Orphan drug prices face increased scrutiny after an historic year for approvals, says GlobalData

Published: 21-Jan-2015

Drugs for rare diseases accounted for 17 of the 41 new drugs approved by the FDA in 2014


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.

Adam Dion, Industry Analyst for GlobalData, says 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 accounted 17 of the 41 new molecular entities approved by the FDA last year.

Dion says this may partly be explained by the need for product pipeline replenishment, quicker access to commercialisation revenues and attractive selling prices.

'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,' he says.

Approval times are also usually faster, because these treatments tend to receive Priority Review from the FDA

Dion adds that with the further benefits of a seven-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.

But he warns 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, particularly as governments worldwide are seeing their healthcare system costs rocket.

'Amgen recently came under fire when it announced last December that its new acute lymphoblastic leukaemia drug Blincyto would 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,' he says.

'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.'

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