6 for the annual feature "The Year's New Drugs & Biologics" that will appear in the January 2015 issue of Drugs of Today, pointed out that other products also are getting a second wind in the orphan drug space. For example, Promacta (eltrombopag, Glaxosmithkline plc), launched this year in the U.S. to treat severe aplastic anemia in patients who had insufficient responses to immunosuppressive therapy, originally was approved under the same name and as Revolade outside the U.S. to treat idiopathic and chronic immune thrombocytopenia. (See BioWorld Today, Nov. 24, 2008.)

Garnering the coveted orphan drug designation from regulators extends the useful life of a drug, providing seven years of exclusivity in the U.S. and a decade in the EU from the time of approval, and potentially allows for a pricing premium in a defined patient subpopulation.

So it's no surprise that, according to the second EvaluatePharma Orphan Drug Report, continued growth in the sector is all but assured. Sales of drugs designated as orphans are projected to increase at an annual rate of approximately 11 percent through 2020 – nearly three times the expected 4 percent growth rate for drugs treating larger populations, according to findings from the market intelligence firm.

The pricing environment for orphan products also remains favorable for the time being. But the trend to push those drugs into ever broader indications through supplemental filings threatens to dim the patina of the orphan space as payers seeking to manage escalating pharmacy spend keep a wary eye on the category.

In "Budget Busters: The shift to high-priced innovator drugs in the USA," a report released earlier this year, EvaluatePharma provided data from an analysis of the 100 top-selling drugs in the U.S. Those findings showed that the median revenue per patient from the top 100 drugs increased from $1,260 in 2010 to $9,400 in 2014 – a sevenfold increase in just four years – with 19 drugs in the top 100 moving up a price bracket over that period. At the same time, the median patient population size served by a top 100 drug decreased to 146,000 in 2014 from 690,000 in 2010.

Seven treatments were priced in excess of $100,000 per patient per year in 2014, compared to four in 2010, according to the report. Not all were orphan drugs – Sovaldi (sofosbuvir, Gilead Sciences Inc.) was a standout in hepatitis C – but the revenue trend clearly earned its biggest boost from the orphan drug market.

'REMAINDER OF MARKET SEEMS TO BE CATCHING UP'

In its Orphan Drug Report, EvaluatePharma took a conservative approach to define the sector. The analysis included only products with orphan drug designations filed in the U.S., EU or Japan. The company further refined the classification by applying more restrictive criteria, such as identifying drugs whose first approved indication was an orphan condition and whose product sales were largely generated (more than 25 percent) from orphan indications.

Those limitations reduced the noise in the space by excluding blockbusters such as Avastin (bevacizumab, Genentech Inc./Roche AG), Enbrel (etanercept, Amgen Inc.), Herceptin (trastuzumab, Roche), Humira (adalimumab, Abbvie Inc.) and Remicade (infliximab, Johnson & Johnson) – all approved for orphan indications but generating less than 25 percent of sales from those conditions.

Even given the narrow focus, EvaluatePharma projected that product sales in the orphan market will constitute 19 percent of overall prescription drug sales by 2020, or an estimated $176 billion. And the pipeline shows no sign of a slowdown, with a record 260 orphan drug designations granted in the U.S. in 2013, according to the firm.

The median cost per patient differential is a staggering 19 times higher for orphan drugs than for those without the designation, according to the report, with Soliris (eculizumab, Alexion Pharmaceuticals Inc.) currently accounting for the highest orphan drug revenue per patient in the U.S.

However, Revlimid (lenalidomide, Celgene Corp.) is expected to be the number one selling orphan drug by 2020, according to the report, and Bristol-Myers Squibb Co. is in position to become the top seller of orphan drugs by the end of the decade, based on projections for its cancer immunotherapeutic, Opdivo (nivolumab). The programmed cell death protein-1, or PD-1, drug was approved in Japan this year and has a March 30, 2015, PDUFA date in the U.S. (See BioWorld Today, July 9, 2014.)

Certainly, the Orphan Drug Act of 1983 is doing its job. Products advanced under the designation reduced phase III development costs, on average, by 50 percent or more and slashed FDA review times by approximately 25 percent, according to the report. Prior to the Act, 38 orphan drugs had been approved. Since then, 468 indication designations covering 373 drugs have been approved.

But pricing for orphan drugs, new in this year's report, bears watching.

"We looked at the trends over the last few years, especially comparing them to non-orphan drugs," said Andreas Hadjivasiliou, an EvaluatePharma analyst and author of the Orphan Drug Report. "What we saw is that the orphan drugs did command a price premium. They are much more expensive."

Focusing on orphan drug pricing doesn't show the whole picture, however, Hadjivasiliou maintained.

