AHIP: Orphan drug costs 26 times higher than they were 20 years ago

Drugs and money
The average launch price of an orphan drug in 1998 was $7,136. It rose to $186,758 in 2017. (Getty/LIgorko)

While the launch prices of traditional and specialty drugs approved by the Food and Drug Administration doubled in the past 20 years, the rise in the prices of orphan drugs has reached heights that put it in a stratosphere all its own, according to a new report.

Those prices reached an average annual cost of more than $123,000 — or 26 times higher — today compared to their launch prices in 1998, according to the report from America's Health Insurance Plans (AHIP). 

AHIP said they conducted the study by examining a list of novel therapeutic drugs approved by the FDA betwen 1998 and 2017. For each drug, researchers calculated the annual per-patient expenditure at its launch price, adjusted for inflation, by drug type and therapeutic class. 

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Their final sample contained 417 drugs approved in the past two decades.

Among their findings: 

  • The average launch price of a traditional drug in 1998 was $2,542. It rose to $5,024 in 2017.
  • The average launch price of a specialty drug in 1998 was $31,106. It rose to $66,053 in 2017.
  • The average launch price of an orphan drug in 1998 was $7,136. It rose to $186,758 in 2017.

The growth in orphan drug development followed the passage of the Orphan Drug Act (ODA) in 1983. Orphan drugs are drugs developed to treat medical conditions that are rare — or occurring in fewer than 200,000 people in the U.S. a year — which qualify for government assistance such as seven-years of market exclusivity to assure a market for production. 

More orphan drugs are being launched over the past two decades from 10% of drugs approved in 1998 to 44% in 2017, they said. In 2017, seven of the top 10 best-selling drugs were orphan drugs that were widely prescribed for non-orphan indications and off-label uses.

"The pharmaceutical industry points to small patient populations in order to justify exceptionally high prices on orphan drugs. Yet, the argument fails to explain the extraordinary year-over-year launch price increases for orphan drugs," AHIP wrote in its report.

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Of course, AHIP — which represents the nation's health insurance plans — would be expected to release data that supports their concerns about the impact of the Orphan Drug Act on the growth of drug prices. They pointed to examples of blockbuster orphan drugs including immunosuppressant Humira, the global sales leader in drug sales at $18.4 billion in 2017 or cancer drugs like Revlimid which generated $8.2 billion in 2017. These drugs were initially approved for more rare diseases but were later approached for use in more common conditions. 

Drug industry group PhRMA released its own report in June, defending the orphan drug act's impacts on attracting innovation and investment into rare diseases that might have otherwise been neglected. For instance, the report said, $5.8 billion in venture capital dollars were invested in orphan drug development in 2017. Of the about 500 orphan drugs approved since the passage of the ODA, 78% have been approved only for orphan indications, they said.