Strategies for the Sustainable Development and Delivery of Drugs

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Strategies for the Sustainable Development and Delivery of Drugs for Rare Diseases

Kristen Cardinal and Chris MeierLondon Business School

Executive Summary Rare diseases present a distinct set of challenges for the pharmaceutical industry: Due to the high cost of drug development, the limited numbers of patients and regulatory restrictions on drug pricing, rare diseases push the economics of the pharmaceutical business model to its limits. As a result, many large pharmaceutical companies have stayed away from this area in favour of mass-market indications.

This report discusses the challenges and opportunities of rare diseases. Specifically, we argue that today there exist unprecedented opportunities for pharmaceutical companies to expand into this area and make a difference to the lives of large numbers of patients. We describe four strategic dimensions that pharmaceutical companies need to focus on in order to make rare diseases commercially and scientifically viable:

1 The patient dimension By focusing on the unmet needs of patients, pharmaceutical companies can leverage opportunities for breakthroughs in treating rare diseases. We highlight different approaches that companies can take to identify and exploit such opportunities.

2 The economic dimension By optimizing the cost and revenues of drug discovery and delivery, it becomes economically viable to develop a greater number of rare disease medicines. We describe specific strategies that pharmaceutical companies can follow to achieve this.

3 The collaborative dimension By engaging with external stakeholders, such as charities and academia, pharmaceutical companies can increase the efficiency of developing medicines for rare diseases. We provide examples of how such interactions can advance drug discovery and provide unique benefits to patients.

4 The innovation dimension By investing in new technologies, pharmaceutical companies can achieve therapeutic breakthroughs in the treatment of rare diseases. We discuss examples of technologies and approaches which hold particularly great potential for the discovery of such new medicines.

Having identified and described the key dimensions for successfully tackling rare diseases, we then outline the steps that pharmaceutical companies, such as GlaxoSmithKline, should undertake to implement the proposed strategies. Finally, we develop a vision of what the future of the diagnosis and treatment of rare diseases may look like.

About the authors

Kristen Cardinal is a Sloan Fellow pursuing an MSc in Leadership and Strategy at London Business School. She holds a PhD in Neuroscience from the University of Zurich and received a BSc with Distinction

Chris Meier is an MBA student at London Business School. Before starting his MBA, Chris was Principal Scientist at UCB Pharma. In his industrial work, he contributed to the

discovery of several drug candidates. in Biology from the University of Colorado. Kristen has worked across different roles in R&D, Medical Affairs and Strategic Marketing. Prior to her Fellowship, she was a Global Medical Manager for Actelion Pharmaceuticals in the field of Rare Genetic Disease and Lysosomal Storage Disorders. She has a strong interest in business model innovation in pharma.

Chris graduated from the University of Oxford with a first‐class degree in Biochemistry, and completed a PhD in Biophysics. He was awarded a Wellcome Trust Scholarship for his work on emerging diseases. Chris is excited about rare diseases because he believes that they hold great potential for the pharmaceutical industry.

Strategies for the Sustainable Development and Delivery of Drugs for Rare Diseases | 2

Section I – Introduction Illnesses have always differed in their frequency. For example asthma, a chronic inflammatory disease of the airways, has for centuries been described as a rare condition (asthma has historically been much less prevalent than it is today). In contrast infectious diseases, such as tuberculosis, have been known as common and wide-spread illnesses since antiquity. Since the late 19th century, when the growth of medical knowledge accelerated, an increasing number of rare and unusual conditions have been discovered and reported in the medical literature. Today a wide range of such rare diseases are known and, although each single disease occurs only infrequently, an estimated 30 million people in the US are thought to have a rare disease of some kind (nearly 1 in 10) 1. Similar numbers have been reported for European countries (see box below for examples).

This report discusses the challenges and opportunities of rare diseases for patients, physicians and providers of medical solutions. In particular we discuss strategies by which the pharmaceutical industry can successfully develop and deliver medicines that deliver real value to patients suffering from rare diseases.

An overview of rare diseases

At the outset it is important to note that “rare disease” is a somewhat elusive concept – currently there is no unique and widely accepted classification of what constitutes a rare disease. Some definitions rely solely on prevalence (i.e. the number of people living with a condition), for example the US legal system classifies a disease as rare if fewer than 200,000 people in America suffer from it. Other definitions consider prevalence or incidence in addition to other factors, such as severity and availability of effective treatments. Today there are between 6,000 and 8,000 known rare diseases, depending on which definition one uses 2 . Approximately 80% of these conditions are genetic by nature and are therefore chronic. Many rare diseases appear early in life and, as a result, disproportionately affect children, particularly those under the age of five. The severity of rare diseases varies greatly, ranging from only mild symptoms (e.g. certain forms of PAPA syndrome, a skin disease) to severe and debilitating conditions (e.g. cystic fibrosis, a disease of the lungs and other internal organs). The prevalence of rare diseases also varies greatly, from diseases which are relatively common to exceedingly rare (see box below for an illustration). Rare diseases have been reported in many therapeutic areas, including oncology, neurology, cardiovascular, gastrointestinal, and immunology – however some therapeutic areas, such as oncology, appear to have more and better-characterised rare manifestations. Rare diseases thus form a large, complex and heterogeneous group of conditions with few common denominators. However, since most rare diseases do not yet have effective therapies available, there is ample potential for medical and commercial breakthroughs.

