Understanding China’s Access Environment for Orphan Therapies: 3 Key Considerations

Biopharmaceutical companies face distinctive challenges when it comes to developing and commercializing treatments for rare diseases, as these conditions affect only a small segment of the population. China, as one of the world's largest pharmaceutical markets, harbors over 20 million rare disease patients affected by approximately 1,400 different rare diseases, presenting a significant opportunity for companies looking to access patients with rare diseases.

This three-part newsletter series will first discuss three keys to address the unique commercial challenges facing rare disease therapies and how these solutions may vary across developed and developing economies. In our next two articles, our focus will shift to applying this solution framework to China, enabling us to gain insights into the access environment for orphan therapies within the country.

Unique Commercial Challenges for Rare Disease Products

Rare diseases vary in their definitions across different regions worldwide. However, when standardized on a common scale, rare diseases are generally characterized as those that impact four to six patients or fewer per 10,000 individuals in the general population. Converting these frequencies into actual patient numbers means that rare diseases typically involve patient populations in the thousands, whereas non-orphan and more prevalent diseases tend to affect millions of patients.

The low patient numbers have resulted in some unique commercial challenges for rare disease therapies.

• Fewer Patients, Higher Costs. Pharmaceutical manufacturers have concluded that rare diseases with very few patients are not commercially attractive due to the inverse relationship between patient numbers and drug prices. For instance, a disease like primary hyperoxaluria has a prevalence of 1-3 per million, which means there are only 1,000 to 3,000 patients across the EU, US, and Japan. Drug pricing for these ultra-rare conditions can be prohibitively high under today's drug pricing framework, making it difficult to recover drug development costs across such a small patient population. As a result, over 95% of the 7,000 rare diseases identified to date have no effective treatment solutions, leaving a high level of unmet need.

For rare diseases with existing treatments, the prices for these products are typically very high, can range between $300,000 and $750,000 (US) per year, and can easily exceed $10 million over the patient's lifetime. This presents significant affordability issues for patients and payers alike. It also underscores how valuable a single rare disease patient is to pharmaceutical firms when compared to common diseases.

• Fewer Patients, Harder to Find. Rare disease patients are often scattered across different geographic locations, making it difficult to identify and diagnose them. The low prevalence of these diseases also means that they are not extensively studied, resulting in limited awareness and knowledge among both primary care physicians and specialists.

Adding to the complexity is the fact that most rare diseases have a genetic basis and disproportionately affect newborns, infants, and children, making early diagnosis and intervention even more challenging.

As a result, the journey to diagnosis for rare disease patients can be protracted and fraught with difficulty. A 2018 survey found that 72.97% of adult rare disease patients in China were initially misdiagnosed. These patients had to wait an average of 4.30 years before receiving an accurate diagnosis. A separate survey by EURORDIS found that 41% of patients were initially misdiagnosed, and 25% had to wait between 5 and 30 years for a confirmed diagnosis.

This long delay in finding patients can lead to several problems for pharmaceutical companies, including extended development timelines, delayed product launches, slow market uptake, and reduced product lifetime value.

• Fewer Patients, Smaller Evidence Base. For pharmaceutical companies, demonstrating strong clinical and economic evidence is crucial to secure coverage for their products. When payers have a better understanding of the patient population size, treatment costs, and treatment outcomes, they can manage uncertainty more effectively and allocate budgets toward treatments with higher confidence.

However, rare diseases often lack adequate understanding, and their epidemiology and disease burden remain unclear. Moreover, pivotal studies for rare diseases typically involve much smaller patient populations and subgroups than those for common diseases, leaving pharmaceutical companies to rely on incomplete data and educated estimates.

Furthermore, the cost-effectiveness analysis used in popular Health Technology Assessment (HTA) frameworks is ill-fitted for rare disease therapies, posing additional challenges for reimbursement negotiations with national authorities and during local listings.

Three Essential Solutions

To tackle the unique commercial challenges of rare disease therapies, comprehensive solutions encompassing public policy, diagnosis treatment infrastructure development, and funding are needed.

First, to stimulate the supply of orphan drugs, it is crucial to implement policy incentives that enhance their commercial viability. These initiatives can encompass various measures such as incentivizing research and development, expediting regulatory approvals, or reducing taxes on drug imports. The more favorable and supportive these policies are, the more conducive the access environment becomes for rare disease treatments.

In most developed economies, special legislative initiatives have been established to facilitate the development of drugs for rare diseases. A notable example is the Orphan Drug Act implemented in the United States in 1983. This act provides incentives such as up to 50% tax credits for clinical trials and extends the marketing exclusivity period for drug manufacturers to 7 years. This legislation has since inspired similar policies in Singapore, Australia, Japan, and Europe.

Conversely, limited public funding and smaller patient populations have often resulted in rare diseases being considered a lower policy priority for governments in developing countries. These nations often prioritize universal healthcare packages that cater to the basic needs of the majority, leading to fewer resources allocated specifically to rare diseases.

Second, to find rare disease patients, the establishment of Centers of Excellence (COEs) and effective referral networks is imperative. The extraordinary challenge associated with identifying, diagnosing, and treating individuals with rare diseases makes COEs and referral networks invaluable for patients, physicians, and pharmaceutical firms.

COEs function as centralized and multidisciplinary hubs, playing a pivotal role in patient care, knowledge dissemination, and research for specific disease states. These COEs offer coordinated care, foster the development of diagnostic tools and treatment guidelines, and enhance the referral process from primary care physicians to specialists. Through these initiatives, disease awareness is heightened, and the time to diagnosis is reduced, leading to accelerated identification of patients. Thus, COEs and referral networks represent a crucial strategy in effectively identifying and accessing individuals affected by rare diseases.

Additionally, COEs house Key Opinion Leaders (KOLs) who possess specialized expertise in specific rare disease fields. As there are limited experts in these fields, pharmaceutical companies must actively seek out and collaborate with these KOLs to maximize the commercial potential of their products.

Establishing efficient and effective Centers of Excellence (COEs) and referral networks poses significant challenges in any context. However, in countries with underdeveloped healthcare infrastructure, considerable regional disparities, and limited availability of qualified physicians, the task of building COEs and referral networks from scratch becomes an exceptionally daunting endeavor.

Third, to ensure patients’ continued access to treatments and the long-term market viability of orphan products, a multi-layered financing strategy for rare diseases is vital. Insufficient funding not only jeopardizes patients' ongoing access to therapies, particularly for those requiring lifelong treatments but also diminishes the market value of orphan products, thereby discouraging future investments and the development of treatments for rare diseases.

The allocation of public funding for rare diseases often reflects the priorities of a nation's healthcare system. Developed economies typically incorporate special considerations for orphan therapies within their Health Technology Assessment frameworks. Conversely, developing countries with multiple competing healthcare priorities often rely on a multi-layered financing ecosystem to bridge the gap left by public insurance.

Given the limited number of patients affected by rare diseases, it is crucial for orphan drug manufacturers to explore diverse financing strategies, particularly in developing countries. Furthermore, manufacturers may find greater flexibility in adapting evaluation frameworks when dealing with private payers compared to national authorities, as rare disease therapies tend to carry high prices and are supported by a relatively small evidence base.

In our next two articles, we will apply this solution framework to China to gain insights into the country’s access environment for orphan therapies, in particular, the impact of supply-side policy incentives, the development of diagnosis and treatment capacity, particularly through Centers of Excellence (COEs) and referral networks for rare diseases, and the various financing mechanisms for orphan drugs, encompassing basic medical insurance, commercial health insurance, and payment innovations at local levels.

References:

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