Orphan Drugs Now "Where the Money Is," Says Willie Sutton's Ghost

When a dumb reporter asked "Willie" Sutton, the famous bank robber, why he robbed banks, he is reported to have said "Because that's where the money is." Duh!

Until a few years ago, if you asked a pharmaceutical company executive why his or her company developed and marketed an "orphan drug" -- ie, a drug for a disorder affecting fewer than 200,000 people in the U.S. -- you would likely have gotten a response such as "because there is an unmet medical need" or something similar.

Today, however, orphan drugs also have the potential to turn into blockbusters; ie, be where pharma's money is at (see "Orphan Drugs are 'Where the Money Is' for Big Pharma" and "New Big Pharma Economies of Scale: Less Patients Needed to Reach Blockbuster Sales").

The U.S. government has been very kind to pharma companies that develop orphan drugs. Under the 1983 Orphan Drug Act of January 1983, orphan drugs get extended marketing exclusivity, tax breaks, expedited approval by FDA, and require fewer patients in clinical trials.

 Now, the U.S. is poised to get even friendlier!

"Recently, a bipartisan group of House members proposed to broaden exemptions for drug makers that pay a fee on sales made to government health insurance programs. And those fees, which are due by Sept. 30, could generate at least $2.3 billion this year, according to Bloomberg News."

This is not exactly what president Obama meant when he said small businesses need incentives to innovate. This is what he meant by big lobbying groups - eg, PhRMA - having too much influence over Congress!

[This post originally appeared in Pharma Marketing Blog. 

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New Big Pharma Economies of Scale: Less Patients Needed to Reach Blockbuster Sales

"Meet the new blockbuster," reports the Wall Street Journal; ie, drugs that treat intractable diseases afflicting "small numbers of patients shown by testing to likely benefit from the drug. Such targeted therapies can be brought to market faster and at less cost, and health plans will pay high prices even for long courses of treatment" (find the article here).

One such drug is Pfizer's Xalkori (crizotinib), a "newly approved for a rare form of lung cancer, for which Pfizer plans to charge $115,200 a year per patient."

At that rate, Pfizer needs only about 9,000 patients worldwide to generate $1 billion in annual sales of Xalkori. In comparison, 1,671,000 Lipitor patients are required to generate the same sales figure. I demonstrate this in the following chart, which requires a logarithmic scale to represent both these numbers visibly on the same chart (see chart below).

Meet the New Big Pharma Economies of Scale: A smaller market can provide blockbuster sales as long as health plans back expensive therapies.

The catch is having diagnostic tests that pinpoint patients most likely to benefit.

Pfizer seems confident it can do this. "There's been a change of paradigm," said a Pfizer researcher. "The new school of thought is, 'If you find the patients that the drug will work in, and if you see enough benefit, we will find a way to get this to market.'"

The new drug development "paradigm" requires a new marketing paradigm as well. That marketing paradigm will focus almost exclusively on medical specialists such as oncologists.

Under the new marketing paradigm it will be difficult to justify broadcast direct-to-consumer (DTC) advertising (eg, TV) because it will cost too much to reach the small group of potential patients with such a broad brush (my guess is that pharma marketers only spend a lot on broadcast DTC when the target audience is greater than 10% of the adult population).

The Internet and especially social media is ideally suited to marketing to a small community of patients such as Linnea Duff who took crizotinib in a clinical trial. Linnea was featured in the Wall Street Journal article. Not mentioned in the article, however, was the fact that Linnea writes the "life and breath: living with lung cancer" blog, which she started during her clinical trial experience. The blog prominently features a "Pfizer Video" (see here).

I don't know if Pfizer paid Linnea to include the video on her blog -- she doesn't say one way or the other, although she did NOT include this equally nice video from the Massachusetts General Hospital (MGH), which ran the clinical trial in which Linnea participated. That video is available on YouTube (here).

I wish Linnea the best of luck -- she is still terminally ill and is "happy each day that she is given" as a result of her treatment.

Her story, however, is a powerful marketing tool and I am sure the future of pharma marketing will include many such patient stories that can circulate online among close-knit patient communities that previously were "orphans"; ie, neglected by the pharmaceutical industry.

[This post originally appeared in Pharma Marketing Blog. 

Make sure you are reading the source to get the latest comments.]