Rare Disease Report

The High Cost of Orphan Drugs

JULY 31, 2013
rarediseasereport

Newsflash - orphan drugs are expensive. Juxtapid (lomitapide) for treating homozygous familial hypercholesterolemia costs $250,000 a year. Gattex (teduglitide) for short bowel syndrome costs $295,000 per year. Naglazyme (galsulfase) for mucopolysaccharidosis VI costs $441,000 per year. The question is – who is paying for those drugs?  According to an editorial in the new issue of Expert Opinion Orphan Drugs, insurance companies are paying for it but they are increasingly asking the patient to foot more of the bill with a trend towards co-insurance rather than co-payment plans. And this trend may continue if the price of orphan drugs also continues to rise.

According to the editorial’s authors - Drs. Joshua Cohen and Christopher-Paul Milne - the economics of orphan drugs is complicated but they argue part of the problem is the system we have created to develop orphan drugs encourages companies to pursue orphan drugs in markets without competition. In other words, the Orphan Drug Act (ODA) and the economics of the rare disease treatment have created a paradox. The editorial noted, “On one hand, without the ODA and the ability to sell a drug at a price corresponding to what the market will bear there would be little incentive to develop new orphan drugs. On the other hand, in the absence of a competitive market there is effectively no price ceiling.” 

According to Drs Cohen and Milne, there is a large variance in the costs of orphan drugs but on average, orphan drugs without competition are 2.6 times more expensive that orphan drugs with competition. That discrepancy, in the authors’ opinion, needs to be addressed.

The editorial concludes “In our view it does not make economic sense to single out orphan drugs based on their per-unit price. Surely, orphan drugs should be subjected to the same types of clinical-, cost-effectiveness, and budget impact analyses as non-orphan drugs.”

We at Rare Disease Report encourage our readers to read the editorial and draw their own conclusions on how to best address the high cost of many orphan drugs.

Reference

Cohen J, Milne C-P. Is the increasing cost of treating rare diseases sustainable?  Exp Opin Orphan Drugs. 2013; 1(8):581-583. doi:10.1517/21678707.2013.819289



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