In January 1983, the Orphan Drug Act was signed in the US, amending the Federal Food, Drug and Cosmetic Act. The Act guaranteed the developer of an orphan product (serving a rare disease affecting less than 200,000 persons in the US) seven years of market exclusivity following the approval of the product by the FDA and tax credits for clinical research undertaken by a sponsor to generate required data for marketing approval.

Just over 10 years later, the Organization for Pharmaceutical Safety and Research (OPSR) started a programme to promote research and development of orphan products in Japan. An orphan product was defined as targeting rare and serious diseases which affect fewer than 50,000 patients in Japan. Australia's orphan drugs policy was set up in November 1997. The orphan drugs programme aims to ensure the availability of a greater range of treatments for rare diseases and allows the Australian Therapeutic Goods Administration (TGA) to use information from the FDA Orphan Drugs Programme as part of the Australian evaluation process.

Since the introduction of orphan drug legislation in the US, a total of 1,432 different orphan drug designations have been granted by the Office of Orphan Products Development (as of March 2005).

World's leading orphan drug

The leading orphan drug by worldwide sales revenue is Amgen's Epogen, which generated sales of $2.6 billion in 2004. In 2004, a total of nine orphan drugs generated blockbuster sales revenues in excess of $1 billion.

After 17 years of US orphan drug activity, Europe finally put in place orphan drug legislation. Regulation (EC) No. 141/2000 of the European Parliament and of the Council on Orphan medicinal products entered into force on 27th April 2000 and sets out the key regulatory framework relating to orphan drug provisions in the EU. The legislation provides Community level incentives to stimulate the development of medications for diseases where the market provides insufficient incentives.

An orphan drug is defined as intended for the diagnosis, prevention or treatment of a serious disease affecting not more than five in 10,000 persons, or a disease where marketing of a drug would likely generate insufficient returns to justify investment. No satisfactory drug must currently be available for the disease, or the orphan drug must be of significant benefit to those receiving currently available therapy.

The designation process for orphan medicines is determined by the committee for orphan medicinal products (COMP) and takes a maximum 90 days from application submission to opinion. The Commission's decision follows in a maximum of 30 days.

Key incentives available for the development and approval of orphan medicines include free protocol assistance, access to the centralised Community procedure for marketing authorization with 50% fee reduction, and ten years of post-approval market exclusivity. Other Community-wide incentives are available by way of research funding and grants, and possible tax incentives at the individual member state level.

Key differences in legislation

A number of key differences in orphan drug regulation and legislation exist between Europe and the US. The addition of designation for showing 'significant benefit' in EU regulations adds a greater chance for the development of novel therapies, counteracting the higher maximum allowable prevalence rate found in the US.

There is a significant difference in the budgets of the respective orphan drug programmes in the US and the EU, with US budgets far outweighing those in the EU. The US also has a well-established tax credit system, which, given the problems of diverse Member State tax systems, is very difficult to implement in the EU.

The US also make the provision and receipt of protocol assistance (PA) a requisite part of the legislation, while in the EU, companies continue to be hesitant in taking the initiative to seek out PA.

An overwhelming rate of uptake

As of March 2005, the European Commission had granted 259 orphan drug designations. At its inaugural meeting in April 2000, the COMP submitted budgetary forecasts based on an expected total of 67 orphan drug designations between 2000 and 2003 (the actual total was 182).

In the last five years orphan drug activity has proliferated in Europe - the number of new designations increased to record levels in 2004, far exceeding the numbers anticipated back in 2000.

As of March 2005, 444 applications for orphan drug designations had been received and 278 positive COMP opinions given. With a fall-out rate of approximately one-third, 120 applications were subsequently withdrawn and to date nine final negative COMP opinions given.

Popular indications and sponsors

Of the 259 designated orphan drugs in Europe, 39 different orphan indications have received more than one drug designation. The most frequently sited indications for orphan drugs in Europe are the treatment of cystic fibrosis and renal cell carcinoma, each with 10 designations. Other popular indications include the treatment of glioma, multiple myeloma and pancreatic cancer.

Of the 259 designated orphan drugs in Europe, 53 different sponsor companies have received more than one drug designation. The most frequently sited sponsors of orphan drugs in Europe are Genzyme, Novartis, Orphan Europe and Pharmion with six designations each. Other sponsors making four or more successful orphan drug applications include Insmed, Orfagen, Pfizer, Agence generale des equipements et produits de sante - Etablissement pharmaceutique des hopitaux de Paris (AGEPS-EPHP), Chiron, Pharma Mar and PPD Global.

Of the 259 European orphan drugs designated to date, 18 designations have been followed by a successful EU market authorisation, including two orphan drug indications for the same compound (Novartis' Glivec). Of the 18 different orphan drug approvals for marketing in the EU, 13 received approval in 'exceptional circumstances' and are required to submit results from ongoing trials to support the drugs' clinical claims.

Pharmacia-Pfizer's Somavert, Pierre Fabre's Busilvex, Axcan's PhotoBarr, Lipomed's Litak and Orphan Europe's Pedea are the only orphan drugs to date to receive a full market authorisation from the EMEA.

