The evolution of orphan PRMA environment in US, EU4, and UK. How much trouble ahead?
The evolution of orphan PRMA environment in the US, EU4, and the UK
The balance between investing in the development of treatments for orphan / rare diseases and ensuring patients access to them has driven much of the biopharmaceutical industry over the last 20 years. This equilibrium has shifted through the years and it is expected to continue. In this white paper, we focus on:
How the pricing, reimbursement, and market access (PRMA) landscape has evolved since the introduction of legislation to incentivize the development of therapies for rare diseases
Similarities and differences in the PRMA evolution between the US & EU
How some of the measures being considered by authorities, particularly in Europe, may impact the future development of orphan therapies and the principle of equitable patient access
These factors drive payers' market evaluations of therapy value that are based upon the clinical data provided to support regulatory approval. Pricing and reimbursement decisions, as well as their timing, reflect the market access achieved for these same products. These decisions for orphan products illustrate this evolving landscape.
Rare diseases are numerous, heterogeneous, mostly chronic illnesses that can become progressively disabling and often limit life expectancy1. While a majority of rare diseases are genetic, approximately 200 rare cancers have been identified. Therapies developed for rare diseases therefore encompass treatments for rare conditions as well as cell/gene therapies (as illustrated in Figure 1). Certainly, the recent advent of one-time use cell/gene therapies that aspire to be curative has added entirely new dimensions to the dynamics of these therapies.
Figure 1: Orphan therapy areas (illustrative only)
In general, individual rare disease therapies account for a relatively low share of healthcare budgets. However, the cumulative effect of increasing numbers of regulatory approvals for orphan drugs 1,2 (Figure 2 and Figure 3) is reflected in the growing spend on therapies with orphan indications. Invoice spending in the US was estimated to be $58 billion in 2019 (~11% of the total $518 billion)1 whereas estimates for 2020 in Europe range from 5.2% of total pharmaceutical spend in Spain to ~12% in Germany3 .
Figure 2: Orphan therapies approved in the US (1983-2019)
Figure 3: Orphan therapies approved in Europe (2000-2021)
Source: European Medicines Agency (EMA)
In future, these expenditures are expected to increase, since 40% of new drug therapies in development are for orphan indications, including cell and gene therapies4. This is likely to add pressure to strained healthcare systems, especially in Europe, where inequitable access to orphan therapies is already a concern. Debate on orphan drug expenditure and regulation to address the growing spend is rife in Europe and has generally moved at a faster pace than in the US.
The pricing, reimbursement, and market access (PRMA) landscape for orphan therapies has significantly evolved over the last 20 years (2001 to 2021)
As the regulatory landscape for orphan therapies has evolved, the PRMA environment has seen a shift, particularly in Europe. Here we present our observations about these changes in Europe and the US-based primarily on three key pillars:
Relative weight of the clinical evidence
Differences between gross and net (GtN) prices.
What follows is a conceptual approach to how this evolution has unfolded so far. (Figure 4)
Figure 4: PRMA landscape for orphan therapies
1st Wave (pre-2007)
2nd Wave (2007 to 2013)
3rd Wave (2014 to 2019)
4th Wave (2020 to present)
Price levels not seen before being accepted by payers with similar EU and US price levels
GtN gap not a significant factor - only mandatory discounts applicable
Number of therapies increased along with budget impact
Market access issues for reformulations in Europe
Mainly mandatory discounts for innovative orphan drugs
Increase in scrutiny due to early approvals based on immature data and high levels of uncertainty
ATMPs increase list price
GtN gap increases
Greater volume of products and several ATMPs increases budget pressures
While Gtn stays the same in the US, gap widens in Europe
Gross price only a starting point
Graph is for illustrative purposes only
EU Gross price
EU Net price: mandatory discount
EU Net price: mandatory + confidential discount
US Gross price
US Net price
The key points between the US and Europe are compared and contrasted below in order to illustrate how these activities have led to similarities and differences in the evolution of the markets below:
1st wave (2001-2007):
Following the introduction of the orphan regulation, therapies were able to achieve commercially viable P&R across EU markets.
List price : Unprecedented list prices necessary to support commercialization were accepted by payers who recognized the high unmet need and low budget impact
Relative weight of clinical evidence : Limited clinical data was acceptable considering the high unmet need
Gross to net (GtN) differences : GtN gap was not a significant factor. While mandatory discounts were applied, gross and net prices were fairly similar
2nd wave (2007 to 2013):
As the number of therapies increased, prices and "value-for-money" started to be scrutinized.
