WASHINGTON -- U.S. regulators are exploring how to make it easier and cheaper for drug companies to develop treatments for rare diseases -- an underserved slice of the market that typically offers slim profits.

The U.S. Food and Drug Administration already offer companies grants and guaranties seven years of market exclusivity for drugs that treat rare diseases.

The agency is looking to find other ways to encourage drugmakers through its new rare disease review group, which holds its first public hearing on Tuesday and Wednesday.

Any disease that affects fewer than 200,000 patients is classified as rare, and one in 10 people in the United States lives with such a disease. However, the FDA has approved a treatment for less than three percent of rare diseases.

"So if you get one of these diseases, God bless you," Senator Sam Brownback, whose amendment created the FDA review committee, said at a Senate hearing last week.

The new rare disease review group is part of a broadened effort to encourage companies to spend more money on the more than 6,000 rare diseases identified, including relatively well-known conditions like cystic fibrosis and Huntington's disease.

More than 350 drugs to treat rare diseases have been approved since the FDA launched an orphan drug program in 1983, compared with fewer than 10 such products approved the decade before.

Yet the pharmaceutical industry still spends little on rare diseases, due to high drug development costs and low profits, especially in contrast to blockbuster cholesterol or heartburn drugs that bring in billions of dollars.

The FDA says it is sensitive to companies' bottom lines.

"Even if you have very targeted and effective product development, it does cost real money and people will expect a return on investment," said Jesse Goodman, chief scientist and deputy commissioner for science and public health at the FDA.

The Biotechnology Industry Organization, which represents more than 1,200 biotech companies, wants to see more funding and incentives within the orphan drug program.

Sara Radcliffe, BIO's executive vice president for health, said in comments submitted to the committee that in Europe, orphan products receive 10 years of market exclusivity. "Given its importance, we urge consideration of a longer U.S. exclusivity period to coincide with Europe," she said.

Companies and advocates also say that drugs for rare diseases should not have to go through as many clinical trials as other drugs. These drugs often have fewer potential test subjects, making it more expensive to coordinate and harder to meet the same scientific standards.

Last year, the FDA began offering a priority review voucher for a company that developed a product approved for one of 16 neglected diseases.

The priority voucher can be used for any drug at the company, cutting the review time by four months and potentially increasing profits by getting the drug to market sooner. So far, only one voucher has been awarded, for Novartis AG's (NOVN.VX) malaria drug Coartem.

The FDA also joined forces with the National Institutes of Health this year to take the first and riskiest steps toward bringing new drugs to market for rare and neglected diseases. [ID:nN24208594]

And earlier this month, the FDA posted a list of drugs already on the market that could be "re-purposed," or tested for their effectiveness against rare diseases. (Reporting by Jon Lentz; editing by Tim Dobbyn)

© Copyright 2010 Thomson Reuters