When Maryland entrepreneur and author Martine Rothblatt learned in 1991 that her daughter, then 8, had a deadly lung disease, the news was made much worse by another discovery: No one seemed interested in developing a drug to treat it.
Rothblatt's daughter has primary pulmonary hypertension, or PPH, a genetic disorder that affects fewer than 1 percent of Americans. It's among the 6,000 rare diseases dubbed orphans by the federal government because the drug industry had abandoned them, aware profits from such treatments might never cover development costs. It can take more than a dozen years and a billion dollars to create a new medication.
However, Rothblatt was driven, and she had an ace in the hole: the 1983 federal Orphan Drug Act, which gives lucrative incentives to those generating drugs for diseases affecting fewer than 200,000 people.
A former satellite communications executive, she created her own biotechnology company in 1996. With the help of the act's incentives, she was able to market a PPH drug in 2002, after just six years of development and at a cost of less than $125 million - a fraction of the price tags associated with treatments for widespread illnesses. By last year, her Silver Spring company, United Therapeutics Corp., had become one of Maryland's most successful biotech businesses and has continued to turn profits ever since.
While still a fraction of the $300 billion pharmaceutical industry, orphan-drug development is one of its fastest-growing segments, doubling in the U.S. over the past two years.
More than 20 years after the legislation to encourage their development, orphan drugs have recently been propelled by some of the larger forces weighing on biotechnology. They've been aided by scientific advancements in genetics and by consumers being more conditioned by the rise of heavily advertised "blockbuster" cures to seek a miracle drug. Also, investors, wary of past biotech busts, want to back a product that can more quickly come to market.
"Coming off the biotech bust, everybody wants to be in product development," said George F. Steinfels, chief business officer at Rockville's Rexahn Corp., which is developing orphan drugs for uncommon cancers.
Several years ago, investors were throwing money at biotechnology, based on promises and potential. But once it became evident that science would need more time to produce certain cures, shareholders and venture capitalists retreated, causing stocks to plummet in 2001. Now, investors prefer to see results before backing a business, and for many, orphan drugs represent a quick way to get them.
Such drugs are more than twice as likely to make it to market as new drugs overall - 18 percent compared with 8 percent. Their approval time is also much shorter than the typical 12 to 15 years for all drugs that successfully emerge from development, in large part because they have smaller scale studies and typically receive expedited review from the Food and Drug Administration. And the government will pay for half of the research and development costs through tax credits, as well as waive expensive filing fees, saving companies more than $700,000.
"The smaller biotechs, and even the specialty drug companies, are beginning to appreciate that this is a market opportunity for them," said Christopher-Paul Milne, assistant director at the Tufts Center for the Study of Drug Development. "This is a market they can live in."
24 million affected
Though the individual diseases are rare, they collectively affect more than 24 million people and their families in the United States. Since the act was implemented, 1,456 drugs have been approved for development and 268 of them have made it to the market, where they collectively treat more than 13 million people, said Dr. Marlene E. Haffner, director of the Office of Orphan Product Development at the FDA.
"These are people that wouldn't have had therapy for their disease prior to the Orphan Drug Act," Haffner said. "For them to have treatment for their particular disease has simply been a godsend."
Last month, Haffner made a pilgrimage to Israel to help that country set up its version of the Orphan Drug Act. Europe, Singapore, Australia and Japan have implemented similar laws in the hope they will help knock off some of their ignored diseases.
"There's just a lot going on right now," Haffner said. "You have to think there's something worthwhile here."
Dozens of biotech companies got their starts by developing orphan treatments, and their ranks are growing. Last year, a record number of orphan drugs were approved for development nationwide: 128 of them. That was up 36 percent from the previous record of 94 new designations in 2003.
In Maryland, more than 20 companies have developed about 85 orphan drugs, at least 16 of which have made it to market, such as Guilford Pharmaceuticals' Gliadel Wafer treatment for brain cancer. Some companies, such as Ceptor Corp. in Hunt Valley, are making orphan drugs their entire focus.
"We're dedicated to knocking off as many of these severe diseases as we can," said William H. Pursley, chief executive officer and chairman of Ceptor. The company is developing treatments for conditions such as Duchenne muscular dystrophy, a genetic disorder that kills about 100 young men in the United States every year.
"It's a wonderful business model," he said, adding that Ceptor hopes to bring one of its drugs to market after four or five years of development and spending just $100 million if it's approved as an orphan.
In addition to the legislated incentives, the 1983 act has created some unwritten, side motivations, as well. Because the orphan market is one of desperation - about 90 percent of the diseases are life-threatening - it's opened up possibilities for outrageously high pricing and unapproved, but tolerated, prescribing that can make cash cows out of certain drugs.
Case in point: Thalidomide, a drug with a horrific past. Originally prescribed as a morning sickness treatment in Europe, it was pulled from that market in 1961 because it caused birth defects in thousands of children. But a Rockville company called EntreMed Inc. resurrected the drug for study in the 1990s and eventually licensed it to Celgene Corp. of New Jersey.
In 1998, Celgene got the drug approved under the Orphan Drug Act as a treatment for leprosy, an infectious skin disease that affects fewer than 5,000 people in the United States. But today, sold under the brand name Thalomid, the drug is almost entirely prescribed as a treatment for multiple myeloma, a blood cancer. It affects about 50,000 people in the United States - including former vice presidential candidate Geraldine Ferraro, who testified before Congress in 2001 about the disease and thalidomide's success treating it.
"What Celgene did was very smart," said John Holaday, former chief executive officer of EntreMed who now runs a bank in Rockville focused on serving the biotech industry. "Here's an example of using [the act] to gain a larger foothold in the market."
While the FDA regulates which drugs get to market, it doesn't control how they're used. Doctors can prescribe as they see fit, even if it's "off label," meaning for a purpose the FDA hasn't approved. Because of that, the orphan act is sometimes thought of as a backdoor way to get a drug on the market quickly so it may be used for something else.
Thalomid also is expected to bring in more than $400 million this year in worldwide sales, largely because Celgene has increased the price of the lowest daily dosage more than sevenfold in the last seven years - from $6 in 1998 to $44.14 for 50 milligrams. The drug made up 81 percent of Celgene's profits last year.
Drugs for rare diseases are in short supply and high demand, allowing companies to charge whatever they want, said Abbey Meyers, president of the National Organization for Rare Disorders, (a coalition of health groups and patients that fought for passage of the act.
"These tend to be very expensive drugs," she said.
For example, Genzyme Corp. of Massachusetts charges an average of $300,000 per patient per year for its biweekly treatment of a genetic disorder called Gaucher disease, which can lead to bone fractures, anemia and fatigue. California-based Genentech Inc. charges about $70,000 per year per patient for the human growth hormone called Nutropin.
Insurance companies tend to cover most of the costs of orphan drugs, though, reimbursing about 95 percent.
And while Rothblatt's PPH treatment - called "Remodulin" - costs about $90,000 a year on average (according to year-old estimates), it's also extended lives, said Fred T. Hadeed, chief financial officer at United Therapeutics. The price is also comparable to another, more cumbersome, treatment that developed in the 1990s, he said.
PPH is blood vessel disorder in the lungs, characterized by life-threatening pressure in the pulmonary artery leading to fatigue, chest pain and fainting spells. Rothblatt's daughter, now a young adult, has a milder form of the disease and has been able to manage it for 14 years through medication, Hadeed said.
"What you're selling is the quality and quantity of life," said Ceptor's Pursley, who helped launch orphan products at Genzyme and Genentech. "They certainly should be the most high-valued drugs on earth, as opposed to the 53rd blood pressure medication."