Novartis and Gleevec

Novartis has six European orphan drug designations and Gleevec is currently approved and marketed for two different orphan diseases - the treatment of chronic myeloid leukaemia (CML) and malignant gastrointestinal stromal tumours (GIST).

In the first half of 2003, Gleevec (marketed as Glivec in the US) became Novartis' second-biggest product, benefiting from approvals in the EU and US for first-line treatment in CML and for GIST.

Global sales for the fourth quarter of 2004 were $466 million, 40% greater than the sales recorded in the same period in 2003. Further progress was made on securing reimbursement, including the new first-line indication. As sales continued to exceed expectations, the number of patients on the Gleevec/Glivec Patient Assistance Programme rose past 4,000, providing many needy patients access to treatment at reduced or no cost. Global sales of Gleevec/Glivec in 2004 increased by 45% to $1.6 billion.

According to research by Urch Publishing, the cost of Gleevec/Glivec is approximately $28,000 per year for the chronic phase dose of 400mg and $42,500 for the accelerated and blast crisis dose of 600mg. The UK price for Gleevec was £1,557 for a 120-cap pack of 100mg capsules. The approved dose of Gleevec is 400mg/day for adult patients with CML in chronic phase, either newly diagnosed or after treatment with interferon; and 600mg/day for CML patients in accelerated phase or blast crisis.

Actelion and Tracleer

Actelion has only two European orphan drug designations. Both designations are for lead product, Tracleer (bosentan), currently approved and marketed for the treatment of pulmonary arterial hypertension (PAH). As well as an orphan designation for this approved indication, Tracleer is also being developed for the orphan indication of systemic sclerosis.

Since its launch in 2001, Tracleer has quickly accumulated significant market share. The drug boasts a number of advantages over its nearest rival, GSK's  Flolan. Tracleer is the first PAH drug to be taken orally, while Flolan must be administered through a catheter. And while a year's supply of Flolan carries a hefty $100,000 price tag, Tracleer costs only $28,000. Tracleer has quickly replaced Flolan as the treatment of choice.

Tracleer generated sales revenues of CHF123.8 million in the fourth quarter of 2004, compared with CHF91.4 million in the same period in 2003. In 2004, Tracleer was marketed in 18 countries worldwide, including almost all major pharma markets.

By 2006, sales of the drug are expected to peak at between $300 million and $600 million a year. But those forecasts could be revised upwards if Actelion succeeds in getting Tracleer approved for treatment of a broader range of diseases involving the endothelium, including cancer and fibrosis. Another treatment for acute heart failure is in late-stage trials, with a further seven early stage compounds in development for diseases such as Alzheimer's and obesity.

Genzyme and Aldurazyme

Genzyme has six European orphan drug designations and currently markets two drugs for orphan diseases - Fabrazyme (alpha-galactosidase A) for the treatment of Fabry disease and Aldurazyme (laronidase) for the treatment of type I mucopolysaccharidosis (MPS-I).

Four more development candidates have been given orphan drug designations for the treatment of Niemann-Pick disease (type B), chronic iron overload requiring chelation therapy, systemic sclerosis and glycogen storage disease type II (Pompe's disease).

For the quarter ending 31 December 2004, sales of Aldurazyme (laronidase) enzyme replacement therapy for patients with MPS-I was $16 million. This was an increase from $6.7 million in the same period in 2003. 2004 sales for Aldurazyme increased by 270% to $42.6 million. Genzyme is commercialising Aldurazyme under a joint venture with BioMarin and, therefore Aldurazyme sales are not included as part of Genzyme General's total revenues. The companies received marketing approval for Aldurazyme in the US in April 2003 and in Europe in June 2003. Launch activities started successfully in both markets, driving early patient access to Aldurazyme.

What does the future hold?

The report Orphan Drugs to 2008: Understanding regulation and market opportunity in Europe (Urch Publishing) makes clear that European orphan drug incentives have resulted in significant interest and development activity in orphan diseases across the pharmaceutical and biotechnology industry. Big pharma companies, such as Novartis, have used the protocol assistance and other regulatory measures to help expedite the time to launch for key drugs.

Follow-on indications for Gleevec may very well broaden out the treatment base beyond the orphan disease setting, while at the same time the drug will enjoy much of its 10 years of market exclusivity in its current treatment settings. The orphan drug route to market is receiving much attention from the pharma industry, with key indications such as ovarian cancer, multiple myeloma and renal cell carcinoma, being fought over by a number of leading players.

Large biotech companies, such as Genzyme have built entire therapeutic franchises through the development of drugs for orphan diseases. Given the limited patient base and exclusivity barriers associated with orphan diseases there is only room for a few orphan drug specialists in the biotech industry. However, those that create the right links with specialist physicians and patient advocacy groups will make significant returns from high prices in specialist treatment settings.

Smaller biotech companies, like Actelion, have successfully exploited the protection and regulatory support offered through orphan drug incentives to develop into more established companies.

Orphan drug legislation in the US is often cited as a major factor in the biotech boom of the 1980s and 1990s and similar incentives might lead to a similar biotech boom in Europe.