1 http://www.rarediseases.org/rare-disease-information 2 http://www.eurordis.org/content/what-rare-disease

Not all rare disease are the same There is a spectrum ranging from near mass‐market to ultra‐rare

While each rare disease may affect only a small number of individuals, the total number of patients with a rare disease is large. For example, in Europe 30m people are believed to be affected by rare diseases (around 6% of the total population).


Rare diseases, the pharmaceutical industry and the regulatory environment

Historically, healthcare systems in general – and the pharmaceutical industry in particular – have not focused on the needs of patients with rare diseases. For example, in the United States before the 1980s only ten drugs for rare diseases were approved, while thousands of drugs for more common indications were on the market. Evidence suggests that this was largely due to the lack of commercial attractiveness: Given the costs of bringing a single drug to market (currently estimated to be $800 million or more) 4, unless a company felt relatively certain that those costs could be recouped between the time of market authorization and patent expiration, it made little sense in terms of shareholder value to pursue such drugs. As a result, the pharmaceutical industry devoted few resources to the development of treatments for rare diseases. In 1983, following pressure from patient organizations, the Orphan Drug Act was passed in the US (the term “orphan” was chosen to indicate a lack of appropriate support and sponsorship). This act was intended to create incentives for the pharmaceutical industry to develop more treatments for rare diseases. Specifically it focused on three main issues which would increase the prospects of profitability for a rare disease drug:3

• Market exclusivity for 10 years post approval by the FDA or EMEA. This can add 5-10 years of exclusivity, significantly adding to a product’s competitive advantage and earning potential.

• Partial or total fee waivers for submission of market authorization. This gives pharmaceutical companies substantial savings in fees for each submission.

• Assistance with protocol development to design optimal clinical trials for a given rare disease. Access to such expertise can significantly reduce the time for trial development as well as increase a given trial’s ability to demonstrate treatment safety and efficacy.

In addition, the Orphan Drug Act provided a definition of a rare disease as a condition affecting fewer than 200,000 people in the US (a prevalence of just under 1 in 1,000, based on the population of 1983) 4. During the 1980s and 90s, similar legislation was passed in Europe and Japan. As shown in the box below, orphan drug regulations have been successful in increasing research and development in this area: Since the adoption of the Orphan Drug Act in 1983, more than 350 drugs have been approved in the US – a thirty-fold increase compared to the prior period. Although this statistic does not account for the advances in research technology and genetics that have occurred during that time, it does suggest that orphan drug regulations have at least contributed to the increase in therapeutic development.

3 http://ec.europa.eu/health/files/orphanmp/doc/inventory_2006_08_en.pdf . “Inventory of Community and Member States' incentive measures to aid the research, marketing, development and availability of orphan medicinal products.” Revision 2005 4 Tambuyzer E., Nature Reviews Drug Discovery, v9 921-929, 2010

Significant growth in numbers In the United States the number of orphan drug designations has been increasing by an average of 6% per year since 1984

Since the 1980s, when legislation was first introduced in the US and Europe, there has been a steady increase in the number of orphan drug designations. Historically, oncology indications are the main group targeted by orphan drugs (approximately 30% of all designations).

Source: FDA website


Yet despite these incentives and the relatively high cumulative prevalence rate of rare diseases, most patients remain undiagnosed or untreated. This translates to a high unmet medical need across a large population of individuals.

How do the characteristics of rare diseases and the regulatory incentives affect the pharmaceutical industry? In delivering new medicines for rare diseases, the pharmaceutical industry faces four key challenges:

1. The medical challenge Due to the small number of patients, best practice for diagnosis and treatment is often difficult to establish – In some cases, physicians may be unaware that the disease even exists. For example, SPTCL (subcutaneous panniculitis-like T-cell lymphoma, a rare type of cancer) is frequently misdiagnosed as panniculitis (a skin disease) due to similar symptoms. As a result, individuals suffering from rare diseases are often treated incorrectly.

2. The scientific challenge For any disease, both diagnosis and treatment require a clear understanding of how the illness ‘works’ – i.e. an insight into the physiological processes that underlie disease progression. However in the case of many rare diseases, the small number of available patients limits the scientific research of the condition. For example, identifying the genetic drivers of Costello Syndrome (a developmental disorder) took several decades mainly due to the small number of patients available for study. As a result, the biomedical basis of many rare diseases is poorly understood.

3. The clinical challenge Before a new treatment or therapy can be sold on the market, its efficacy has to be demonstrated in clinical trials. To show the beneficial effects of a therapy in a statistically significant manner, testing of hundreds or thousands of patients is required. For many rare diseases, the number of available patients is not sufficient for such large-scale clinical trials. For example, StemCells Inc. (a Biotechnology company) recently discontinued clinical studies of a new treatment for Batten disease, a rare neurodegenerative disorder, due to an insufficient number of suitable patients.

