Orphan Drug Prices Face Increased Scrutiny

With the FDA approving an all-time record number of orphan drugs during 2014, the pricing of these treatments is set to come under increased scrutiny, according to research and consulting firm GlobalData.

Orphan drugs for rare diseases constituted 17 of the 41 new molecular entities approved by FDA last year.

“The need for product pipeline replenishment, quicker access to commercialization revenues and attractive selling prices may partly explain this new-found infatuation with orphan drugs," says, GlobalData analyst Adam Dion. “Orphan drug developers generally see significant return on investment due to lower clinical trial costs, particularly in Phase III where patient recruitment is much smaller. Approval times are also usually faster, because these treatments tend to receive Priority Review from the FDA.”

However, Dion notes that while the rare disease sector may appear to be increasingly lucrative for pharma, some orphan drug prices have recently reached new unprecedented levels.

“Amgen recently came under fire when it announced in December that its new acute lymphoblastic leukemia drug Blincyto will cost $178,000 per patient, surpassing Merck’s Keytruda, which is priced at $150,000 per year, as the top price for a cancer treatment.

“This situation is now starting to raise some very tough questions about whether orphan drug prices are justifiable and even sustainable over the long term.”