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China's 1st rare disease list seen as major step toward further policy reforms

With China releasing its first list of rare diseases recently, patients living with the disorders in the country now have a better chance of finding treatments at their local hospitals.

Like many innovative therapies developed overseas, access to rare disease treatments was limited by the slow-paced healthcare reform in the country — home to more than 16 million rare disease patients.

The government had plans to improve access to the treatments, with the State Council proposing to accelerate their approval in 2015.

But there were no clear guidelines to categorize the diseases.

For policy watchers, the list of 121 rare diseases released in May serves as a bellwether for more favorable market access policies to come.

"This is a very important development for the field," Kevin Huang, founder and president of the Chinese Organization for Rare Disorders, told S&P Global Market Intelligence.

Founded in 2013, the patient advocacy group, also known as CORD, aims to promote greater awareness and understanding of rare diseases and improve patients' access to orphan drugs across China.

"The list gives a good foundation for China to develop its policies for rare diseases, for example in orphan drug research and development, and medical insurance for diagnosis and treatment," Huang said.

The release is also "another major step of finalizing the regulatory framework for rare diseases," said Katherine Wang, a partner at global law firm Ropes and Gray's life sciences practice.

Adopting the orphan drug market

Orphan drugs, another name for rare disease therapies, are becoming a bigger part of the global pharmaceutical sector. The medicines are called "orphan" because they lack sales potential for companies as so few patients need them, and so not many want to spend billions in developing them.

But things are changing.

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According to EvaluatePharma's 2018 Orphan Drug Report, global sales of these specialized treatments are projected to grow at a CAGR of 11.3% over 2018-2024, more than doubling that of non-orphan drug sales at 5.3% over the same period.

By 2024, sales of orphan drugs could make up one-fifth of global prescription sales and reach $262 billion, up from $125 billion in 2017, the report notes.

With China bringing out its list of these disorders, orphan drug developers such as Shire PLC are optimistic about their market potential.

"For China to create a list, it is a really big step for the rare disease community," Peter Fang, head of Asia Pacific for Shire, said in an interview.

"We are putting in place additional investments across rare diseases to provide more access, more registration of new drugs," he said.

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Future policy expansion

The definition of what makes a disease rare varies, but governments across the major drug markets have set policies to incentivize orphan drug development.

These include tax benefits, R&D subsidies, and a longer period of market exclusivity.

China does not provide these incentives, but the new list could lay the groundwork for policy expansions.

"It takes some time to refine the system. So far, at least it's a positive step that the government is trying to define what rare disease actually means in China," Ropes and Gray's Wang said.

"Usually the first stage before you can set incentives is to define what the disease is," said Thomas Butt, a research fellow at Peking University's National School of Development.

"Without that definition, you can't set policy," he added.

To Beijing's credit, orphan drug applications have been a part of its priority review pathway since 2016.

In October 2017, the State Council also laid out plans to set up a patient registration system and speed up access to orphan drugs by allowing conditional approvals. The policy was enacted in May.

If a rare disease product has been approved overseas, the China National Drug Administration, formerly the China Food and Drug Administration, can grant conditional approval, allowing the drug to be marketed before requiring the manufacturer to first complete a late stage clinical trial in China on Chinese patients, Wang said.

According to Shire's Fang, the company previously had to submit a clinical trial waiver and wait for feedback before filing a new drug application, or NDA.

"For new therapies going forward, we can now go directly into filing an NDA. That makes a big difference in terms of the time, the speed at which we can get approval and provide access to these therapies to the Chinese patient population," Fang said.

But challenges remain.

Even after getting approval, orphan drugs could still carry a high price tag.

While certain areas — such as Shanghai, or Qingdao city in the Shandong province — provide some level of medical coverage for rare diseases, most patients cannot afford orphan drug therapies.

China's healthcare spending has also continued to climb.

According to data from the National Bureau of Statistics, the country spent 4.634 trillion yuan on healthcare in 2016, up from 2.435 trillion in 2011.

"These drugs are often high-priced, high-value drugs. For the public reimbursement system, it is very difficult for the public insurance to afford these drug prices," said Butt.

Seeing opportunities

With some 7,000 rare diseases in the world, a list of 121 would seem like a drop in the bucket.

Further, only 44 out of the 121 rare diseases have specific therapies, and of those, less than half are available in China, according to Chinese data provider PharmCube.

Diagnosis for rare diseases also remain low, given the lack of patients, R&D spending, and understanding about the conditions.

But to Fang, this is an opportunity to identify and diagnose additional diseases to put on the list and develop new treatments.

"Hopefully companies like ourselves can look at putting in more effort and finding more drugs for these rare diseases," he said.

"If you speak to CORD and other patient groups, they really feel so energized by the opportunity to bring these therapies into China, because today there's a lack of these drugs. This is the opportunity we are looking forward to."

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As of June 4, US$1 was equivalent to 6.41 yuan.