Orphan Drugs are the Most Expensive Drugs in the US Market
(Thursday, May 25, 2023)
An independent survey listed 10 most expensive drugs or biologics in the US market and all of them are orphan drugs. With the annual cost of between $840K to $3.5 million, most of these drugs are quite profitable despite very few patients among the very few eligible patients who could either be covered by their insurance for these drugs or could afford them.
Orphan drugs, medications developed to treat rare diseases, often come with exorbitant price tags to incentivize developers to invest in their research and development. Every company asking for astronomical prices for their treatment justifies the cost of their drug based on its projected limited demand, cost comparison to other treatment or disease management options, and monopoly. However, high costs limit the accessibility and affordability of these drugs.
It has been proposed that for orphan drugs that end up being very profitable for the manufacturers, government should be able to claw back the incentives such as fee waivers granted during development. Many of these drugs were developed with significant investment from the US government in terms of development grants, and by patient groups via logistical and even financial support. While there is scant political will to legislate claw back clauses, such surveys do create a perception of abuse of the orphan drug pathway. From a business point of view, developing orphan drugs could be quite profitable. More than half of the new drugs approved by the FDA last year were orphan designated, as has been the trend for the last decade.
These trends in high cost for rare drugs is unique to the US. Most of the orphan drugs approved in the US either end up giving significant discounts in other countries or are not offered at all. On one side it means that the US consumers have access to treatments not available anywhere else, on the flip side it also means that such high prices perpetuate health disparities and denying patients a chance at a better quality of life on the global scale. Setting exorbitant prices for drugs solely based on the limited patient population overlooks the potential for market expansion and future breakthroughs.
Other than price controls, that exist in several countries and have been deemed untenable in the US, there is little chance of this trend to change. US government plays a pivotal role in developing orphan drugs by implementing policies that incentivize development of these drugs drug development. But it has no control on the pricing of drugs once approved. Access to affordable healthcare is not a fundamental right at this time, and that’s not about to change in the near future.
Dr. Mukesh Kumar
Founder & CEO, FDAMap
Linkedin: Mukesh Kumar, PhD, RAC