What is a rare disease therapy worth? This question is pivotal for pharmaceutical companies, because it underpins their ability to invest in the development of orphan drugs. We know that even ultra-rare diseases can be commercially viable. But for these diseases, it can be tough to assess the size of a market opportunity. As with most pharmaceutical products, it helps to think of an orphan drug’s market opportunity as a three-part question:
1) How many patients can your therapy treat?
2) What is their unmet need?
3) What is the value of your specific therapy?
How many patients can your therapy treat?
Rarity brings a special set of challenges to answering these questions, but the first one is where typical pharmaceutical methods are especially prone to fail. Rare diseases are, by definition, different from other diseases because of their epidemiology. In many cases, the prevalence of a disease (or the subset treatable by your orphan drug) hasn’t been studied before. Orphan drug developers often must generate prevalence data to earn investment, obtain an orphan drug designation, plan trial recruitment, or build a commercial organization.
Three sources can help estimate the size of a treatable population, but they must be used with caution for rare diseases.
- Published literature: For many rare or ultra-rare diseases, review articles offer a prevalence value. In my experience, about 10% of them are misleading and about 10% are simply wrong. Be a bloodhound and track down the original source of any putative population estimate. It’s also important to understand the statistical significance of the published values: are they truly precise enough for your business needs? If different published values seem to conflict with each other, is that because their populations are truly different, or is it merely the result of the “wobbliness” of small samples? Even if the study doesn’t include statistical metrics, they can often be calculated from other data in the article. It’s also essential to understand whether the studies’ inclusion criteria and background population are aligned with your therapy’s treatable population. Any of these factors can radically change the interpretation of a published prevalence value, and likewise grow (or collapse) your market size estimate.
- Physician surveys: You can field surveys to rare-disease specialists that act as chart reviews for affected patients. These surveys let you “count noses” of real-world rare disease patients, though it’s usually not a good idea to extrapolate total prevalence from these samples. In addition, these projects are great multi-purpose tools, because they can also illuminate the disease’s natural history, the patient journey, referral patterns, and physician influence networks.
- Administrative systems: These resources (insurance claims, EMRs, and ex-US national systems) often have huge population samples, which are helpful to identify rare-disease patients. If you master the quirks of their coding systems (diagnoses, prescriptions, and procedures), you can be rewarded with a broad, deep, and statistically significant view of your treatable population. Special techniques are needed to avoid false positive cases.
What is the patients’ unmet need?
Compared to the question of the size of the treatable population, it’s relatively simple to assess patients’ unmet need. As with “normal” pharmaceutical products, orphan drug developers need to understand the seriousness of the disease and the ability of existing (or emerging) therapies to address those needs. Rare diseases can be challenging because of pre-existing assumptions (or a complete lack of data) about unmet need. It is essential to understand the perspective of each stakeholder: patients, caregivers, physicians, and payors. Each may have their own concerns, and perhaps more importantly, a different ability to influence the treatment decision when attempting to address those concerns.
So, the real question becomes: who makes the treatment decision, and can your therapy motivate them to make a different decision? This question should be answered through market research with each of the stakeholders. Even if the answer seems obvious (e.g., an enzyme replacement therapy for a previously-untreatable disease), this approach can often reveal important differences among and within the stakeholders. For example, your product’s risk/benefit balance may not suit patients with mild disease—what share of patients feel that way? Would the mode of administration or reimbursement status disrupt physicians’ practices? Would your therapy’s dramatically-reduced cost-of-care make any real difference to payors?
What is the value of your specific therapy?
When pricing a new therapy, a pharmaceutical company’s goal is to capture the value it offers. This can lead to a debate that compares the therapy to existing treatments. In some markets, a drug developer has a nearly free hand to set the price, but pushback against this model is increasing in every country. Rarity is no guarantee of a high price. Other factors come into play; some are beyond the company’s control, but others can be influenced if addressed early in the development process.
Some payors, particularly outside the US, base their reimbursement decision on the price of competing products. Innovation is always rewarded with a higher price, but payors may have strict standards for assessing the degree of innovation. While a company can’t influence the price of its competitors, it can affect how its own product is evaluated by payors. It is more important than ever to provide compelling evidence of significant clinical superiority versus competitors. When designing clinical trials, it’s tempting to use easy-to-hit endpoints such as biomarkers or non-inferiority. But the impact on price of these early decisions must be considered.
In a similar vein, recent “conditional approvals” show how lax endpoints can undermine a therapy, even without competition. It’s important to remember that regulators and payors have fundamentally different goals: regulators must ensure that a therapy’s benefit outweighs its risks, but payors must ensure that a therapy offers sufficient benefit for its price. So, a regulator might waive through a low-risk therapy with uncertain benefits, but a payor would balk at the same product if its price is high. In the case of a conditional approval, we can speculate that this could result in a vicious circle: a high price causes payors to block uptake, so the therapy never has a chance to prove that it’s effective enough to justify its high price.
Your therapy’s “value” is influenced by the competition, but also by the perspectives of payors and regulators. Rare diseases face special challenges because they often require high prices for sustainability, yet those prices can be undermined by development decisions made long before the company has adopted a commercial perspective.