Rare Disease Report

Orphan Drugs Account for 8% of Total Drug Sales

OCTOBER 23, 2017
James Radke
Last week, a study published by QuintilesIMS Institute determined that orphan drugs account for 7.9% of total drug sales in the United States.

This may seem surprising to those who only see news about orphan drugs costing in excess of $400,000 or $500,000 per year and that the Orphan Drug Act is giving too many pharmaceutical companies card blanche to charge offensively high prices for some medicines.

The study, using their own QuintilesIMS database to assess U.S. invoice-price revenues on all drugs between 1992–2016, included the 449 orphan drugs approved by the U.S. Food and Drug Administration (FDA) from 1983 to 2016. 

It was determined that in 2016, total drug sales in the United States was approximately $450 billion and, of that total, approximately $36 billion was designated for orphan drugs. The majority of sales were for traditional drugs, or those that are generally less expensive, but by their high volume, they account for almost 60% of total drug sales.

In contrast, orphan drugs account for only 0.3% of the volume of pharmaceutical drugs sold.

Share of Drug Sales in 2016
 Type of Drug % of $480 Billion
 Non-orphan traditional
 Non-orphan specialty

The report also noted that sales of non-orphan specialty drugs has increased the most in the past few years. In the past 5 years, spending of specialty drugs has increased from $94 billion to $183 billion with only about 20% of that increase being contributed to orphan specialty drugs. Specialty drugs include those that treat cancer, autoimmune disorders, HIV/AIDS, multiple sclerosis, and viral hepatitis.

The study by QuintilesIMS was commissioned by the National Organization of Rare Disorders (NORD) and in an accompanying report, NORD reiterate that the Orphan Drug Act of 1983 is just as important today as it was then. NORD wrote “To reduce its ability to incentivize development of medical treatments for small patient populations would be tantamount to abandoning the 30 million Americans who have rare diseases and have either benefitted from the law or can reasonably hope to in the future.”

Per NORD: “As we look at ways to reduce the burden of healthcare costs in the U.S., some people have looked upon orphan drugs as a possible contributing factor,” said NORD President and CEO Peter L. Saltonstall. “The QuintilesIMS study provides important new perspective that helps to reinforce the basic value of the Orphan Drug Act and to quantify orphan drug spending within the broader context of total drug sales.”

The Orphan Drug Act was passed in 1983, thanks in part to the tenacity of several people struck by the perception that persons born with a rare disease had no hope of obtaining effective and safe treatment because there were no financial incentives for companies to develop drugs for small patient populations. These obstacles were removed when the Orphan Drug Act became law since it gave pharmaceutical companies numerous incentives to develop drugs and since its inception, the number of orphan drugs approved has grown each year. Recently, the high cost of some orphan drugs as well as some companies using the Orphan Drug Act to charge high prices for a drug that previously could be gotten cheaply off-label (or from another country) has led politicians, such as Senator Chuck Grassley, to question the validity of the law in the current climate.

Image courtesy wikimedia commons. 

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