Magnitude of Non-Rare Disease Use of Orphan Drugs May Inflate Prices

A recently published report by the American Health Insurance Plans (AHIP) found that nearly half of all orphan drugs developed between 2012 and 2014 were used for non-orphan diseases, which accounted for the greatest price increases of these drugs.

Since the passage of the Orphan Drug Act (ODA) of 1983, over 500 orphan drugs have been approval by the US Food and Drug Administration (FDA). Because of the incentives in the ODA to develop these drugs, pharmaceutical companies generally spend less money developing these drugs and can offset the smaller market size of the drugs with higher prices. As such, the revenue generated by orphan drugs can be comparable to the revenue generated from non-orphan drugs over the lifetime of the product. Orphan drug development has become a new business model within the pharmaceutical industry because of this formula.

________________________________________________________________________________________________________________________________________________________________________

RELATED CONTENT
Humana, BCBS, CVS Health Among Participants in Experimental Medicare Part D Model
US States Sue Opioid-Maker Indivior, Alleging Anticompetitive Practices
________________________________________________________________________________________

To describe the prevalence of orphan drug use  and the cumulative price increases for these drugs, the AHIP conducted a study of a sample of orphan drugs approved by the FDA between 2012 and 2014.

The study found a total of 46 prescription medications with at least one FDA-approved orphan indication, with an average of 1405 patients prescribed at least one of these orphan drugs during the study period.

Of the total 46 orphan drugs available, nearly half (47%) were prescribed for patients with non-orphan diseases. Over the 3-year study period, the price on average for the 46 orphan drugs increased by 25.9%. 

The study found that the orphan drugs prescribed largely for non-orphan uses had the greatest price increases (37%) while the orphan drugs used nearly only for orphan diseases had the smallest price increases (12%). 

According to the report, the researchers conducted a test to detect any significant differences in price changes among the quartiles of orphan use. Results of this analysis showed again that drugs used generally for non-orphan diseases on average increased their prices more than drugs used nearly only for orphan diseases.

“These findings suggest the magnitude of non-orphan use of these agents, be it on-label or off-label, may be influencing drug pricing,” the report concludes. 

In addition, the report states that the results of the study “raise significant concerns about the current affordability of this category of important, life-saving medications.” —Mary Beth Nierengarten