Orphan drugs used in wider settings come with sizable price hikes, report finds


Passed in 1983, the Orphan Drug Act (ODA) has spurred development of hundreds of rare disease drugs that may have not otherwise seen the light of day. But many drugs under the “orphan” umbrella are used on-label and off-label to treat more common maladies, and those uses have been associated with big price increases, a new report says.

Funded by the insurance lobby AHIP, the study says that pharma companies may be “gaming the system” by gaining drug development support through the Orphan Drug Act, but then seeking wider, more lucrative uses. Treating more common diseases pushes sales into the billions for some of the orphan drugs studied.

For a sample of 46 orphan drugs from 2012 to 2014, AHIP found that the average price increased by 26% during the period. Prices for drugs used more for non-orphan diseases increased by 37%, while meds that were limited mostly to orphan uses saw price increases averaging 12%.

Developing orphan meds for broader use isn't illegal, but AHIP says “the days of viewing orphan drugs as having limited impacts on payer’s pharmacy budgets are ending.” For a potential correction, the lobby referenced a “payback” program that would see drugmakers issue refunds to taxpayers if the drugs reach certain revenue or usage levels.

For several drugs examined--including Roche’s ($RHHBY) Herceptin, AbbVie’s ($ABBV) Humira and DepoMed’s ($DEPO) Gralise--orphan disease uses accounted for less than 5% of all prescriptions. And during the study period, Merck’s ($MRK) Remicade and Gilead’s ($GILD) Viread weren’t given to any rare disease patients, the report said.

“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,” the report said.

But pharma's lobby, PhRMA, argued in a statement that the study doesn't incorporate discounts after price negotiations, saying the research work "fails to recognize the tremendous success of the ODA for its intended goals." ODA has been instrumental in the development of more than 500 orphan drugs, PhRMA says, but much work remains, as only 5% of rare diseases have an approved treatment.

"This underscores the importance of offering incentives to help facilitate the development of treatments for diseases affecting a small patient population," PhRMA's statement said.

The findings warrant a careful examination of the Orphan Drug Act and its consequences, AHIP argues, as drugmakers are looking more to rare disease drugs for prospective blockbusters. In 2015, nearly half of all medicines approved by the FDA were orphan drugs, and as prices climb, the lobby said “it is becoming increasingly urgent that the original intent of the Orphan Drug Act be restored."

AHIP isn’t alone with its claim; late last year, Johns Hopkins Medicine experts said drugmakers were “gaming” the system with loopholes by getting subsidies for drugs with much wider uses than the initial rare disease they target. At the time, 7 of the world’s top 10 best-selling drugs had orphan designations.

Special Report: Top 20 orphan drugs by 2018

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