4. The commercial challenge Since most rare diseases have few patients, the commercial potential of medicines for these conditions is often limited. For example, some rare oncology indications affect only a few hundred patients, making the development of dedicated drugs commercially challenging.

Yet despite the challenges and the complex regulatory environment, the rare disease field presents unique opportunities for the development and delivery of new medicines.

• Limited competition This is due to pharmaceutical companies historically focusing their efforts on developing blockbuster drugs that target mass-market indications; as a result, rare diseases have received little attention. Such diseases also represent a sizeable terrain in which to operate: At present approximately 8,000 rare diseases are described in the literature. The combination of a large and commercially unexplored area, in which few players operate, makes rare disease highly attractive.

An orphan blockbuster? Drugs for rare diseases can have sizeable revenues

In addition to the increase in orphan drug approvals, regulatory incentives have also assisted in the profitability of such drugs.

Perhaps the most striking example is that of Epogen (epoetin alfa), a drug manufactured by Amgen. In 1989, Amgen gained FDA approval for Epogen for the treatment of anemia associated with end‐stage kidney failure. At the time, there were estimated to be only 78,000 such patients in the US, making Epogen eligible for orphan drug status and the benefits associated with it. However, with additional post‐marketing clinical experience, it was found that Epogen was useful in other, less rare anemic conditions such as that resulting from HIV treatment or chemotherapy. The expanded indication portfolio resulted in Epogen becoming a multi‐billion dollar blockbuster product and 6th best‐selling drug in the US by 2001. A debate arose over whether the use of the orphan drug designation was appropriate, which highlights the need to proactively assess the broader strategic and stakeholder landscape in seeking such a designation.

Despite this controversy, the Epogen case highlights the commercial potential of rare disease medicines.


• Scientific and clinical opportunities

As a field, the development of orphan drugs for rare diseases is relatively young which means that many opportunities have not yet been fully explored and exploited. Unlike many mass-market indications, which are mature and for which progress is often incremental and slow, the rare disease field holds many possibilities for genuine breakthroughs in diagnosis and treatment. For example, in March 2011 a study was published about a rare disease, Congenital Hyperinsulinism, in which a genetic defect causes the pancreas to chronically produce too much insulin. These findings showed that the genetic defect could be turned off in vitro by using a drug currently being tested for Cystic Fibrosis. Because there were similar cellular mechanisms involved in the genes, this serendipitous finding has since opened up a new array of treatment options5.

• Commercial opportunities Because of the unique nature of rare diseases, there are relatively few companies that specialise in this area. Some have grown around the orphan drugs themselves, such as Shire, Biomarin and Genzyme. Other larger companies, such as GSK, Pfizer, and Novartis have instead developed specialized Rare Disease business units internally. In many cases, success in rare diseases comes from proprietary knowledge or technology. For example, Genzyme has been highly successful in treating many rare metabolic diseases (such as Gaucher’s Disease) by leveraging their expertise in enzyme replacement therapy. Because of the substantial investment required to commercially synthesize relatively large biomolecules, such as enzymes, there is a high barrier to entry for this market which forms part of Genzyme’s competitive advantage. Companies such as Genzyme demonstrate that the rare disease field is not just commercially viable, but can be highly profitable.

These examples illustrate the enormous potential of rare disease, for both patients and healthcare providers. The questions remains, how can pharmaceutical companies leverage this potential? We argue that by following strategies which are tailored to the unique world of rare diseases, companies can make rare diseases scientifically and commercially viable. The next section describes these strategies, and provides case studies of current best practice and trends for the future.

5 http://www.sciencedaily.com/releases/2011/03/


Section II – Strategies for the Sustainable Development and Delivery of Medicines to Treat Rare Diseases In the previous section of this report we reviewed the challenges and prospects of rare diseases and demonstrated how these disorders represent unique opportunities for medical and commercial breakthroughs. We now address the following question: How can the pharmaceutical industry exploit these opportunities and bring novel therapeutic solutions to patients? This section describes the key dimensions that pharmaceutical companies need to focus on in order to deliver new medicines for rare diseases. These dimensions represent a holistic view and cover the entire value chain of the industry, from the early stages drug discovery to sales and marketing. For each dimension we explain key ideas, describe strategic choices and provide examples of trends which are likely to impact the future development of the field.

The Patient Dimension Unmet patient need is a particularly salient issue in the field of rare disease. Although the number of patients with a given condition may be relatively small, the impact on quality and duration of life can be substantial. Hence, meeting patient needs not only aligns the interests of patients and the pharmaceutical industry, but can also lead to a greater likelihood of regulatory approval, particularly when the impact on quality of life is large. To meet these needs, successful strategies should therefore look to partner and work with patients extensively. In particular, there are two mechanisms for patient engagement:

1. Partnerships with patient organizations When a new orphan drug is being developed or has been approved, a key challenge is to identify those patients who benefit from it. The actual number of patients that need to be treated is often highly uncertain (mathematical prediction methods, such as extrapolated estimated prevalence, provide a relatively imprecise picture). In order to reach these patients, pharmaceutical companies can benefit greatly from partnering with patient organizations. Such organizations typically represent a well-organised network of patients, which is particularly relevant in rare diseases – not only for treating diagnosed patients, but for finding sufficient numbers of patients for clinical trials.

