The number of novel drugs approved by the FDA has doubled in the ten-year period from 2012 through 2020. Investment in investigational drugs for rare diseases appears to be continuing this trend with spending estimates of $260 billion at the end of 2025.
A Potential Tipping Point
As reported recently in MedCityNews, the development and research of diseases in this category have been the focus of small boutique biotech companies considered to be a specialized market.
Recently, however, researchers, investors, and their companies have shown an increasing interest in rare diseases motivated by an uptick in the number of FDA rare disease approvals.
In fact, forty-nine percent of novel treatments most recently approved by the FDA were associated with rare diseases. Of the 7,000 officially declared rare diseases, ninety-five percent do not have approved treatment options.
As if emerging from the shadows, the rare disease space has attracted the attention of new grads. Previously the study of rare diseases had been a stepping-stone to higher revenue-generating healthcare medicine, now it is seen as serving patients.
What Drives Rare Disease Investment?
In spite of the low patient populations and therefore the high cost to develop drugs for these patients’ incentives have been put in place to encourage well-established companies to take notice.
The U.S. has created a research and development (R&D) tax credit as well as a tax credit for Orphan Drugs. The tax credits offset a portion of the cost of investment. Two additional incentives, vouchers for priority review and fast-track incentives are designed to expedite drug reviews.
When considering the merits of the R&D credit vs. the Orphan Drug designation the developer would pursue the credit that has the greatest savings.
About Investment Challenges
As yet the amount of clinical literature about rare diseases is scarce. Therefore, rare diseases are not widely understood. For this reason, patient groups are necessary as they offer insight into their disease.
The recruitment factor for clinical trials is another challenge that will drive up the cost and especially the time needed to develop the drug.
An alternative to searching for patients who would be eligible for inclusion in the trial according to their diagnostic code may be to use healthcare claims data including the use of medications.
AI – Emerging Technology
By using AI, patients receive an accurate diagnosis faster and receive the most effective treatment earlier.
We have often seen that it can take seven providers and seven years to diagnose a rare disease. By using AI and claims data, analyzing patterns generated by specific patients with specific symptoms, and adding the treatments they received, the patients will be spared being ‘bounced’ around the healthcare system. Biomarkers and genetic sequencing will also accelerate the diagnostic process.
In conclusion, all factors indicate a continued surge in treating rare diseases.