List price : List prices continued to accelerate for innovative new molecular entities
Relative weight of clinical evidence : While payers understood the challenges of gathering clinical evidence for rare diseases, they were less accepting of insufficient data. This was especially evident for repurposed molecules impacting market access for these therapies in Europe
Gross to net (GtN) differences : Payers began to adapt management tools but overall largely supported drug utilization, especially for new molecular entities
3rd wave (2014 to 2019):
Higher scrutiny of product evaluations in the EU vs. the US was observed with the introduction of more oncology orphan therapies and cell/gene therapies.
List price : A new, higher list price frame was set by cell and gene therapies
Relative weight of clinical evidence : Early approval based on immature data and higher levels of uncertainty. Additional concerns about the long-term benefits of one-time therapies resulted in an increase in market access scrutiny
Gross to net (GtN) differences : Significant discounts were expected by European payers to mitigate uncertainty, whereas in the US only mandatory concessions generally applied
4th wave (2020 to present):
Greater volume of orphan therapies continues to increase pressure on health systems
List price : As more therapies launch, including cell/gene-based, and budget impact continues to grow, list price starts to become only a pivot for negotiations in Europe. In the US while the list price is still relevant, the price acceleration seen in prior years begins to dampen
Relative weight of clinical evidence : In Europe, issues with small trials, lack of comparators, and early approval under special conditions result in less-than-optimal Health Technology Assessment (HTA) reviews for several new therapies
Gross to net (GtN) differences : Significant discounts and rebates are anticipated in Europe with the average discount for orphan therapies being ~20% in Germany5 and the overall discounts in Italy ranging from 20% to 55% based on the level of innovation. Furthermore, failed P&R negotiations for innovative therapies leads to access delays and even withdrawals from the European market as a cautionary tale (e.g., Zynteglo from bluebird bio)
Access challenges for orphan therapies
It is well known that the clinical data that is necessary to achieve regulatory approval for medicines is often not sufficient to achieve market access for the same medicines. For over 10 years, MME, an Indegene PRMA business, has tracked the time it takes for biopharmaceutical products to gain market access following regulatory approval in the US and EU4/UK6. Based on our periodic data cuts, we have observed differences in both if, and when, therapies reach the market. While some of these differences are a result of how the procedures work in the individual countries, others are more nuanced, and change based on the country and circumstances.
Recently we analyzed similar 4-year cohorts (EC approvals between Jan 2013-Dec 2016 and Jan 2017- Dec 2020) for all therapies, therapies with orphan indications, and those with oncology indications, in order to understand not just the overall statistics, but to look for changes in trends. What we uncovered is that there are distinct differences. Most notable are the following key takeaways (Table 1):
The US remains the quickest in terms of time to market for all products as well as orphan medicines
In Europe, there are some differences based on trends analysis over time. In France, Italy, and Spain, where the procedures require a local filing and negotiation before entering the market, the gap between regulatory and pricing approval is longer, albeit declining in Italy and Spain.
Between the time cohorts, we see declines in time to market for France Italy, and Spain, but this is offset by a fewer percentage of approved drugs being launched in the more recent years. This seems like the decline might be a "false positive" until a number of the remaining products complete the process. For instance, although the average time to market in Spain appears to be shorter at 58 weeks, patients only have access to 41% of all therapies and 29% of orphan therapies.
Table 1: Average number of Weeks to Launch Post Regulatory Approval across EU4/UK and US and percentage of launched therapies. Subsets selected: 2013 to 2016 and 2017 to 2020
*Data collection cut off -July 2021
Further analysis of recent approvals (EC approval: 2017 to 2020) indicates that market access barriers increase for therapies with conditional approval and those approved under exceptional circumstances (Table 2). Only 25% of drugs with conditional approval have completed P&R negotiations in both France and Spain and only 40% in Italy. Orphan drugs approved under exceptional circumstances seem to have a particularly difficult time in Spain as evidenced by none of the recently approved drugs available gaining access.
