Contents:

1. Introduction 1.1 What are Orphan Drugs? 1.2 What are the P&R Issues with Orphan Drugs? 2. EU Orphan Drug Regulation 2.1 Objectives 2.2.Qualifying Criteria 2.3 Procedure/Timetable 2.4 Incentives 2.4.1 Information 2.4.2 R&D 2.4.3 Protocol Assistance 2.4.4 Marketing Approval Assistance 2.4.4.1 Priority review/fast track 2.4.4.2 Lower regulatory fees 2.4.5 Market Exclusivity 2.4.5.1 Exclusivity withdrawn? 2.5 Comparison with US Orphan Drug Act 2.6 Results 2.6.1 Designation 2.6.2 Marketing Approval 2.6.3 Medical Benefit 3. Compassionate Use 4. Paediatric Regulation 5. Market Access 6. Pricing and Sales 6.1 Public Prices 6.2 Manufacturer Selling Prices 6.3 Sales 7. Distribution 8. Advantages and Disadvantages of Orphan Designation 8.1 Pros 8.1.1 Incentives 8.2 Cons 8.2.1 Most National Incentives Still Apply 8.2.2 Some Help from EU Still Available 8.2.3 Limitation to Market Exclusivity 8.2.4 Initial fee Waivers May Not be Permanent 8.2.5 Information Disclosure to Authorities 8.2.6 Information Disclosure to Competitors 8.2.7 No Regulatory Flexibility 9. Future EU Developments 9.1 New Communication 9.2 Common HTA, Single EU Price for Orphan Drugs? 10. National Situation 10.1 EU-5 10.1.1 Germany 10.1.1.1 Orphan incentives 10.1.1.2 Patient access 10.1.1.3 Funding provisions 10.1.1.4 Impact on P&R 10.1.1.5 Health economic considerations 10.1.2 France 10.1.2.1 Orphan incentives 10.1.2.2 Patient access 10.1 2.3 Funding provisions 10.1.2.4 Impact on P&R 10.1.2.5 Health economic considerations 10.1.3 UK 10.1.3.1 Orphan incentives 10.1.3.2 Patient access 10.1.3.3 Funding provisions 10.1.3.4 Impact on P&R 10.1.3.5 Health economic considerations 10.1.4 Italy 10.1.4.1 Orphan incentives 10.1.4.2 Patient access 10.1.4.3 Funding provisions 10.1.4.4 Impact on P&R 10.1.4.5 Health economic considerations 10.1.5 Spain 10.1.5.1 Orphan incentives 10.1.5.2 Patient access 10.1.5.3 Funding provisions 10.1.5.4 Impact on P&R 10.1.5.5 Health economic considerations 10.2 Other European Countries 10.2.1 Austria 10.2.3 Belgium 10.2.4 Bulgaria 10.2.5 Czech Republic 10.2.6 Ireland 10.2.7 Netherlands 10.2.8 Poland 10.2.9 Portugal 10.2.10 Slovak Republic 10.2.11 Sweden 10.2.12 Other Nordic Countries 10.2.13 Switzerland 11. Pricing Case Studies 11.1 Chronic Myeloid Leukaemia 11.2 Pompe Disease 11.3 Pulmonary Arterial Hypertension 12. Conclusions 13. Strategic Implications List of tables 1.1 Level of evidence in selected orphan drug appraisal dossiers 2.1 Examples of orphan medicines predating the orphan drug Regulation 2.2 Advice to orphan drug sponsors from EMEA 2.3 Orphan drug regulations compared 2.4 Overview of EU procedures for orphan drug designation and approval 2.5 EU designated orphan drugs with centralised marketing authorisations 2.6 National marketing authorisations granted for EU-designated orphan drugs 2.7 Main therapeutic classification of approved orphan drugs 2.8 EU designated orphan drugs with previous non-orphan use 4.1 Marketed orphan drugs with supporting data in paediatric populations 5.1 European availability of orphan drugs by product 5.2 European availability of orphan drugs by country 5.3 First launch quarters for centrally authorised orphan drugs 5.4 Reimbursement status of Aldurazyme across EU 6.1 Public prices of EU orphan drugs 6.2 Estimated manufacturer selling prices of orphan drugs (EU-5, Swiss & US) 7.1 Main distribution channels for orphan drugs 10.1 ZE rates for Glivec in Germany 10.2 ASMR scores for orphan drugs in France 10.3 Status of orphan drugs in Scotland after SMC review 10.4 Status of orphan drugs in Wales after AWMSG review 10.5 Costs per QALY for ultra orphan drugs in UK 10.6 Certified rare disease centres in Italy 10.7 Treatment costs with selected orphan drugs in Italy 10.8 Reimbursement status of orphan drugs in Belgium 10.9 Actual reimbursed expenditure on orphan drugs in Belgium 10.10 Intramural and extramural orphan drugs reimbursed in the Netherlands 10.11 NFZ points value and MSP of reimbursed orphan drugs in Poland 10.12 Swedish cost effectiveness estimates for orphan drugs 10.13 Swiss orphan drugs with simplified marketing authorisations List of figures 6.1 Estimated manufacturer selling prices across Europe for Glivec 6.2 Orphan target population vs monthly adult treatment cost

Summary:

