Pharma companies may be exploiting a legal loophole that increases utilization costs of certain drugs, according to a study from AHIP.
"Orphan drugs" treat rare diseases impacting populations fewer than 200,000 annually that are otherwise lacking special treatment. Pharmaceutical companies can make tremendous profits by finding uses for those drugs outside of the original condition the medications were intended to treat. While the practice is legal, some experts say pharmaceutical companies are “gaming the system,” according to the brief.
Almost half of the orphan drug use in the study was for non-orphan diseases and conditions.
AHIP notes,"in a 2012 study on more than 350 orphan
drugs approved through mid-2010, researchers
found that 43 drugs, having at least one approved
orphan indication, achieved global sales in excess
of $1 billion in 2008."
Market exclusivity and extremely high prices have created such “blockbuster” orphan drugs, “a result that seemingly runs counter to the spirit” of the law which incentivizes rare disease research, the report adds.
The growing number of orphan drugs now in circulation and in the future pipeline mean insurers cannot afford to ignore them, the data brief authors note. They add that “the days of viewing orphan drugs as having limited impacts on payer’s pharmacy budgets are ending.”