Key Highlights
- A sample of 45 orphan drugs available between 2012 and 2014 shows almost half of these drugs’ usage—44 percent— was for non-orphan diseases.
- Across the three years of the study, on average 20 percent of orphan drug use was for non orphan, on-label uses; while 24 percent was for off-label use.
- We also found that drugs having little-to-no off-label use increased their prices by only 16%; however, those drugs used extensively off-label increased their prices by 52% from 2012-2014.
- Drugs having little-to-no orphan utilization increased their prices by 42% during the three year study period; while, those orphan drugs used almost exclusively to treat orphan diseases increased prices by only 15%.
Summary
Orphan drugs- developed to treat rare diseases affecting patient populations of fewer than 200,000 people annually – have become a lucrative business opportunity for drug makers. These medications made up almost half of all new drugs approved by the U.S. Food and Drug Administration (FDA) in 2015
Given the growing number of orphan drugs currently in the market as well as the pipeline of future orphan treatments, understanding the utilization and pricing patterns of orphan drugs is of increasing interest to policymakers, public, and private payers given the potential cost impacts on the healthcare system. This study finds that price changes of certain orphan medications appear to be tied to the degree and type of utilization of the drug. Based on our sample of 45 orphan drugs available from 2012-2014, data show a significant, negative correlation between the magnitude of price changes and the degree of orphan utilization of these drugs. Furthermore, a significant positive correlation was detected between the magnitude of price changes and the degree of off-label use of these drugs. There was no significant correlation between price changes and the degree of FDA-approved, non-orphan uses of these agents. These findings suggest that the magnitude of off-label use may influence drug pricing.
These findings are supported by results from Analysis of Variance (ANOVA) testing which suggested that those orphan drugs having little to no orphan use, increased their prices significantly more than those orphan drugs used almost exclusively for treating orphan diseases. Similarly, those drugs having little-to-no off-label use, increased their prices less than those drugs having greater off-label use. Both ANOVA findings were statistically significant.