How Much Do Drugs For Rare Diseases Add To Health Care Spending?

From NPR:

“We wanted to focus on the true impact of orphan drugs,” said Victoria Divino, a senior consultant at IMS Health and an author of the study. Researchers at IMS Health, a health care analytics firm, and drugmaker Celgene Corp. looked at U.S. pharmaceutical spending from 2007 to 2013 on more than 300 drugs that had orphan approval under the 1983 Orphan Drug Act.

The Orphan Drug Act has long been considered a success for encouraging the production of hundreds of drugs for rare diseases. But the law’s very success has raised economic concerns as the number of high-priced drugs for rare diseases has grown.

The review found that orphan drug spending in the United States totaled $15 billion in 2007 and $30 billion in 2013, an increase from 4.8 percent of total pharmaceutical spending to 8.9 percent. The current study projects orphan drug spending will remain fairly stable as a proportion of total drug spending. That stands in contrast to other published reports that estimate orphan drugs will account for 20 percent of worldwide spending on drugs (other than generics) by 2020.

The rise in orphan drug spending since 2007, Divino said, was caused by an increase in the number of orphan drugs approved by the Food and Drug Administration. The number of orphan drug approvals increased from 16 in 2007 to 33 in 2013, the analysis’ time period.

The Health Affairs article is the latest in a growing debate about the causes of high prescription drug prices and how orphan drugs may play a role. Drugs that win orphan approval have been cited for commanding premium prices, costing up to $300,000 per year or more, according to market research reports.

The Orphan Drug Act provides a seven-year exclusivity period that blocks competition and other financial incentives to companies that develop …

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