Orphan drugs – those developed to treat rare diseases affecting patient populations of less than 200,000 people annually – have become a lucrative business opportunity for pharmaceutical companies. These medications made up almost half of all new medications approved by the U.S. Food and Drug Administration (FDA) in 2015.
Given the growing number of orphan drugs currently in the market as well as the pipeline of future orphan treatments, policymakers, and public and private payers must account for the increasing utilization of these medications and their cost impact on the broader health system. This study finds that price changes of certain orphan medications appear to be tied to the degree of orphan utilization of the drug.
In a sample of 46 orphan drugs available from 2012-2014, data show that drugs being used primarily for the treatment of non-orphan indications experienced price increases of 37 percent on average. Drugs used almost exclusively in the treatment of orphan diseases, however, experienced price increases of only 12 percent on average during the same period. These findings suggest the magnitude of non-orphan use of these agents, be it on-label or off-label, may be influencing drug pricing.