Orphan drugs are being approved – and entering the market – at higher rates than ever before. They’re also prescribed in increasing numbers – often for conditions that aren’t even orphan conditions and already have cheaper treatments available. Drug makers are taking advantage of the hope for cures and gaming the orphan drug system – driving up prescription drug prices for everyone.
How Big Pharma Makes Big Profits on Orphan Drugs
Orphan drugs treat rare medical conditions afflicting fewer than 200,000 Americans. Thanks to landmark legislation passed in the 1980s, millions of Americans with rare diseases have hope for cures. Unfortunately, what was envisioned as a protection for desperate patients has become a major profit-driver for Big Pharma.
How Big Pharma Games the Orphan Drug Act
Orphan drugs have become a lucrative business opportunity for drug makers. Pharmaceutical companies are seeking “orphan” status to develop blockbuster drugs used to treat other common medical conditions. They reap the benefits of orphan status – subsidies, tax credits, and waivers – while generating billions of dollars in profits.
Humira costs $69,295 per year per patient.
Humira, which treats numerous conditions like arthritis and psoriasis, costs more than $69,295 a year for just one patient in 2017. Despite its orphan drug price tag, more than 90% of Humira prescriptions are for non-orphan use.
Remicade costs $31,531 per year per patient.
Remicade, which treats numerous conditions like rheumatoid arthritis and colitis, costs more than $31,531 a year for just one patient in 2017. Despite its orphan drug price tag, more than 93% of Remicade prescriptions are for non-orphan use.
- 88 %
of orphan drugs cost more than $10,000 per year per patient.
- 7 /10
best-selling drugs in 2017 had orphan indications.
- 80 %+
is the gross profit margin for the rare disease industry. The pharmaceutical industry average gross profit margin is 16%.
Here’s what we can do to fix it.
Drug prices are out of control, hurting hardworking families across the United States. Congress should revisit the incentives in the Orphan Drug Act to ensure this law is used as intended by those developing medicines to treat rare diseases – not as a gateway to premium pricing and blockbuster sales and profits beyond orphan indications.
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AHIP Submits Statement for Senate Judiciary Committee Hearing on Prescription Drug Prices
The Rise of Orphan Drugs
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Background: The Orphan Drug Act
The Orphan Drug Act passed in 1983 to encourage pharmaceutical companies to invest in treatments for rare diseases – so-called “orphan diseases” that had been ignored because their small patient populations made them unprofitable.
The intent was that through incentives included in the Orphan Drug Act, drug makers could break even or possibly post modest profits for developing and manufacturing drugs to treat orphan diseases.
Incentives for Drug Makers
A period of time when a brand-name drug is protected from generic drug competition. Ex. There could be only one drug to treat cystic fibrosis, one drug to treat Tourette's syndrome, one drug to treat tuberculosis.
A sponsor may claim as tax credits a quarter of the qualified clinical research costs for a designated orphan product.
Waiver of FDA User Fees
The sponsor’s fee at the time of submitting a marketing application to the FDA is waived for a designated product.