By Nancy Volkers

Special To BioWorld Financial Watch

There are more than 190 of them, and some of their names sound familiar: Neupogen, Pulmozyme, hydroxyurea. Others are not so familiar: Chenix, Atnativ, Albenza. All are orphan drugs, treatments for rare diseases, approved under the Orphan Drug Act of 1983.

The act defines a rare disease as one that affects fewer than 200,000 people in the country. According to the National Organization for Rare Diseases (NORD), more than 5,000 such conditions exist; about one in 12 people is affected. Some of the diseases like some of the drugs designed to treat them are familiar: cystic fibrosis, Crohn's disease, sickle cell anemia. Others are not: hydatid disease, Lennox-Gastaut Syndrome, neurocysticerosis.

Before the act, there was little or no financial incentive to research drugs for these conditions. To recoup research and development costs was nearly impossible when the relevant patient population numbered only in the thousands, or hundreds, or even in the single digits.

The Orphan Drug Act came at a fortuitous time for biotechnology, and most agree that it contributed to the growth of the industry. A 1998 review article from the Tufts Center for the Study of Drug Development said nearly 60 percent of the new biological entities approved between 1980 and 1994 had orphan status. Having an orphan drug in development also made biotechnology firms more attractive to venture capitalists, wrote Sheila Shulman, first author of the review.

Jon Alsenas, managing director at ING Baring Furman Selz LLC in New York, said the act "has been a wonderful biotech incubator for many companies."

The act led to an explosion of approvals for drugs and biologics to treat rare diseases, most of which had no treatments to speak of.

Abbey Meyers, NORD president, said that, since passage of the act, more than 190 orphan drugs are approved and on the market. "Considering that in the 15 years preceding the Orphan Drug Act we only had 15 drugs approved [for rare diseases], it's been tremendous," she said.

The act also has served as a prototype for countries such as Japan and Australia, and for Europe; in March, the European Parliament backed the European Union's plan to stimulate the development of orphan drugs. Until 1993, the U.S. was the only country with an orphan drug program.

Nearly half of all products approved under the act have passed FDA muster only in the past five years. In 1997, 14 orphan products were approved; last year, there were 18, including Centocor's Remicade (infliximab) for Crohn's disease; Celgene Inc.'s Thalomid (thalidomide) for Hansen's disease (leprosy); Bristol-Meyers-Squibb Pharmaceutical Research Institute's Droxia (hydroxyurea) for sickle cell anemia in adults; and Seragen Inc.'s Ontak (denileukin diftitox) for patients with a type of non-Hodgkin's lymphoma who have failed other therapies.

Since 1983, more than 900 products have received orphan designation from the FDA. Recently, the agency bestowed orphan drug designations on M-VAX, a treatment vaccine for melanoma being developed by Avax Technologies Inc., and on Theragyn, developed by Antisoma plc, which is in Phase III trials for ovarian cancer.

The act also established the Orphan Products Grant Program, which funds more than $11 million in clinical studies annually. Biotechnology firms developing orphan drugs may receive $200,000 a year for up to three years. The FDA also helps companies with orphan drugs in the pipeline navigate the journey to approval by providing guidance on protocol set-up and regulatory issues.

The act provides important financial incentives as well. Companies developing orphan drugs receive a tax credit for half of clinical trial costs; the credit may be carried forward for up to 15 years. Such companies have had a great track record of requesting waivers of fees collected under the 1992 Prescription Drug User Fee Act. According to the Tufts review article, nearly one-third of all waived fees, totaling more than $2.5 million, is attributable to orphan drugs.

Not to be overlooked is the act's provision for seven years of exclusive marketing rights, a veritable mini-patent that shields a biotech from competition. Cephalon, Inc., whose first drug, approved in December, was an orphan Provigil (modafinil) for narcolepsy found the exclusivity clause to be a big draw, said Scott Melville, Cephalon's senior director of government affairs and regulatory counsel.

"It's been a very positive experience," he said. "The two main incentives [market exclusivity and the tax credit] were key, particularly the exclusivity. The credits are less important because they're down the road, but the market exclusivity gives you time to recoup your investment."

