Orphan Drug Prices Facing Increased Scrutiny Following Historic Year for Approvals

With the US Food and Drug Administration (FDA) approving an all-time record number of orphan drugs during 2014, the pricing of these treatments is set to come under increased scrutiny, says an analyst with research and consulting firm GlobalData.

According to Adam Dion, MS, Industry Analyst for GlobalData, Big Pharma has shifted its focus from large patient populations in established therapeutic areas, such as cardiovascular diseases and diabetes, to developing orphan drugs for rare diseases, which constituted 17 of the 41 new molecular entities approved by the FDA last year.

Dion explains “The need for product pipeline replenishment, quicker access to commercialization revenues, and attractive selling prices may partly explain this new-found infatuation with orphan drugs. Orphan drug developers generally see significant return on investment due to lower clinical trial costs, particularly in Phase III where patient recruitment is much smaller. Approval times are also usually faster, because these treatments tend to receive Priority Review from the FDA.”

The analyst adds that with the additional benefits of a 7-year minimum of marketing exclusivity in the US (10 years in the EU) from date of approval, tax credits and grants for conducting clinical trials, and a waiver of user fees, developing orphan drugs makes both strategic and financial sense.

However, Dion notes that while the rare disease sector may appear to be increasingly lucrative for pharmaceutical companies, some orphan drug prices have recently reached new unprecedented levels. Their affordability has therefore become a significant issue for payers, particularly as governments all over the world are seeing their healthcare system costs explode.

Dion comments “Amgen recently came under fire when it announced in December that its new acute lymphoblastic leukemia drug Blincyto will cost $178,000 per patient, surpassing Merck’s Keytruda, which is priced at $150,000 per year, as the top price for a cancer treatment.

“This situation is now starting to raise some very tough questions about whether orphan drug prices are justifiable and even sustainable over the long term.”

GlobalData is a leading global research and consulting firm offering advanced analytics to help clients make better, more informed decisions every day. Its research and analysis is based on the expert knowledge of over 700 qualified business analysts and 25,000 interviews conducted with industry insiders every year, enabling them to offer the most relevant, reliable, and actionable strategic business intelligence available for a wide range of industries.

For more information, please contact our Press Office on +44 (0)1204 543 537 or at pr@globaldata.com. Gain access to our latest press releases and expert analysis on developments in your industry. Subscribe to our RSS feed for the Healthcare sector, or connect with us on: Facebook | LinkedIn | Twitter