Effective partnership between the pharmaceutical industry and patient organisations – A case study The Niemann‐Pick Disease Group: a rare disease organisation, working together with Genzyme Inc.

One example of a well‐developed patient organization is that of the Niemann‐Pick Disease Group (NPDG). Based in the UK, this group provides support for patients and families with any of the Niemann‐Pick diseases (Types A, B, or C), which are rare metabolic disorders with incidences running from 1 in 40,000 (Type A) to 1 in 150,000 (Type C).

According to Toni Mathieson, the Executive Director of the NPDG, one of the greatest needs of patient organisations is the speed and access to information concerning treatment availability. In addition, the management of side effects is crucial, because it can help to keep patients on disease‐modifying treatment as much as possible.

To help benefit patients, she suggested that having clear guidelines about who to speak to within a company as well as ensuring the quality of the information provided would be of great use. Often, she said, the response letters provided from Medical Information departments take too long and are too “watered down” to be of any practical use.

As an example of best practice, she cited Genzyme which is developing an enzyme replacement therapy for Niemann‐Pick Type B (NPB). Genzyme has recently set up a patient liaison office which works with organisations such as the NPDG to help get useful information back to the patients as quickly as possible and stay in touch with patient needs. Genzyme has also shown commitment to NPB patients by proactively incorporating them into discussions on clinical trial designs for at the earliest opportunity. For example, Genzyme holds regular teleconferences with patients and their families in order to identify the best procedures and timelines that will work for both the patients and the company’s trial. This effort not only has the potential to increase the speed of trials, but also substantially improves the sense of control that the patients have in the process, as well as a clear sense of contribution through their participation.

Source: Toni Mathieson, phone interview (conducted by Kristen Cardinal, one of authors of this report) 13 September 2011


2. Developing online patient communities for research In addition to improving information and trial design via patient organizations, recent advancements in communication methods, such as online social media, can also increase the speed of rare disease research. This is possible because online participation can accelerate key steps in the scientific and clinical process. For example, patient recruitment, data mining and analysis, and publication of results in peer-reviewed journals have historically been rate-limiting and expensive. Using the tools of online social media, these steps can be carried out more cheaply and efficiently (see box below for an example).

Patient engagement, whether online or through patient organisation, therefore has the power to transform the study and treatment of diseases. The cases highlighted in this section represent early steps, but they illustrate the enormous potential, particularly for rare diseases.

How online patient communities can advance and accelerate research into rare diseases The case study of Google and Gaucher’s Disease

In 2006 Sergei Brin, one of the co‐founders of Google, discovered that he has a gene mutation that is strongly associated with the development of Parkinson’s disease. In response to this news, Brin decided to apply his computational skills to the challenges of genetic research, in partnership with his wife who is the CEO and co‐founder of 23andMe, a California‐based personal genetics testing company.

Although Parkinson’s is not a rare disease, genetic mutations related to its development have also been linked to Gaucher’s Disease, a rare metabolic disorder (incidence of 1 in 100,000 people). Through the combination of online community development with genetic testing, genetic information about the correlation between Parkinson’s and Gaucher’s was obtained and analysed nine times faster than conventional research at the US National Institutes of Health (8 months versus 6 years). The table below illustrates key differences between the two approaches.

The dramatic acceleration of clinical studies through online patient engagement therefore has the potential to reduce the cost of R&D. As a result, the development of new medicines for rare diseases (which would otherwise be unprofitable) can become commercially viable.

Traditional Model: US National Institutes of Health

Novel Model: Online Initiative and Genetic Analysis

1. Hypothesis: An early 2004 study suggests that patients with Gaucher’s disease might be at increased risk of Parkinson’s.

2. Studies: Researchers conduct further studies, with varying statistical significance.

3. Data aggregation: Sixteen centers pool information on more than 5,500 Parkinson’s patients.

4. Analysis: A statistician crunches the numbers.

5. Writing: A paper is drafted and approved by 64 authors.

6. Submission: The paper is submitted to The New England Journal of Medicine. Peer review ensues.

7. Acceptance: NEJM accepts the paper.

8. Publication: The 2010 paper notes that people with Parkinson’s are 5.4 times more likely to carry the GBA mutation.

1. Tool Construction: In early 2009, survey designers build the questionnaire that patients will use to report symptoms.

2. Recruitment: The community is announced, with a goal of recruiting 10,000 subjects with Parkinson’s.

3. Data aggregation: Community members get their DNA analyzed. They also fill out surveys.

4. Analysis: Reacting to the NEJM paper, 23andMe researchers run a database query based on 3,200 subjects. The results are returned in 20 minutes.

5. Presentation: The results are reported at a late 2009 Royal Society of Medicine meeting in London: People with GBA are 5 times more likely to have Parkinson’s, which is squarely in line with the NEJM paper. The finding will possibly be published at a later date.

Total Time Elapsed from Initial Pilot Study to Publication: 6 years

Total Time Elapsed from Online Tool Construction to Presentation of Findings: 8 months

Source: Wired, July 2010. “Sergei Brin’s Search for a Parkinson’s Cure.”