The company's second drug, myotrophin for adrenoleukodystrophy (ALS), is also an orphan. Cephalon received an approvable letter in May 1998. "It's not like we said, 'Oh, look at this great act, let's find something that fits'," Melville said. "The act made an otherwise attractive compound even more attractive."

Since a 1992 revision of the act, the exclusivity clause has some bend to it. Now, if a second drug for the same indication is found to be clinically superior, the FDA can approve it for marketing during the seven-year period. In 1996, a high-profile decision tested the definition of "clinically superior": the FDA approved Biogen Inc.'s Avonex (interferon beta-1a) for multiple sclerosis, three years into the exclusivity period for Betaseron (interferon beta-1b), which is marketed by Chiron Corp. and Berlex Laboratories and was approved in July 1993.

Berlex filed a lawsuit, but the FDA backed its approval with data showing that Avonex produced a lower incidence of injection-site reactions. The court ruled in favor of Biogen. At the time, the FDA said "a small demonstrated improvement in efficacy or diminution in adverse reactions may be sufficient to allow a finding of clinical superiority."

Alsenas said the agency "has been pretty diligent in maintaining standards. I think that's a vote of confidence."

Shulman wrote that this 1992 revision also provided the FDA with a way to meet patients' expectations for safer or more effective therapies, preventing them from having to wait until an exclusivity clause expired.

Historically, the approval times for orphan products at least for new chemical entities (NCEs) has been considerably shorter than times for non-orphan NCEs (1.8 vs. 2.7 years). From 1983 to 1995, the FDA rated 90 percent of orphan drugs "priority," and 60 percent of orphan products were either fast-tracked or were under investigational new drug applications, or both. All of these indications shortened approval periods, sometimes by nearly a year.

However, according to Shulman's review, the overall time for development of an NCE orphan is almost two years longer than that of a comparable non-orphan (9.8 years vs. 8.1 years). She attributed the gap to longer clinical development times for orphans, but allowed that a 1996 analysis of new biological entities showed no such disparity.

Though big biotechnology firms have brought drugs to market under the act, nearly 85 percent of orphan biotechnology products come from small and medium-sized companies.

"After an initial orphan success, [big biotechnology companies have] initially gone away from orphan designations," Alsenas said. "The initial success was as an orphan, but then they've moved on."

Meyers said "a lot of the big companies haven't done much with orphan drugs. It's mostly been small and medium companies. The first five years or so were pretty tough, because companies saw an opportunity to make a lot of money. There were many attempts to try and stop drugs like [erythropoietin] and human growth hormone."

In recent years, Meyers said, the FDA has become "much stricter. They saw how much bad publicity was out there and how much Congress was getting upset. Then they tended to use the orphan drug act for the real orphans."

Some of the "older orphans" still make a lot of money, however. Of the top 10 selling biotechnology drugs of 1997 (according to a 1999 Ernst & Young report), six were orphans. Amgen Inc.'s Epogen and Neupogen were numbers two and three, respectively. Epogen's sales topped $1.1 billion; Neupogen sales topped $1.0 billion. Neupogen is orphaned for four indications, and the earliest exclusivity period will expire in 2001. Epogen's remaining exclusivity period expired on the last day of 1997.

The other top 10 sellers were Ceredase/Cerezyme, Genzyme's drugs for Gaucher's disease; Genotropin, developed by Genentech Inc. and marketed by Pharmacia & Upjohn as a treatment for short stature; Chiron's and Berlex's Betaseron for multiple sclerosis; and Schering Corp.'s Intron, for AIDS-related Kaposi's sarcoma (among other, non-orphaned conditions).

NORD's Meyers noted a number of orphan drugs are very costly. "[Genzyme's drugs for Gaucher's disease] are the most expensive in the world," she said. "But, still, the population is very limited. It's not a blood pressure or arthritis drug."

Enzon Inc.'s Adagen is used to treat a form of severe combined immunodeficiency (SCID), also known as "bubble boy disease." The National Institutes of Health estimates that SCID occurs in about one of every 1,000,000 births; the type for which Adagen is a treatment is even rarer. A 1998 filing with the Securities and Exchange Commission by Enzon said 53 patients were being treated with Adagen in seven countries. The product's seven-year exclusivity period ended in March 1997.