Table 2: Average number of Weeks to Launch Post Regulatory Approval across EU4/UK and US and percentage of launched therapies across 189 medicinal products from Jan 2017 to Dec 2020
^All drugs approved under exceptional circumstances were designated as orphan therapies. 75% of therapies with conditional approval had orphan designation
Our analysis suggests that despite regulatory incentives and a higher willingness to approve medicines under special conditions (conditional approval and exceptional circumstances), patient access to orphan therapies is suboptimal. This issue has likely been exacerbated as more innovative expensive orphan therapies have been launched and are expected to continue in the future. This further illustrates the point that the clinical data that is necessary to achieve regulatory approval for medicines is often not sufficient to achieve market access for the same medicines.
Current Pan-EU and country-wide initiatives to prioritize orphan drugs
One of the greatest challenges of pharmaceutical policy is the sustainable incorporation of new orphan drugs into the healthcare system. Orphan therapies continue to launch with the evidence needed to achieve regulatory approval but without the difficult-to-generate data demonstrating improvement in mortality, morbidity, or quality of life relative to standard of care; this is especially true with long-term data. As a result, the willingness to pay based on prevalence data alone is diminishing.
The similarities and differences within Europe are generally recognized. This issue is being addressed in multiple ways by different authorities. While still based on the principle that the development of orphan medicines and patient access to them is critical, the view of the world has shifted greatly since 2001.
A review of the EU Orphan drug regulation is currently ongoing to address key shortcomings including inequitable access to orphan drugs7, meanwhile, individual national payers are developing their own mechanisms to prioritize orphan drugs. In countries like France and Italy, for example, early access programs are becoming more stringent with only "truly innovative" orphan therapies being included in these programs, and for shorter timeframes than in the past8,9 In Germany, the "orphan drug loophole” is likely to be shrunken/narrowed and may be applicable to a smaller sub-set of orphan products based on set criteria (not yet defined)10. In England, the newly established criteria for the highly specialized technologies (HST) by National Institute for Health and Care Excellence (NICE) reduces the number of therapies likely eligible for this path based on the rare disease impacting fewer than 300 patients and significantly shortening life or severely impacting the quality of life11.
All of these measures being taken by authorities in key EU markets are likely to reshape the orphan drug landscape.
What is the future of orphan drugs?
Proposed changes in European orphan regulation could potentially disincentivize the development of orphan therapies with policies likely misaligned to further address unmet needs and improve patient access, for instance:
Reducing the prevalence threshold for orphan drug designation would mean very rare diseases being targeted which would only magnify the inherent scientific and commercial challenges that are associated with orphan drug development 12
Shortening market exclusivity would likely drive investment away from orphan therapies as one of the key incentives that were laid out by both the US and EU reforms (see Appendix)
National reforms in key European markets such as narrowing of the "orphan drug loophole" in Germany, could potentially result in Europe being de-prioritized as a commercial opportunity for orphan drug launches if manufacturers believe the PRMA environment is getting squeezed
US drug pricing pressures could see lawmakers follow suit in terms of anticipated discounts for orphan therapies further shifting the environment for rare diseases
Maintaining a positive incentive framework is essential to advancing therapeutic innovation towards delivering effective treatments for rare diseases to patients, strengthening equitable health systems, and fostering a productive biopharmaceutical industry13. A dialogue is therefore needed between manufacturers and health systems to ensure sustainability of orphan therapies and to restore balance between developing treatments for rare diseases and ensuring access for patients.
Appendix: Orphan drug legislation leads to a new era in biotech
Rare diseases are numerous, heterogeneous, mostly chronic illnesses that can become progressively disabling and often limit life expectancy1. Although each rare disease impacts a small number of patients, collectively over 6,000 identified rare diseases are estimated to impact ~300M people worldwide12. 72% of rare diseases are genetic, whereas others are the result of infections (bacterial or viral), allergies, and environmental cases or are rare cancers14, 15.
Historically because of the rarity of each condition and consequently the size of the commercial opportunity, there was a lack of investment from biopharmaceutical companies in research and development of treatments for rare diseases. In the 1980s, US-based rare disease patient advocacy groups formed a coalition that became the National Organization for Rare Disorders (NORD) and, along with Senator Orrin Hatch and Representative Henry A. Waxman, were instrumental in passing the US Orphan Drug Act in 19831. The Orphan Drug Act defined a rare disease as a disease or condition that affects less than 200,000 people in the United States16. This act provided incentives such as tax credits for qualified clinical (in human) testing, waiver of the Prescription Drug User Fee (currently ~$3 million for a new drug), and potentially 7 years of market exclusivity after approval. In addition, the Orphan Drug Act established the Orphan Product Grants Program to provide development funding.