The Economic Dimension In theory, the economic approach to rare diseases is straightforward: Given the substantial expense of drug development and the limited income from each rare disease drug, pharmaceutical companies should undertake steps to minimise cost and maximise revenues. Historically, there are two well-established strategies:

1. Identifying and targeting rare diseases based on the number of patients – i.e. focusing on ‘rare-but-not-too-rare’ diseases, in order to maximise the number of patients and revenues. For example Avedro, a US Biotechnology company, has developed a novel treatment for keratoconus, a condition which leads to serious eye deformation. While technically a rare disease, keratoconus is relatively common affecting approximately 1 in 2000 people.

2. Leveraging regulatory incentives and generous reimbursement rules – i.e. developing medicines for diseases which are most likely to obtain orphan drug status and pricing these drugs accordingly. For example Genzyme, a US Biotechnology company which was recently acquired by Sanofi, has developed several high-price drugs that target rare diseases, such as imiglucerase (a drug for Gaucher’s Disease, a metabolic disorder) which cost approximately $200,000 per patient annually.

While these strategies have enjoyed good successes in the past, they are unlikely to be sustainable in the future: the number of ‘rare-but-not-too-rare’ diseases is likely to be limited; and generous reimbursement of drugs may come under pressure due to the financial constraints that many healthcare systems are currently experiencing. In practice, focusing purely on the economic dimension is therefore challenging. In order to develop new and economically sustainable strategies for rare diseases, we have developed a framework which allows the revenues and costs of rare disease medicines to be analysed in a systematic way (see below).

How to make the economics of rare diseases work Key levers that minimize the cost of drug development and maximise revenues

The value chain of drug development

Simplified revenue model for drugs for rare disease


Using this framework, we have identified additional economic levers which the pharmaceutical industry can exploit in the rare disease field:

1. Co-development of diagnostic products and services which can increase revenues of rare disease medicines. In common (mass-market) diseases there are numerous examples of how this approach can generate revenues, including: • Sensors for measuring medically important parameters (e.g. blood sugar in diabetes) • Diagnostic toolkits that help hospitals and surgeries to diagnose diseases quickly and accurately (e.g. rapid

screening of clinical samples for viral infections) • Screening services that allow clinicians to analyse patients and choose an optimal course of treatment

(e.g. screening of tissue to determine the suitability of different cancer treatments). Such revenue-enhancing products and services could be developed for rare disease medicines which could make these medicines commercially more viable. For example, information about biomarkers (which is typically a by-product of the drug discovery process, especially for rare diseases) could be systematically converted into new and valued-added diagnostic toolkits.

2. Risk sharing through partnership which can lower the cost of delivering rare disease medicines. Given the high-risk nature of drug development, many pharmaceutical companies are exploring arrangements in which multiple companies share resources, gain economies of scale, and pool their risks. Recent examples include joint ventures between pharmaceutical companies (e.g. ViiV Healthcare, in which GSK and Pfizer pool their resources in the HIV/AIDS field), and partnership in sales and marketing (e.g. co-promotion of the same product in different markets or segments). Such risk-sharing approaches could benefit the development and delivery of rare disease medicines. Pharmaceutical companies could form a consortium dedicated to rare diseases (e.g. a joint venture or incubator), in which they leverage their collective expertise, skills and knowledge; in return, they would get a share of the revenues of any product arising from the consortium.

While the economic dimension is key to the commercial success of any medicine, our analysis shows that a purely economic approach to rare diseases does not provide all the answers. Specifically, it overlooks important dimensions and stakeholders that can positively influence the development and delivery of rare diseases medicines. The subsequent sections discuss these in more detail.

The Collaborative Dimension Given the complexity of modern science and of drug discovery in particular, it is becoming increasingly challenging for individual pharmaceutical companies to deliver novel therapeutic solutions in an efficient and timely manner. As a result, the industry has begun to embrace a collaborative approach to research and development. In this section we discuss the key features of the new world of collaborative science and demonstrate how collaboration can unlock scientific and medical breakthroughs specifically for the diagnosis and treatment of rare diseases. Principally there are three ways in which pharmaceutical companies can harness the power of collaborative R&D:

1. Collaboration between pharmaceutical companies and academia Partnerships with academia have become more common over the last decade as costs and risks associated with R&D have increased. In response, pharmaceutical companies have opted to share the risks with academic labs which are better positioned to investigate disease mechanisms and novel molecules with minimal cost or risk. Often partnerships can arise where, if a promising molecule is discovered, both the company and the academic lab stand to benefit through shared licensing agreements. Such arrangements help increase the iterative cycles necessary at the earliest stages of research to find a potential new treatment. Recently, new avenues for pharmaceutical-academic collaboration have arisen which have the potential to impact rare diseases: Several universities have established academic drug discovery units, many of which focus on less common disease (e.g. in the UK, the University of Dundee). Partnering and collaborating with such academic centres increases the potential to discover novel medicines for rare diseases.


