Planning for Second to Market in Orphan Disease Space

The R&D pendulum is swinging to orphan diseases for multiple reasons. Among them, low hanging fruit for mass market diseases is largely addressed, and advances in science have increased the potential to treat once-untreatable conditions. Indeed, in 2019, FDA projected that by 2025 it would approve 10-20 cell and gene therapies a year.

With the growing volume of orphan disease treatments, an emerging issue for manufacturers is how payers can be expected to handle the second to market in the orphan space. Will payers approach the second to market as they do non-orphan conditions?

Based on past market research, the answer is “no” and, while that might not be surprising, the issues may be instructive for manufacturer planning.

Non-orphan vs. orphan in the payer market

Second-to-market products have greater ability to challenge the first to market for non-orphan than orphan conditions. This does not suggest they are likely to succeed; only that payer dynamics make it possible. For orphan conditions, second to market securing preferential status appears highly unlikely. Three underlying factors stand out:

1. Surrogate markers. In the non-orphan space, surrogate markers are closer to predicting outcomes than in the orphan space. This creates the possibility for payers to favor the second to market. In addition, complexity of orphan conditions, lack of real-world experience, and competing preferences of expert clinicians prevent payers from going down that road in orphan diseases.

2. Budget impact. For non-orphan conditions, patient size allows a second to market targeting preferred position to offer a discount producing a meaningful budget impact. Given the handful of patients with orphan conditions, savings from any second-to-market discount isn’t worth the limitation payers would impose on doctors and patients.

3. Warehouse effect. For non-orphan conditions, even if large numbers of untreated patients use the first product, there should be a sizeable population for the second product. With orphan conditions, the warehouse effect heavily benefits the first to market, limiting the second to incidence of new patients.

Equal playing field for second to market

Brand teams can anticipate that payers are naturally inclined to maintain an equal playing field for the second to market in the orphan disease space and to let manufacturers “duke it out with providers.” Research suggests that payers will manage coverage consistent with label and trial data and are unlikely to favor one product: science is too new; patient variability too likely; patient size too small; physician preference too important; and payer responsibility too great.

Key business factors for second to market

Assuming an equal playing field, three key business factors appear to be particularly important for the second-to-market product:

1. Trial data. Coverage typically follows trial data. Is there a gap in the first to market’s pivotal trial that second to market can address? Is it possible to target a different endpoint? Is there a way to demonstrate superior durability?

2. Parity pricing. Payer comments suggest that they do not see a pressing need for a lower price. As one person put it, “If they cost exactly the same, I’m not really increasing cost at all.” Given the tendency to not favor one product, access is unlikely to depend on a lower price.

3. Specialty pharmacy. Some specialty pharmacy attributes worth noting are: expertise in the orphan condition and drug; working effectively with charitable organizations and manufacturer free goods programs before a prior authorization (PA); handling the PA if no hub is involved; providing real-time data to the manufacturer; and a track record of maximizing adherence.

Learn from first-to-market experience

Second-to-market planning should include looking at the following factors to see if they played a role in the first to market’s performance: weakness in strategy, unanticipated problems, exaggerated clinical story, overestimated provider conviction, and flaws in specialty pharmacy performance.

The overall message for the second to market in the orphan space is that financial factors are less important than clinical in driving a successful payer strategy.

Ira Studin, PhD, President, Stellar Managed Care Consulting. He can be reached at istudin@stellarmc.com.