Tuesday, August 23, 2016

The Orphan Drug Act: A Boom for Business

Drug prices for orphan drugs had increased by 37%

An important new review of the impact of the Orphan Drug Act has found some surprising results. Since the act was approved over 30 years ago in the US, more than 500 drugs have been approved in previously forgotten conditions.

By definition, an orphan or rare condition affects fewer than 200,000 people in the US. The act paved the way for other regulatory authorities to follow, including the European Union, Australia and Canada, which similarly provides many benefits to orphan drug makers.

A recent analysis of the impact of the act from 2012-2014 by America’s Health Insurance Plan (AHIP), the US trade association of health insurers, found that drug prices for orphan drugs had increased 37% on average in non-orphan indications. This is possible as many medications approved for orphan conditions may also be used for on-label or off-label use to treat other, more prevalent non-orphan indications.

It seems some drug makers are adopting a strategy first outlined by Cote & Keating in 2012: apply for orphan designation; demand a high price because of the low prevalence; expand sales in additional therapeutic area, orphan or otherwise, while maintaining the initial price.

The act gives business several other benefits, including a waiver of the filing fee for a new drug application, worth about $2.4M, a 50% tax credit for all R&D costs in the clinical research for an orphan drug and a seven-year exclusivity period from approval so the FDA cannot approve another similar drug for the same condition. So it’s easy to see why business is attracted.

In addition, clinical trials for rare conditions tend to be smaller and less expensive than more common conditions; though patient recruitment can pose significant challenges as patients, by definition, are harder to find.

The report concludes that it is becoming increasingly urgent for the original intent of the act to be restored. What is needed is more orphan drugs – there are still 6,800 rare conditions with no treatment – rather than higher prices for more common conditions.

Julie Walters, Raremark, the Founder, is a contributing writer for the Partnerships in Clinical Trials US conference who has over 20 years of experience in the digital healthcare sector, including time spent as a news reporter and news editor at Sky News, Reuters TV and Good Morning.




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