2. Collaboration between pharmaceutical companies and charities With such distributed patient populations, charities and patient organizations are often the best resources for finding patients for enrolment into trials. Charities may also help provide funding for very targeted research and may partner with academic labs themselves for this purpose, independent of pharmaceutical companies (see box below). By generating funding and working to initiate research directly, charities can often help generate the proof-of-concept required by pharmaceutical companies to warrant further investment. Collaborations with patient organizations also help pharmaceutical companies better understand patient needs which can also assist in the demonstration of efficacy for regulatory approvals and health economic outcomes. Such studies may be difficult with only small numbers of patients, particularly if the disease modifying therapy is chronic and/or slow acting – as may be the case for a genetic condition. Patient organizations provide a clear path to a patient population and can help ensure that the patient’s interests are best represented throughout the trials.

3. Collaboration and data sharing between different pharmaceutical companies In the previous section, we discussed how collaboration has the potential to reduce risk and lower cost in the pharmaceutical industry – such as through joint ventures or partnerships in sales and marketing. An even more powerful approach is the sharing of data which would otherwise have to be generated multiple times by different companies (see box below for an example). This is particularly relevant for rare diseases: if clinical data sets could be anonymised and standardised, they could be used for “secondary” purposes, such as for pooling across populations and data mining. Such procedures could allow previously unseen effects or correlations in the data to be discovered. Pooling large amounts of data – even if noisy – can produce statistically significant findings and allows the identification of unexpected effects in rare disease patients. So far, data sharing has been restricted to isolated initiatives, such as the example discussed in the box below. For rare diseases, a more broad-based approach would be ideal, in which a wide range of data is shared, including biomarkers, drug metabolism and pharmacokinetics (DMPK), absorption and distribution (ADME).

These examples illustrate the enormous potential of collaboration, particularly in the rare disease field. As the field matures, we expect to see significant progress in this dimension.

Case studies of successful collaboration highlight enormous potential for rare disease C Case Study 1: Working together, a charity and a biopharmaceutical company discovered a drug candidate for a rare disease

Spinal Muscular Atrophy (SMA) is a genetic disorder, which is typically marked by the degeneration of voluntary muscle movement. SMA is particularly debilitating in young children, where it can be life threatening. At present, there is no specific treatment for most forms of SMA.

Since 2003, Families of Spinal Muscular Atrophy (a US charity) has worked with deCODE (an Icelandic biopharmaceutical company) to develop new treatments for SMA. As a result of this collaboration, a molecular target for the treatment of SMA was identified in 2007. Subsequently, a drug candidate was discovered which is currently in pre‐clinical testing.

Source: DeCODE and SMA press releases

Case Study 2: Sharing data between pharmaceutical companies

In 2007 a group of leading European pharmaceutical companies – including Bayer, GlaxoSmithKline, Roche, Novartis, AstraZeneca and others – have formed a consortium in which they share expensive‐to‐obtain toxicological data on drug molecules. (Toxicology data typically has to be collected only once, and is transferable from one R&D program to another. Therefore it is usually sufficient if one consortium member collects the data and makes it available to others).

The toxicology initiative has allowed consortium members the reduce cost of drug discovery and increase the speed with which new drug candidates can progress.

Source: company press releases


The Innovation Dimension Breakthroughs in the diagnosis and treatment of disease often arise from innovation in science, technology and medicine. For rare diseases, the impact of innovation is particularly great since the fundamental drivers of these conditions are often poorly understood. There are three aspects in which innovation can impact rare diseases in particular:

1. Scientific innovation, especially in Biomedical sciences In recent years, numerous new technologies have shown strong potential to impact the rare disease field. For example RNA interference, a method for selectively deactivating genes which was initially used in experimental research only, is currently being explored as a therapeutic (e.g. Alnylam pharmaceuticals are currently testing an RNA interference-based compound, called ALN-VSP, in oncology indications). Once this technology proves reliable, it could be applicable to large numbers of rare diseases, especially those with well-understood genetic drivers. Similarly, gene therapy approaches in which defective genes are replaced by functional genes within patients, are likely to mature and become relevant for rare diseases. For example, cystic fibrosis (see box on page 2) is typically caused by a defect in one specific gene. Once it becomes possible to ‘repair’ this gene using gene therapy, a cure for this (and many other) rare diseases will be possible.

2. Intelligent data management and mining In previous sections, we discussed the patient dimension and how it can impact the delivery of rare disease medicines. To achieve efficient engagement with patients and to derive value, innovation in data management and mining are critical. For example novel search algorithms will allow disease-relevant but weak signals to be identified within large clinical datasets, as well as new and cost-effective ways of measuring parameters related to disease (see example in the box below).

