The new policy of guiding principles is introduced, and the future of rare disease drugs is coming

At the beginning of 2022, in view of the low incidence of single diseases of rare diseases and the more difficult clinical research and development of drugs, the Center for Drug Evaluation of the State Food and Drug Administration issued the "Technical Guidelines for Clinical Research and Development of Drugs for Rare Diseases"
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On the basis of ensuring rigorous science, adopt a more flexible design to obtain more sufficient scientific evidence through limited patient data, meet the assessment of benefits and risks, support regulatory decisions, and provide new insights for the development of the rare disease industry help

China's rare disease industry has a good development environment

China strongly supports the development of the rare disease market in terms of policy
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In recent years, China has successively issued documents related to rare disease drugs.

Rare disease drug protection is gradually improved
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Drugs in the National Basic Medical Insurance Catalogue will be adjusted to include drugs for rare diseases as a priority, and eligible drugs will be included in the catalogue in a timely manner

Rare disease market has the potential to become a hot track

The future market space for rare disease drugs is broad
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According to Frost & Sullivan's forecast on the rare disease market in Beihai Kangcheng's prospectus, from 2020 to 2030, the global rare disease drug market will increase from US$135.

Figure 1 Market breakdown of rare disease drugs (unit: USD 1 billion)

Data source: Beihai Kangcheng’s prospectus, Rost & Sullivan analysis (2021 and beyond are forecast data)

Rare disease drugs have a high success rate in drug development
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It is well known that the research and development of innovative drugs has the "Double Ten Law", the time cost and the cost of money are very high, and the research and development of new drugs has a very high failure rate under such a high cost

Figure 2 Comparison of the success rates of various types of drug development

Data sources: "Investment Logic in the Biomedical Industry in 2021", Clinical Development Success Rates 2006-2015, Thomson Reuters

From these perspectives, the rare disease industry has the potential to become a hot track
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In addition, the development momentum of the rare disease industry in the world is also very clear

The phenomenon of "no one paying the bill" has become the biggest obstacle to the development of the rare disease industry

The annual treatment cost of 300,000 has become an acceptable ceiling for medical insurance¹
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Based on the positioning of medical insurance as "basic insurance" and the affordability of medical insurance funds, it is difficult to enter the negotiation list for products with high treatment costs in the previous year.

Excessive price cuts are a double-edged sword for the rare disease industry
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The inclusion of rare disease drugs has contributed to the satisfaction of patients, hospitals, and medical insurance, and the sales of products after being included in medical insurance will soon increase dramatically

The success rate of rare disease drug negotiation is low
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Although the medical insurance negotiation in 2021 led to the inclusion of many high-priced rare disease drugs into the medical insurance, the success rate of the rare disease drug negotiation was only 31.
8%, and only 7 of the 22 rare disease drugs that passed the formal examination were successfully negotiated
.
Among the 15 drugs that failed to negotiate successfully, 7 of the drugs corresponding to 4 indications have no corresponding treatment drugs in the medical insurance list, and the economic needs of these patients are still strong
.

Table 1 15 rare disease drugs that passed the formal examination but failed to negotiate

Data source: IQVIA analysis "2021 National Medical Insurance Drug Catalog Adjustment - Thinking and Action"

The source power of an enterprise is an important guarantee for the development of the rare disease industry
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Based on the registration applications of Class 1 new drugs in China in the past six years, it can be found that according to the statistics of diseases in the rare disease catalog, the IND ratio of rare disease drugs is relatively low, and the proportion of innovative chemical drugs and biological innovative drugs is only about 2%.
Far below the proportion of oncology drugs, China's rare disease industry is still in the early stages of development
.
As the research and development of oncology drugs has gradually become the trend of the Red Sea, the rare disease market has received more and more attention
.
Limited by a small patient group, in order to recover the research and development costs, the high prices of rare disease drugs are unavoidable, but this also poses a major challenge to the affordability of medical insurance funds, resulting in many rare disease drugs that fail to enter medical insurance after they are marketed.
This phenomenon has become the main contradiction that hinders the development of the rare disease industry
.
To solve this contradiction, we need to consider many aspects such as administrative intervention and industrial environment
.

Table 2 IND application ratio of rare disease drugs

Data source: Yaozhi database

Short-term fix: Negotiating agreements complicates

Develop complex negotiated agreements for high-value orphan drugs with small patient populations
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At present, the rules of medical insurance negotiation are relatively simple, so there is a unified standard of up to 300,000 annual treatment costs.
However, different types of drugs face different situations.
For this, medical insurance negotiation can completely formulate different types of drugs in the future.
Negotiation Rules
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Drawing on the UK's access principles for high-value medicines²
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Referring to the UK's negotiation rules for the universal health insurance system, formulate more complex negotiation agreements for high-value drugs, so as to allow more rare disease drugs to be covered by medical insurance without causing more burden on the medical insurance fund as much as possible, through rebates Find a better balance between medical insurance payment and drug access in a variety of ways, such as the upper limit of the dose, and based on efficacy
.

Table 3 Negotiation Rules for Orphan Drug Access

Reference from "Price Negotiation Mechanism Implementation Experience and Enlightenment in the Process of Orphan Drug Access in the UK"

Long-term solution: build a multi-level medical security system

Paying for the cost of medicines from multiple parties is the basis for the sustainable development of the pharmaceutical industry
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It can be seen from the figure below that the current payment of China's medical insurance fund has gradually reached saturation, and at the same time, commercial health insurance has failed to develop in the context of China's increasing direct medical expenditures, resulting in personal expenditures currently occupying the main part
.
At present, other security systems other than medical insurance are urgently needed to develop rapidly, so as to effectively reduce the proportion of personal expenditures and promote the formation of a perfect closed loop and healthy development of the pharmaceutical industry
.

Figure 3 China's direct medical expenditure

Data source: "Building China's Pharmaceutical Innovation Ecosystem (2021-2025)"

Reduce the proportion of medical insurance payments and leave room for the development of commercial insurance
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An important reason why commercial insurance currently occupies a low proportion of medical payment in China is that there is not enough space for the development of commercial insurance.
Medical insurance uses the same standard to pay for high-priced drugs such as basic mature drugs and rare disease drugs.
The proportion included in the price drug and medical insurance is still low, which leads to the failure to fully realize the strategic policy of “basic insurance” for medical insurance
.

In response to this, it is necessary for medical insurance to reduce the compensation ratio of high-priced drugs, so that more high-priced drugs and even all high-priced drugs with clinical value can be included in medical insurance under the condition that the medical insurance fund can afford it.
The development of insurance leaves enough space to form a win-win situation for patients, pharmaceutical companies, medical insurance, and commercial insurance
.

Epilogue

With the rapid development of China's pharmaceutical industry in recent years, China's pharmaceutical industry has entered the second echelon and is heading for the first echelon, which may be followed by the fear of China from the United States and other Western countries, and sanctions such as the entity list in recent years.
There is a lot of talk about measures, and in the face of this situation, the sustainable and healthy development of China's pharmaceutical industry is even more needed
.

The development of the pharmaceutical industry is based on long-term and continuous investment in drug R&D.
Only by allowing companies to get more returns than their investment in innovative drug R&D can they have continuous motivation to carry out the next round of innovative drug R&D and make China's pharmaceutical industry move towards a more advanced stage.
high stairs
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References:

1.
"The success rate of 74 new drugs entering the medical insurance negotiation reaches a new high - Interpretation of the 2021 new version of the National Medical Insurance Drug List"

2.
"Implementation experience and enlightenment of price negotiation mechanism in the process of rare disease drug access in the UK"