They are relatively cheap to develop, since clinical trials are small and “the lack of alternative treatments give orphan agents an advantage when up for regulatory review,” according to a report by Evaluate, a life science market intelligence company that provides forecasts on that sector. The company’s second annual EvaluatePharma Orphan Drug Report says that orphan drug sales will make up 19% of prescription drug sales by 2020, totaling about $176 billion.
Insurers will have their hands full because even though the populations that need orphan drugs are small “they represent big per-patient outlays, and insurers will be looking carefully at new tools to arrest cost growth as more and more orphan drugs launch,” says the study. The cost per orphan drug per patient is six times that of non-orphan drugs.
Worldwide Orphan Drug Sales & Share of Prescription Drug Market (2000-20)
Average Cost per Patient per Year 2010-14
There doesn’t seem to be much slowing drug companies’ rush to develop these agents, either. Revisions to the U.S. Orphan Drug Act seek to prevent manufacturers “from creating subsets of patients that could inappropriately qualify as an orphan indication, but does not appear to have a major effect on development,” says the study.
Andreas Hadjivasiliou, an Evaluate analyst, says that, “Providing treatment options in indications with little current alternative is a significant driving force behind pricing power.” He adds ominously that, “this trend shows signs of spilling over to non-orphan drugs.”
Source: “EvaluatePharma Orphan Drug Report 2014,” Evaluate