3. Innovation in organization structure and culture As discussed above, the cost of R&D varies greatly throughout the value chain, with late-stage clinical development consuming the majority (illustrated in the box on page 8). Given the high failure rate of R&D projects, it is therefore sensible to fail as early as possible in the R&D process (before wasting valuable funds). The concept of ‘failing often and failing early’ is a relatively new paradigm in the pharmaceutical industry and the managerial structures and incentives in many companies are not yet aligned with it. Recognizing that many aspects of disease progression are poorly understood and that accurate diagnosis is often challenging,

How innovative data management can improve the outcome and reduce the costs of treatment The case study of Duofertility

A striking example highlighting the impact of data management comes from the world of reproductive medicine:

Infertility is a common condition, especially in Western countries, and is typically treated by in‐vitro fertilisation (IVF), a cumbersome and expensive procedure. Cambridge Temperature Concepts, a spin‐out of the University of Cambridge, has recently developed a non‐invasive alternative to IVF called DuoFertility. The DuoFertility system consists of a sensor which continuously monitors body temperature (a strong indicator of a woman’s fertility). Data is transferred to a computer and fertility information can be calculated in real‐time and displayed on a hand‐held read‐out device. Research has shown that the success rate of DuoFertility is comparable to IVF (see graph on the left). Since DuoFertility is also significantly cheaper (£500 compared to £5,000‐£10,000 for IVF), it represents a highly cost‐effective method for improving outcomes.

As technology advances, it may be possible to develop similarly cost‐effective solutions for rare diseases.

Source: DuoFertility


pharmaceutical companies have the opportunity to reinvent some of their organizational structures. By incentivising collaboration, patient engagement and innovation, and by rewarding exploratory science, pharmaceutical companies can put establish an organisational structure and culture which is conducive to development of new medicines for rare diseases. Similarly, companies can develop operational models for running clinical trials which are more suitable for rare diseases (e.g. using secondary data to improve the statistical power of rare disease studies with low numbers of patients which can increase the likelihood of success).

The examples and cases discussed in this section represent a very small selection of the vast array of innovative approaches in the pharmaceutical industry. Nonetheless, they demonstrate such approaches can impact the entire value chain of the pharmaceutical industry, especially in the rare disease field.

Summary and Outlook We have described the strategic dimensions that are key to the success in developing and delivering medicines for rare diseases: The patient dimension, the economic dimension, the collaborative dimension and the innovation dimension. We have also shown specific examples of how these dimensions can impact the development and delivery of rare disease medicines. However these dimensions do not exist in isolation: successful implementation requires the dimensions to be brought together in a coherent and holistic manner. In the next section we describe how pharmaceutical companies, such as GlaxoSmithKline, can put into practice the strategies we have developed.


Section III – How can pharmaceutical companies, such as GlaxoSmithKline, implement the proposed strategies?

In earlier parts of the report we discussed the strategic dimensions that underlie the successful delivery of medicines for rare diseases. We now turn to the question of implementation: How can pharmaceutical companies address the key dimensions? This section discusses practical steps and proposals with specific reference to GlaxoSmithKline.

GSK today GSK is a global leader in the development and commercialisation of innovative medicines. With an extensive network of R&D facilities (see box below), a well-developed regulatory affairs department and a commercial presence in all major markets of the world, GSK has outstanding resources to bring new medicines for rare diseases to market. Specific highlights include:

• Cutting-edge R&D capabilities, both internally and through a wholly owned subsidiary (see box below). In particular, GSK has invested substantially in biologics which – due to their specificity and higher success rate in clinical studies – are especially important for treating rare diseases (approximately 20% of today’s orphan drugs are biologics) 6.

• Industry-leading health economics and regulatory affairs groups, which allows GSK to precisely target medicines for rare diseases and leverage regulatory incentives.

• Forward-looking initiatives in open innovation and collaboration. For example, in 2009 GSK set up a ‘patent pool’ which gives researchers access to compounds, technologies and expertise that will help organizations conduct research on treatments for neglected diseases in developing countries more efficiently and effectively.

In summary, GSK is well-placed to exploit opportunities in the rare disease space.

6 National Organization for Rare Disorders (NORD)

GSK’s R&D capabilities around the world Through its internal capabilities and its network of partners, GSK is well‐placed to develop new medicines for rare diseases

GSK’s R&D facilities around the world (Source: GSK Website)

GSK has a number of R&D facilities that are ideally suitedto discover medicines for rare diseases, having 10 research facilities in three continents.

In addition, GSK owns a number of subsidiaries which have R&D capabilities that are suitable for rare diseases, including: • Domantis, a company specializing in the discovery of biologics

• Praecis Pharmaceuticals, a company that has built innovative chemical‐synthesis and screening technology

• ID Biomedical, a company involved in the develop‐ment of vaccines

These technologies allow GSK to pursue rare disease R&D across a broad range of modalities.

Through its corporate venture capital fund, GSK can connect to a network of approximately 30 cutting‐edge Biotechnology companies that are developing cutting edge therapies and technologies that will impact rare diseases. Examples include: Dicerna Pharmaceuticals which focuses on RNA interference and iPierian, a leader in the field of stem cells (see page 11 of this report for a discussion about some of these technologies).


A vision for the future of rare diseases Using the strategies discussed in this report, pharmaceutical companies such as GSK have the opportunity to develop novel and groundbreaking medicines for rare diseases. By focusing on the four strategic dimensions and their implementation, they can ensure the greatest probability of sustainable success.

1) Patient Dimension: To empower patients, participation and contribution to research is essential. In addition, having a direct line of communication between patients and GSK provides transparency and access to information for patients as well as provides GSK with input on unmet needs and new developments in the community.