The European Orphan Regulation was introduced ~17 years later in 2000. It laid out similar incentives with an aim to stimulate and facilitate the development of rare disease medications and ensure equitable access to treatments. The European legislation (Regulation (EC) No 141/2000) offered 10-year market exclusivity as a financial incentive along with scientific advice on study protocols, various fee reductions, and access to EU grants triggering the development of orphan therapies. Rare diseases encompass, by European definition, all diseases which affect fewer than 5 in 10,000 people17.
We would like to thank our colleagues below for their contribution to this paper
Vice President, Strategic Initiatives PRMA Biopharma
Senior Analyst, PRMA
Orphan Drugs in the United States: Rare Disease Innovation and Cost Trends Through 2019. IQVIA Institute (Dec 2020). https://www.iqvia.com/insights/the-iqvia-institute/reports/orphan-drugs-in-the-united-states-rare-disease-innovation-and-costtrends-through-2019
European Medicines Agency. Orphan medicines in the EU. https://www.ema.europa.eu/en/documents/leaflet/leaflet-orphanmedicines-eu_en.pdf
Spain Orphan Drug Evolution (2016-2021). Ministry of Health -Feb 2022. https://www.sanidad.gob.es/profesionales/farmacia/pdf/202202222_Infor_Evol_Mtos_Huerfanos_SNS_2016_2021.pdf
EFPIA Pipeline Review 2021 Update. IQVIA Feb 202. https://www.efpia.eu/media/602563/iqvia_efpia_pipeline-review_final.pdf
Contributions to Health Economics and Health Services Research (Volume 38). AMNOG-Report 2022. Andreas Storm (Editor) https://www.dak.de/dak/download/report-2524570.pdf
Market Access Trends of Pharmaceutical Products in the EU5 and US (2009-2019). Value in Health. ISPOR. https://www.valueinhealthjournal.com/article/S1098-3015(21)00967-0/pdf
Joint evaluation of Regulation (EC) No 1901/2006 of the European Parliament and of the Council of 12 December 2006 on medicinal products for paediatric use and Regulation (EC) No 141/2000 of the European Parliament and of the Council of 16 December 1999 on orphan medicinal products. https://ec.europa.eu/health/system/files/2020-08/orphan-regulation_eval_ swd_2020-163_part-1_0.pdf
Reform of early access to drugs in France- Article 78 of Social Security Financing Act for 2021. https://www.legifrance.gouv.fr/jorf/article_jo/JORFARTI000042665373
Criteria for accessing the AIFA 5% Fund (Legislative Decree No. 269/2003, converted into Law No. 326/2003) subsequently integrated by Law 10 November 2021 n. 175 on the treatment of rare diseases operating procedures. https://www.aifa.gov.it/documents/20142/1307543/2021.11.30_allegato-1_Nuovi_criteri_accesso_Fondo_AIFA_5.pdf
Law for more safety in the supply of medicines (GSAV). https://www.bundesgesundheitsministerium.de/service/gesetze-undverordnungen/guv-19-lp/stellungnahmen-refe/gsav.html
NICE highly specialised technologies guidance- Jan 31, 2022. https://www.nice.org.uk/about/what-we-do/our-programmes/niceguidance/nice-highly-specialised-technologies-guidance
Addressing unmet needs in extremely rare and paediatric-onset diseases: how the biopharmaceutical innovation model can help identify current issues and find potential solutions. July 2021. https://www.efpia.eu/media/602878/addressing-unmet-needs-inextremely-rare-and-paediatric-onset-diseases-how-the-biopharmaceutical-innovation-model-can-help-identify-current-issues-and-find-potential-solutions.pdf
Estimated impact of EU Orphan Regulation on incentives for innovation. Prepared by Dolon. Technopolis Group, 2020. https://dolon.com/dolon/wp-content/uploads/2020/10/Estimated-impact-of-EU-Orphan-Regulation-on-incentives-for-innovation.pdf
Estimating cumulative point prevalence of rare diseases: analysis of the Orphanet database. https://www.nature.com/articles/s41431-019-0508-0.pdf
Burden and centralised treatment in Europe of rare tumours: results of RARECAREnet-a population-based study. https://core.ac.uk/reader/96662760?utm_source=linkout
Regulation (EC) No 141/2000 of the European Parliament and of the Council of 16 December 1999 on orphanmedicinal products. Official Journal of the European Communities. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32000R0141&from=EN
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