Orphan drugs join the price-squeeze club in Europe

Everyone who's anyone in Big Pharma wants to amp up in orphan drugs. Treatments for rare disorders, many of them deadly, aren't easily copied, and competitors are few, if not completely absent. Plus, payers are willing to pay top dollar for drugs aimed at very small groups of patients, even if they are costly.

So, hitting a rare-disease target comes with a big payoff. Or does it? As Bloomberg reports, austerity-minded European governments are turning a gimlet eye on these expensive treatments. So, pharma could find its pricing power limited, putting a crimp in the promise of orphan drugs.

"The price of orphan medicinal products is under much more debate," Yann Le Cam, who heads up a rare-disease patient group, told the news service. "We have seen countries which were providing good access to orphan medicinal products now questioning the continuation of reimbursement."

As Bloomberg notes, several well-known treatments for rare diseases have faced the price-cutting scalpel of late, including Myozyme, the Sanofi ($SNY) drug for Pompe disease; and Alexion Pharmaceuticals' ($ALXN) Soliris, which treats two blood disorders and is among the most expensive drugs in the world. While the actual size of these discounts isn't public, they're "considered significant," the news service says.

Apparently, some orphan drugmakers are victims of their own success. Barclays analyst Michael Leuchten told Bloomberg that payers are eyeing companies' financial results and challenging the rationale for such high prices. "If you make more than a billion dollars out of a product, at some point somebody's going to wake up and say, 'Hang on a second, clearly you've recouped your R&D substantially, and you've made an economic return that's healthy,'" Leuchten said.

The question now is whether pricing sensitivity might jump the Atlantic. Some analysts are skeptical. But Mary Dunkle, a spokeswoman for the National Organization for Rare Disorders, sees danger ahead. "It's a growing area of concern. The word 'sustainability' is something that we hear quite a bit now."

- read the Bloomberg analysis