Don't worry about orphan drug costs, study says. The years of fast growth are over

On the heels of an August study that spotlit big price hikes for certain orphan drugs, IMS Health and Celgene researchers have published some numbers of their own. A years-long upswell in orphan drug spending should slow down, and worries about unsustainable growth in orphan drug costs are unfounded, the authors say.

But the key difference is that the study in August--funded by the insurance lobby AHIP--accounted for all uses of so-called orphan drugs. That includes rare disease meds used in more common disease areas. Roche's Rituxan, for example, was originally granted orphan drug status for non-Hodgkin's B-cell lymphoma, but now it's sold more broadly for a variety of blood cancers, rheumatoid arthritis and other uses.

IMS Health and Celgene only included spending on rare diseases for their study, published this month in Health Affairs, which could explain the vast difference in perspective between the groups.

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The IMS Health and Celgene authors found that--when limited to rare disease indications--orphan drug spending grew to $30 billion in 2013 from $15 billion in 2007. That's 8.9% of total pharma costs, up from 4.8%. But the authors expect that growth to slow down for the 2014-2018 period.

“Concerns that growth in orphan drug expenditures may lead to unsustainable drug expenditures do not appear to be justified,” the authors wrote.

Orphan drugs have a “relatively small,” impact on payer budgets, the group said, directly contradicting a contention in AHIP’s report that “the days of viewing orphan drugs as having limited impacts on payer’s pharmacy budgets are ending.”

Back in August, AHIP’s report said that drugmakers may be “gaming the system” by gaining drug development support through the Orphan Drug Act, but then seeking wider, more lucrative uses. The Orphan Drug Act was designed to spur development of drugs for diseases that affect fewer than 200,000 patients, and thus might not otherwise attract investment. 

Drugmakers working on orphan meds enjoy regular consultation with the FDA, an NDA filing fee waiver, R&D tax credits and a 7-year exclusivity period in the orphan indication.

Orphan drugs that expanded into more common uses came with bigger price increases, the AHIP study found. Using a sample of 46 orphan drugs, the authors found that prices for those used more often in non-orphan diseases increased by 37% between 2012 and 2014, while meds that were limited mostly to orphan uses saw price increases averaging 12%.

For a few of the so-called orphan drugs AHIP looked at, rare disease uses accounted for less than 5% of all prescriptions. Some were no longer used in any rare diseases.

That makes it “increasingly urgent that the original intent of the Orphan Drug Act be restored,” the authors in AHIP’s paper wrote, joining a similar call by researchers at Johns Hopkins last year. That group said drugmakers were exploiting 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 - Rituxan

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Big Pharma grapples with idiosyncrasies of orphan drug marketing
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