Implementation: By proactively partnering with patient organizations and online communities, GSK can integrate patients into the entire drug discovery process – from early engagement for recruitment and design of clinical trials to involvement in post-authorization registries and database development, such as Google’s online initiative.

2) Economic Dimension: To turn the economics of rare diseases into opportunities, GSK can look to leverage its current capabilities and assess strategic partnerships.

Implementation: By developing revenue-enhancing products and services (such as diagnostic and/or personalized medicine tools) that complement their innovative medicines, GSK will be in an ideal economic position.

Utilize the framework approach discussed earlier to systematically assess the potential value of a new product and any synergies along the value chain.

Look to share risks through strategic partnerships and co-develop products. Leverage regulatory incentives and ensure market access through appropriate pricing strategies.

3) Collaborative Dimension: Optimal collaborative outcomes in rare diseases can be obtained through collaborations across many stages of drug discovery, development and approval.

Implementation: GSK should partner with expert medical and academic researchers, as well as patients, to identify the greatest unmet medical needs and to stay abreast of new scientific breakthroughs and feasibility issues.

Rare diseases with clear and accessible biomarkers will be the easiest to develop diagnostic tools for. In the case where biomarkers do not yet exist or are difficult to assess (e.g. for some neurological diseases), focus on collaboration with academic centres where resources for research may already exist and which could easily be supplemented by GSK. As many rare diseases are genetic in nature, maintain close ties with genetic experts as well as smaller, commercial operations for potential alliances.

With patent pooling, pharmaceutical companies can collaborate to bring a product to market. Particularly in diseases that have been underserved or in which the return on investment is unclear or unattractive through a single company’s efforts, pooling patents can help create value that would otherwise go undeveloped.

Seek opportunities to collaborate with other companies or care providers not only for drug development, but for data sharing as well. By investing in the development of computational capabilities, GSK will be well-poised to benefit from all sources of data.

4) Innovation Dimension: Through innovations in science, data, and business models, GSK can best create and capture value from its future treatments for rare diseases.

Implementation: By investing in academic partnerships and research centres, as well as capabilities in data sharing and analysis, GSK can reinvent the rare disease business model, tailored to best suit its own needs. Also by continuing its investment in promising technologies, such as RNA interference and stem cells, GSK can stay at the forefront of drug discovery in rare diseases.


Unique Strategies Require Unique Structures As potential opportunities for rare disease treatments emerge, it is important to recognize the unique aspects of this sector that influence how new opportunities should be evaluated. In the past, companies often grew and developed around a new, fortuitous discovery from the lab – or “bottom-up.” More recently, companies have begun to be more “top-down” in their approach, looking to invest research funding into those areas that are most likely to be profitable and then discovering products within them. While this strategy has proven effective for more common ailments such as cardiovascular disease or cancer, rare diseases require a different approach.

We argue that an intelligent combination of top-down and bottom-up will best enable a company to take advantage of cutting edge research into rare diseases, while also targeting those diseases which are most likely to yield actionable insights into treatments. Partnerships and collaborations with both researchers and patient organizations will provide the required information at the levels needed. However, to best utilize this approach, a company’s organizational structure must also enable the flexibility and bi-directional communication required for this to succeed. Small, expert teams with clear paths of communication and decision-making authority will work best for this strategy. Such teams would ideally be composed of individuals with both scientific and commercial acumen, as well as the soft skills to successfully negotiate and manage external stakeholders. Unlike drug discovery in the more common disease areas, most breakthrough research in rare diseases is likely to come from the academic sector and companies should ensure that partnerships and alliances are in place to best manage any discoveries.

Different Standards for Different Diseases In addition to the unique organizational structures required for successful drug development, there should be different criteria required for go/no-go decisions in rare diseases. Because returns on investment may be less or slower in coming than for other disease areas, managers should not apply the same standards and timelines for their evaluation. Instead, separate criteria that incorporate more global input combined of both quantitative and qualitative data and at longer time intervals should be developed. This requires commitment and patience on the part of the company, but the returns from both a financial and social perspective are likely to be substantial.

Conclusion In this report, we have discussed strategies with which pharmaceutical companies can make the development and delivery of medicines for rare diseases commercially viable and sustainable. We have described examples that illustrate what we believe is the way of the future: A connected, collaborative and innovative ecosystem, in which pharmaceutical companies, patients, academia and other stakeholders work together to advance the diagnosis and treatment of rare diseases. Many of the tools and approaches that we have highlighted are still in their infancy. But critical first steps have been made, and we expect to see further progress in the future.

The ultimate measure of success – the yardstick of achievement – is how many diseases we can overcome, and how many patients we can help. Clearly, rare diseases are one of the most exciting frontiers in this endeavour.

Acknowledgements

This report was written by Kristen Cardinal and Chris Meier as part of the business competition “Rare Diseases: a sustainable model for the pharmaceutical industry” which is sponsored by GlaxoSmithKline.

While every effort has been made to ensure that the information contained in this report is accurate and up to date, the authors make no warranty, nor do they assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information.

The authors would like to thank Toni Mathieson, the Executive Director of the Niemann‐Pick Disease Group, for agreeing to be interviewed. Statements in this report are included with her permission.

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Strategies for the Sustainable Development and Delivery of Drugs