s payers continue to foot the bill for orphan drugs, sales of these rare disease treatments are forecast to grow 11 percent over the next five years — to $209 billion. And this is more than twice the expected increase in sales of all other prescription medicines, according to a new analysis.
By 2022, orphan drugs are predicted to account for more than 21 percent of worldwide brand-name prescription drug sales, up from 6 percent in 2000. Last year, sales of orphan drugs, which are used to treat rare diseases for patient populations numbering less than 200,000, climbed more than 12 percent, to $114 billion. By comparison, sales of other brand-name drugs rose 2.4 percent, to $578 billion.
The figures indicate that orphan drugs remain a lucrative revenue stream for the pharmaceutical industry, especially the largest drug makers. Based on worldwide orphan drug sales, seven of the 10 largest players are global companies, including Novartis, Roche, and AbbVie, not upstart biotechs, according to the analysis, which was conducted by EvaluatePharma, a market research firm.
The data indicate that the pharmaceutical industry is aiming to satisfy unmet medical needs, but the data, which was released to coincide with Rare Disease Day, also emerges amid growing controversy over orphan drugs. Large price tags are drawing attention and there is growing concern that some drug makers are exploiting loopholes in a US law, which has prompted one lawmaker to start a probe.
The latest example of a sky-high price occurred two months ago, when Biogen won regulatory approval for a spinal muscular atrophy drug called Spinraza and set a price that few expected — $750,000 for the first year of treatment and $375,000 each year thereafter. One analyst suggested the “sticker shock” may cheer investors, but also invite criticism amid growing outrage over drug pricing.
Meanwhile, Senator Chuck Grassley (R-Iowa) is investigating whether some drugs may have been submitted for FDA approval with the ultimate intention of being used more broadly than if they were designed only for the rare disease populations. “I’m interested in learning whether the unanticipated uses of the provisions are contributing to high prices for commonly used drugs,” he said earlier this month.
Concerns were further raised when another company, Marathon Pharmaceuticals, this month won orphan status for an older drug for treating Duchenne muscular dystrophy and set an $89,000 price tag. Generic versions have been available for about $1,000 from other countries, but Marathon will have seven years of market exclusivity, and Americans will not be able to buy from overseas. And Grassley noted that Marathon did not develop the drug.
The new analysis notes, however, that “pricing incentives are substantial.” Of the top-selling 100 drugs in the US, the average cost per patient per year for an orphan drug was $140,443 in 2016, compared with $27,756 for a non-orphan. And the median cost per patient differential was 5.5 times higher for orphan drugs last year compared to non-orphan drugs.
Nonetheless, a survey last fall of 36 payers that cover more than 74 million patients in the US found their coverage policies are unlikely to change much over the next six years. For instance, there was only a 19 percent chance that policies would tighten by 2018, a 25 percent chance that such a change would occur by 2020, and a 33 percent probability of a policy change by 2022.
Whether this trend will change is uncertain. The Sprinraza drug has become a closely watched bellwether in the national debate over drug prices. UnitedHealthcare agreed to cover the med and its policy is less restrictive than one disclosed recently by Anthem. Even so, UHC will set limits and will only pay beyond an initial handful of doses only if doctors can prove the drug is working.
But while high prices contribute to national anxiety over the cost of prescription medicines, orphan drugs are also a politically sensitive topic, since some medicines are meant for small, seriously ill populations. And while insurers may create hurdles to coverage, the number of patients may be small enough to avoid major battles that can generate outsized negative publicity.
This helps explain why drug makers are rushing to win regulatory approval. Last year, for instance, there were 582 requests by companies for an orphan designation by the Food and Drug Administration, a stunning 23 percent increase from 2015 and triple the number of requests that were made a decade ago, according to the FDA Law Blog.
Meanwhile, more orphan drugs are winning the coveted designation. The total last year amounted to 333, down slightly from 354 in 2015, but the second-largest number ever. Although the number of orphan drugs approved last year was 39, which is less than the two previous years, this was also the third-largest tally ever.
Investors are taking notice. Oncology drugs were a dominant area of focus in mergers and acquisitions, but rare disease drug deals now outpace meds for the central nervous system, dermatology, metabolism, and other categories, according to SunTrust Robinson Humphrey. The mean transaction size for orphan drug deal was $3.1 billion, which was larger than the biotech sector overall, at $2.6 billion.
Just the same, Evaluate Pharma cautions that the sky may not be the limit. “If the orphan drug industry is to continue to thrive it must continue to generate innovations that justify the huge cost of these life-transforming treatments,” the firm concludes.
Here are a few other nuggets from the report:
- In the US, the biggest-selling orphan drug last year per patient was Soliris, an Alexion Pharmaceuticals medication used to treat two rare diseases, at more than $400,000 per patient.
- Also in the US, the biggest-selling orphan drug, based on total revenue, was Revlimid, a Celgene treatment for cancer, at $4.4 billion.
- And among companies selling orphan drugs for diseases other than cancer, Shire has the largest sales volume on a global basis with $5.3 billion.