SummaryManufacturers currently in the developmental phase for drug assets targeting rare or orphan diseases should assess the commercialization implications when bringing novel therapies to market and how they may differ from the standard pharmaceutical supply chain and economics.
The National Institutes of Health (NIH) estimates that 25–30 million Americans are currently living with one of 7,000 rare diseases.1 For the small proportion of patients with access to a Food & Drug Administration (FDA) approved therapy, it is critical to ensure that access can be realized via a well-designed distribution strategy, which includes the selection of a third-party logistics (3PL) partner.
The Orphan Drug Act (ODA) passed by Congress in 1983 was designed to provide incentives for pharmaceutical manufacturers to develop drugs to treat rare diseases that affect fewer than 200,000 people a year. Since the ODA was passed, almost 1,000 orphan drugs have been approved.2
While representing a direct benefit to patients with few treatment options, orphan drug products present unique challenges throughout the commercialization process. New orphan drug launches need to be well-planned long before FDA filing to ensure appropriate avenues to care are streamlined.
Impact of Novel Distribution Strategy on Rare/Orphan Drugs
A well-designed streamlined distribution strategy that ensures the product moves in an efficient manner from the point of manufacture through the supply chain is critical to ensure patient access in an orphan drug launch. A tailored distribution strategy is more likely to be successful by identifying both the critical high-volume treatment locations and potential gaps for patients when accessing care. The process starts with obtaining detailed data on patient treatment site locations, highlighting where patients are treated and by whom. This can be accomplished through physician targeting by specialty, via claims analysis, and by using analogs where necessary for novel therapies or conditions that have previously not had drugs as a treatment option.
In addition, overlaying where treatment sites are located and which wholesaler/distributor services them today will provide an important input in eventual selection of a 3PL partner. This information is then used to construct a bottom-up channel strategy that focuses on ease of access for the patient.
A novel channel strategy will also help define the life sciences company’s 3PL requirements and distribution needs. 3PL providers offer life sciences companies both a warehouse to store their product and an enterprise resource planning system to record transactions from the point of order through cash application. The partnership between the life sciences company and the 3PL provider is very close; it is important, therefore, for a life sciences company to find a 3PL partner that not only offers the right services to meet business requirements but also shares the same values and is a good cultural fit.
Considerations for 3PL Partner Selection and Launch Preparation
Careful consideration must be given to choosing a 3PL partner, such as evaluating partner affiliation with specialty distributors (SD) or specialty pharmacies who service providers and sites of care. Life sciences companies should consider how a streamlined distribution model may limit the number of partners within the channel. If a limited or exclusive distribution model becomes prudent, it may be beneficial to negotiate a single contract with 1 provider that encompasses both 3PL and specialty distribution or specialty pharmacy services. This exclusive relationship provides life sciences company the following opportunities:
- Greater ability to deliver a consistent high-quality “white glove” or concierge-level experience for patients and providers
- Improved control and visibility of product inventory within the channel
- A streamlined accounts receivable process due to the limited number of sold-to customers
- Additional volume funneled through the 3PL/distributor partner providing additional influence and clout with the 3PL/distributor partner
Figure 1. Open Distribution Model
Figure 2. Limited/Exclusive Distribution Model
Rare disease centers of excellence (COEs) are facilities that offer comprehensive care for patients in a specific rare disease therapeutic area. Partnerships with SDs that already have established sound relationships with target COEs are desirable for manufacturers for a number of reasons:
- Prerequisite customer credit and licensing work should already be complete; this is particularly important as rare disease therapies can be relatively costly and may exceed standard credit limits
- Ordering processes are already established with the SD, and any day-to-day operational issues have likely been discovered and resolved
Provider ordering difficulties can be a barrier to care that create orphan drug launch challenges. Thus, finding SDs that already service the target COEs can minimize inherent market risk. Choosing the right 3PL and distribution partners is key to optimizing the patient care experience.
Avalere has deep industry experience working with clients in the rare and orphan disease space to design distribution channel strategies and select 3PL partners. Distribution channel strategy and 3PL selection are part of a broader market access strategy and constitute 1 offering from Avalere’s comprehensive market access service portfolio. This includes payer mix analysis, overview of coding and reimbursement barriers, and mapping policy changes among other market access capabilities. Avalere takes a data-driven approach and utilizes its proprietary claims data to analyze the patient populations and sites of care to drive channel and 3PL partner decision-making 18–24 months prior to drug launch.
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- NIH, “FAQs About Rare Diseases,” Jan 26, 2021.
- FDA, “Orphan Drug Designations and Approvals,” Sept 2020.
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