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Jun 15, 2010 (Vol. 30, No. 12)

Big Pharma Steps Into Orphan Drug Market

Main Attraction of Sector Is the Availability of a Market Space Devoid of Competition

  • Ultraorphan Drugs

    Ultraorphan drug development is still challenging. However, some of the emerging business models may change the industry outlook on ultraorphan drugs. The inventors and adapters of these innovative business models include not-for-profit as well as for-profit companies, pharmacies, and patient-support groups.

    While the for-profit business model  based on high-prices has become the norm of the sector, novel approaches are being adopted in the emerging ones. For instance, the Institute for One World Health, a not-for-profit company focusing exclusively on neglected diseases, works on a hybrid business model combining philanthropic funding with the revenues from commercial activities such as partnership projects and intellectual property licensing.

    Another model is patient-support groups as investors. A typical example is the Cystic Fibrosis Foundation Therapeutics, which is promoting cystic fibrosis drug development by acting as a virtual company based on a venture philanthropy business model.

    Specialty pharmacies dedicated exclusively to ultraorphan drugs are also emerging, which is proving to be beneficial for patients as well as companies. While the patients receive a full package of services that include safe and timely delivery, payment, reimbursement, and financial assistance, the companies benefit by improved patient access that assists in patient monitoring and price designing. 

  • Demand for Modification of ODA

    Click Image To Enlarge +

    ODA has attracted considerable negative media coverage lately. The controversy over the price increase and the availability issues associated with H.P. Acthar Gel (ACTH) is a representative case. In 2007, after receiving orphan drug status for the treatment of infantile spasms, the price of ACTH was increased by over 10 times and its availability was controlled by limiting the number of distributors.

    Since the drug was in the market for decades for treating various indications, payers, as well as patients categorized these actions as loopholes of ODA. Critics also have criticized the practice of defining patient groups in a narrow manner to get orphan drug status. 

    Overall, however, it has to be acknowledged that ODA was instrumental in providing treatments for various rare diseases, which would have received little attention from the industry otherwise. Hence, though loopholes exist, ODA can be rated as a regulation successful in meeting its objectives to a significant extent.


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