August 16, 2016
A recent report released by America’s Health Insurance Plans (AHIP) found that almost half of orphan drugs are used to treat conditions other than those they were developed for, suggesting drug companies could be gaming the designation to take advantage of funding incentives.
Due to small patient populations, drugmakers often spend less money on the research and development needed to find cures for rare diseases. Therefore, the 1983 Orphan Drug Act was intended to incentivize the development of drugs to treat rare diseases by offering several financial incentives such as, a waiver of the filing fee for new drug applications, a 50% tax credit for research expenditures and a 7-year exclusivity period.
According to the AHIP report, of 46 orphan drugs studied, 47% of were used for non-orphan purposes. The researchers found that orphan drugs prescribed for non-orphan purposes had the highest average price increases (37%). Comparatively, orphan drugs almost exclusively used for their orphan indications had the lowest average price increases (12%) from 2012 to 2014.
“This study finds that price changes of certain orphan medications appear to be tied to the degree of orphan utilization of the drug,” the researchers wrote. “These findings suggest the magnitude of non-orphan use of these agents, be it on-label or off-label, may be influencing drug pricing.”
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Report results stated that the average percentage of patients having at least one prescription for an orphan drug and at least one medical claim for a related orphan disease was 53.2%. The researchers examined data from IMS Health, and found that of 725 million total prescriptions, 150 million prescriptions (21%) were used for unapproved, off-label purposes for 160 commonly used medications.
Orphan drug designated medications made up almost half of the newly approved medications by the FDA in 2015. Since the law was implemented, more than 500 orphan drugs have been developed and approved; however, only 5% of rare diseases have approved treatments.
“To be clear, by expanding the use of their orphan drugs, either by gaining additional FDA approvals or by off-label usage, pharmaceutical manufacturers are not doing anything illegal,” the researchers wrote. “However, they may not be keeping with the original spirit of the Orphan Drug Act and as such, some authors have suggested, they are “gaming the system” when it comes to the Orphan Drug Act drug companies do accrue a number of benefits.” --Julie Gould
America’s Health Insurance Plans. Orphan Drug Utilization and Price Changes (2012 - 2014). https://www.ahip.org. Published August 2016. Accessed August 16, 2016.