1. An orphan drug, according to EU Regulation 141/2000, treats life-threatening or chronically debilitating conditions with a prevalence of less than five cases per 10,000 population (about 250,000 patients in EEA), when either no satisfactory alternative approved treatment exists or the new drug could bring significant therapeutic benefits. 2. Designated orphan status is provided by the European Commission after receiving a positive opinion from the EMEA’s Committee on Orphan Medicinal Products (COMP). Application can be made by the drug’s sponsor anytime during development. A subsequent marketing authorisation (MA) is needed, with all orphan drugs now required to use the centralised route. 3. Designated orphan status provides sponsors with the following incentives: - free trial protocol assistance from the EMEA; - priority regulatory review and approval often ‘under exceptional circumstances’ on the basis of very limited trial data; - 50% discount on EMEA fees (MA applications, variations and inspections) incurred up to the end of the first year of marketing; and - 10 years’ marketing exclusivity (i.e. the EMEA will not accept a MA application for a ‘similar’ product for the ‘same’ indication for 10 years after the first orphan drug receives its MA). A two-year exclusivity extension is available to orphan drugs with an agreed paediatric investigation plan. 4. Some very limited additional incentives are provided by member states. France, Italy and the Netherlands offer the most supportive environments in the EU overall for orphan drugs 5. There is provision for reducing the exclusivity period to six years if, at the end of the fifth year, a member state can either show the qualifying criteria for an orphan are no longer met or the drug is ‘sufficiently profitable’. Neither has occurred yet. No guidelines on what ‘sufficiently profitable’ means have appeared. 6. From April 2000, when the Regulation came into effect, to January 2008 there have been a total of 777 designation applications by sponsors, 528 positive opinions by COMP, and 520 designation decisions by the Commission. Forty four designated orphan drugs, to treat 38 different orphan conditions, from 31 different sponsors have received pan-EU marketing approval. A further two EU designated orphan drugs have received regulatory approval in certain member states only. 1.6 million rare disease patients in the EU have potentially benefited as a result of the Regulation. 7. All 44 orphan drugs with centralised marketing approvals have received launches by March 2008. Germany was the EU-5 country with most first launches, with Italian launches most delayed. Glivec, the biggest-selling orphan drug, had the fastest rollout, less than six months from marketing authorisation. Only in Germany were all 44 orphan drugs commercialised and reimbursed, but at least 40 were reimbursed in two or more of the EU-5, and at least 25 were reimbursed throughout the EU-5. Availability in the CEE countries is much less than in the west of Europe. 8. Many, but not all orphans, enjoy premium prices (with no clear relationship to prices for the same product in the US). As multiple drugs for Fabry’s disease, pulmonary arterial hypertension and chronic myeloid leukaemia show, this is true of later entrants as much as for the treatment pioneer. 9. Germany shows the highest prices overall, followed by France, Spain and Italy, with the UK having the majority of the lowest prices when expressed in euro. This is only in part due to the weakening of the pound against the euro. Swiss prices were generally higher than those in the EU-5. The price corridor (at MSP) for newlyintroduced orphan drugs in the major European markets is relatively narrow, ±10% of the mean (or less in the case of ultra orphan drugs) if the UK is excluded. 10. Public prices vary from less than €200 per pack to over €10,000 per pack. Annual treatment costs (at MSP) vary from under €2,150 (Wilzin for Wilson’s disease) to over €850,000 (Naglazyme for MPS-VI). There is no clear relationship between the size of the target population and the treatment cost, but there is a point above which realising a particular price for a particular patient population might be considered ‘abnormal’ and thus expected to meet especial payer resistance. 11. The public price includes the cost of distribution to hospitals or, in the case of Germany, to community pharmacies. Some companies have created special valueadded distribution channels for high-priced orphan drugs. 12. Most orphan drugs enjoy full reimbursement in each of the EU-5, though there are significant delays in other countries, most especially in central Europe. 13. The notion that cost effectiveness demands applied to other treatments should apply also to orphan drugs has been mainly raised in the UK, though NICE seems content to allow orphans a ten-fold increase on the cost per QALY compared to nonorphan appraisals. More countries are now looking at health technology assessment and the rare disease patient lobby Eurordis has proposed an EU-wide HTA for orphan drugs linked to a single EU reference price. 14. Many orphan drugs can only be prescribed by hospital-based specialists. Though France, Germany and the UK are now phasing-in DRG-based systems for hospital reimbursement that might be expected to hit usage of such high-priced innovations as orphan drugs, each country has a facility to pay for at least some of these separately from central health funds. Italy and Spain also have DRG systems in place, but these do not cover the cost of medicines. 15. A new Comunication from the European Commission is expected to address bottlenecks to orphan drug access, improved assessment of the therapeutic added value of orphan drugs, and whether to extend rare disease incentives to medical devices and diagnostic agents.

Companies Mentioned

Actelion Addmedica SAS Alexion Axcan Bayer-Schering Biocodex Bioenvision BioMarin BMS Celgene Cell Therapeutics Eisai Elan Encysive Pierre Fabre Genzyme GSK HRA Lipomed Medac Novartis Orphan Europe Pfizer PharmaMar Shire Solvay Swedish Orphan TKT Europe Teracia TopoTarget UCB Wyeth Zentaris Products covered Aldurazyme Atriance Busilvex Carbaglu Cystadene Diacomit Duodopa Elaprase Evoltra Exjade Fabrazyme Flolan Gliolan Glivec Impavido Increlex Inovelon Litak Lysodren Myozyme Naglazyme Nexavar Onsenal Orfadin Pedea PhotoBarr Photofrin Prialt Replagal Revatio Revlimid Savene Siklos Soliris Somavert Sprycel Sutent Tasigna Thelin Torisel Tracleer Trisenox Velcade Ventavis Viagra Wilzin Xagrid Xyrem Yondelis Zavesca