"What's changing, perhaps, is the fact that non-orphan drugs are coming into the market that are also charging a premium," he told BioWorld Insight, citing Sovaldi as a prime example. Although payers were accustomed to covering the price premiums for orphan drugs in small patient subsets, "now, the remainder of the market seems to be catching up," Hadjivasiliou said.

EFFECT OF MARKET FORCES ON PRICING A 'WAIT AND SEE'

For drugmakers, that raises an unsettling prospect: Are pricing trends sustainable?

"That's the big question," Hadjivasiliou admitted. "I think we're going to have to wait and see how market forces shape it."

Several trends affecting the trajectory of orphan drugs already are clear. Most drugs in the orphan pipeline fall into one of three distinct categories, according to Hadjivasiliou. Two are related to oncology: blood cancer indications such as non-Hodgkin's lymphoma and acute myeloid leukemia, and hard-to-treat indications such as ovarian and pancreatic cancers and glioma. The third category comprises approximately 7,000 classic rare diseases with very small populations, including some better known indications such as cystic fibrosis (CF), hemophilia and muscular dystrophy.

Half of the drugs in development in the U.S. target cancer, and many begin as orphan indications. Among those, blood cancers historically have received the most attention from drugmakers, Hadjivasiliou said. Three orphan drugs launched this year – Beleodaq (belinostat, Spectrum Pharmaceuticals Inc.), Promacta and Zydelig (idelalisib, Gilead Sciences Inc.) – target forms of leukemia or lymphoma.

But more drugs for classic orphan indications are muscling their way to market. Companies such as Alexion Pharmaceuticals Inc., Vertex Pharmaceuticals Inc. and Pharmacyclics Inc. have cracked the top 20 in global sales of orphan drugs largely on the back of single products or indications, Hadjivasiliou pointed out.

Even more common is the expansion of an initial approval into additional rare indications – for example, with Jakafi and Soliris.

"There's a lot of movement, and if you get it right, it's certainly a very lucrative payoff," Hadjivasiliou said.

Orphan products are emerging through a combination of organic development and in-licensing, according to EvaluatePharma. Although the top three prospects in the late-stage pipeline – Vertex's CF transmembrane conductance regulator corrector, Intercept Pharmaceuticals Inc.'s obeticholic acid and Dcvax-L from Northwest Biotherapeutics Inc. – all were developed internally, "I don't think there's any clear trend at the moment," Hadjivasiliou said.

In terms of technologies, "we're going to see more of the same in terms of the enzyme replacement therapies we've seen from companies like Genzyme, Biomarin and Shire," added Karen Andersen, biotechnology analyst with Morningstar Inc. "But we're also starting to see the newer technologies, such as RNA-based therapies and gene therapies."

Andersen cited hemophilia as the most active orphan indication for the development of gene therapy and RNA technologies.

THE PRICING MODEL 'COULD BE SUSTAINABLE'

Andersen also predicted 2015 could be a pivotal year for certain companies in the space. For example, Vertex is expecting expanded approval of Kalydeco (ivacaftor), and "that's really going to open up the market for them," she said.

Last month's purchase of Prosensa Holding NV by Biomarin Pharmaceutical Inc., of San Rafael, Calif., also dramatically expanded Biomarin's footprint in orphan drugs, according to Andersen, with 2015 shaping up as a huge year for data and filings in the increasingly competitive muscular dystrophy market. (See BioWorld Today, Nov. 25, 2014.)

In fact, Andersen said she would add lung disorders as a separate category of orphan disease drugs. She cited indications such as idiopathic pulmonary fibrosis, targeted by Esbriet (pirfenidone), which drove the Roche AG acquisition of developer Intermune Inc. (See BioWorld Today, Aug. 26, 2014.)

Pulmonary arterial hypertension, or PAH, is another hot indication, Andersen said, with Actelion Ltd., of Allschwil, Switzerland, taking a commanding lead in the space with Opsumit (macitentan). Selexipag, Actelion's first-in-class selective oral prostacyclin IP receptor agonist, is hot on its heels. (See BioWorld Today, Oct. 21, 2013, and Oct. 22, 2013, Oct. 28, 2013, and June 17, 2014.)

"We've seen a lot of progress in hypertension indications with new mechanisms of action," Andersen said.

Many drugs approved in orphan indications could have legs in broader disease categories outside cancer, she added, citing Esbriet as a drug that could eventually be expanded into other forms of fibrosis "that would not be rare at all."

And she agreed with Hadjivasiliou that pricing could become a bigger bugaboo with the seepage of orphan drugs into broader indications.

"For given orphan indications, the current pricing model could be sustainable," Andersen told BioWorld Insight. "The problem is that we're going to see more and more diseases treated with combination therapies, especially in cancer, where pricing has already been pushed to a very high level. If you have a drug that costs $100,000 per therapy but it works even better if you add another drug that costs $100,000 per therapy, and that combination becomes standard of care for earlier-line patients, you start pushing pricing to a point where you're going to break the system."