Orphan Drug Act Helps Pharmaceuticals But Does Little for Patients, Study Says

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by Magdalena Kegel |

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Orphan Drug Act

An analysis of U.S. orphan drug designations and approvals suggests that current incentives, detailed in the Orphan Drug Act (ODA) of 1983, have failed to stimulate the development of orphan drugs targeting spinal muscular atrophy (SMA) and other rare diseases. Rather, researchers at the University of Massachusetts-Amherst suggest that the ODA lets pharmaceutical companies maximize revenues while leaving patients with numerous unmet needs.

They conclude that authorities must balance economic incentives to develop new drugs without blocking patients’ access to those drugs.

The study, “Ethical imperatives of timely access to orphan drugs: is [it] possible to reconcile economic incentives and patients’ health needs?” appeared in the Orphanet Journal of Rare Diseases. In it, researchers highlighted the ethical dilemma of granting patients with rare diseases the possibility of treatment while being restrained by high costs.

The U.S. Food and Drug Administration (FDA) approved Spinraza (nusinersen) in December — the first approved treatment for this disease — and the drug was introduced at a list price of $125,000 per injection. At six injections over a year, this comes to $750,000 for the first year of treatment — a price tag that added fuel to the already heated debate on astronomical drug prices.

Another example is the recent approval of Emflaza for Duchenne muscular dystrophy, with an initial list price of $89,000 a year. Emflaza’s cost is now under review after those with the illness vehemently opposed it (Emflaza is based on a drug, deflazacort, widely available outside the United States at a much lower price).

Since the ODA’s passage 34 years ago, the number of approved orphan drugs has increased significantly, but so has the cost of these medicines, far outstripping the rate of inflation over the years.

To assess how the ODA’s incentives have affected drug development for rare diseases, the team — led by Rosa Rodriguez-Monguio, an associate professor at UMass-Amherst’s School of Public Health and Health Sciences — studied all the FDA’s orphan drug designations and approved orphan drugs since 1983. They also reviewed published studies dealing with the ethical principles and economic incentives for the development of orphan drugs.

One of the study’s key findings challenges the often-cited reason for high costs for orphan drugs: that it doesn’t pay to develop orphan drugs without public support. The researchers argued that research and development costs are often lower for orphan than for other drugs, aided by the many economic and regulatory benefits of an orphan drug designation.

The analysis, which included 24 studies that met the researchers’ criteria, found that the FDA granted 3,647 orphan drug designations and approved 554 treatments for 277 rare diseases through 2015. Cancers had the highest number of orphan drug approvals (32 percent). Infectious diseases excluding HIV (46 treatments, 8.3%) followed, as well as hemophilia and other bleeding disorders (32 treatments, 5.8%). Other therapeutic classes had 244 orphan approvals, for 44 percent of the total.

The combination of low development costs, high prices for orphan drugs and a favorable reimbursement system has allowed drugmakers to rake in billions in revenue. According to the study, in 2010 the orphan drug market represented about 22 percent of total pharmaceutical sales, with a mean annual economic value per drug of $637 million. In addition, the return on investment for an orphan drug is 8.4 percent, compared to 2.3 percent for a non-orphan drug.

Today’s economic incentives do not promote innovation on a longer time scale. Nor do they address concerns that patients can’t afford newly developed medications, researchers said.

“Advocates are reluctant to point out any flaws based on the fear of stifling innovation, but with over 6,500 diseases needing treatment, there is evidence to suggest patients’ unmet health needs remains a concern and more effective incentives have to be implemented,” the researchers said in a news release.

The FDA defines an orphan disease as one that affects fewer than 200,000 Americans. Since more than 6,800 rare diseases are known to exist, estimates suggest that 25 millions to 30 million Americans have a rare disease.