Orphan drugs are the fastest-growing segment of the pharmaceutical market, but the Inflation Reduction Act (IRA) clouds the future of new treatments for rare diseases, says a report released last month by Evaluate.
What are orphan drugs? They target rare diseases affecting fewer than 200,000 people in the U.S., so their potential market is smaller. The 1983 Orphan Drug Act (ODA) encourages development with tax incentives for R&D.
Orphan drugs are growing—with market share growing faster than non-orphan drugs for the last ten years (except during the 2021-22 COVID drug boom). While non-orphans will grow 7%, orphan drugs are expected to grow 12% by 2028, achieving $300 billion in sales and nearly 20% of non-generic sales, Evaluate reports.
A few interesting trends:
- Oncology drugs make up half of the top ten selling orphan drugs.
- The Food and Drug Administration (FDA) approved more orphans than non-orphans in four of the last five years.
- “2022 was the first year ever that FDA biologics approvals outpaced those of small molecules,” Evaluate says.
But the IRA could hurt growth: Orphan drugs targeting only one disease are exempt from drug price controls—killing incentives to show a drug can address secondary diseases.
And it’s hurting patients: Alnylam, for example, stopped researching whether their nerve damage drug Amvuttra also treats Stargardt, which impacts children’s vision, Evaluate says.
The outlook: Legislation could limit Orphan Drug Act incentives, but “tailored reform” is possible, explains the report. “Orphan Drug Act 2.0 could include tiered incentives…and higher tax credits for ultra-rare orphan drugs,” says Ovid Therapeutics CEO and BIO Board member Jeremy Levin in the report. “As for oncology orphans, they’d need to be handled separately.”
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