AHIP Report Finds Orphan Drugs That are Used More Widely are More Costly

A report from America’s Health Insurance Plans (AHIP) suggest that “orphan drug” designation from the U.S. Food and Drug Administration (FDA) has become a lucrative business opportunity for pharmaceutical companies. These medications made up almost half of all new medications approved by the FDA in 2015, and the report notes that pharmaceutical companies may be “gaming the system” by gaining orphan drug designation, but then seeking wider, more lucrative uses for the treatment.

The report included a sample of 46 orphan drugs available between 2012 and 2014 and found that 47 percent of these drugs’ usage was for non-orphan diseases. The greatest price increases (37 percent) occurred for orphan drugs prescribed mostly for non-orphan indications, while orphan drugs almost exclusively used on-label saw the smallest price increases (12 percent) during the assessed time period.

The report discussed some benefits that orphan drug makers receive due to the Orphan Drug Act (ODA), including:

  • regular consultation between the FDA and the drug company for orphan drug development
  • a waiver of the New Drug Application filing fee
  • a 50% tax credit for all research and development expenditures incurred during the clinical testing of the orphan drug
  • a 7-year exclusivity period, beginning on the date of FDA’s approval of the orphan indication, during which time the FDA cannot approve another similar drug for the same orphan indication

“The combination of market exclusivity coupled with the extremely high prices, many in excess of $100,000 per year, has led to the creation of ‘blockbuster’ orphan drugs, a result that seemingly runs counter to the original spirit of the ODA,” according to the report.

The researchers included orphan drugs for hematologic malignancies in the report, including imatinib for myelodysplastic/myeloproliferative disorders, ruxolitinib for polycythemia vera, deferiprone for thalassemia syndromes, rituximab for CD20+ chronic lymphocytic leukemia, and bortezomib for mantle cell lymphoma, among others.

In response, the Pharmaceutical Research and Manufacturers of America argued in a statement that the research does not take into account discounts after price negotiations and noted that it, “fails to recognize the tremendous success of the ODA for its intended goals. This underscores the importance of offering incentives to help facilitate the development of treatments for diseases affecting a small patient population.”

Read the full AHIP report at ahip.org/wp-content/uploads/2016/08/OrphanDrug_DataBrief_8.13.16_KW.pdf.

Source: AHIP, “Orphan Drug Utilization and Price Changes (2012 – 2014),” August 2016; FiercePharma, August 15, 2016.