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Every patient deserves to get the medications they need at a cost they can afford, but drug makers are gaming well-intentioned legislation to generate outsized profits from drugs intended to treat a small population of patients with rare diseases. Now more than ever we need lawmakers to revisit the Orphan Drug Act. We must balance the incentives to develop new treatments for rare diseases while preventing drug makers from exploiting the system with launch prices that defy gravity, blocking competition, and increasing their prices on the same products year after year."   Matt Eyles, President and CEO, AHIP

$123,543 For Little Orphan Rx and Daddy Pharmbucks 
A new report could be scripted, with apologies to "Annie", to portray Little Orphan Rx, the ward of Daddy Pharmbucks, as she belts out in song "Prices will go up tomorrow, bet your bottom dollar that tomorrow will cost more." AHIP this week released a twelve-page Issue Brief: The Rise of Orphan Drugs that found "the prices for drugs to treat rare medical conditions are 25 times more expensive than traditional drugs. That is a 26-fold increase in two decade," and "that orphan drugs are now entering the market at higher prices than ever before, ranging from tens-of-thousands to hundreds-of-thousands of dollars per patient."

J.D. Power 2019 U.S. Pharmacy Satisfaction Study Mail Order Satisfaction Index Ranking

AHIP frames their discussion by reminding us "the Orphan Drug Act was passed in 1983 to encourage pharmaceutical manufacturers to invest in treatments for rare diseases and conditions – so-called “orphan diseases” - that had been ignored because their small patient populations (fewer than 200,000 Americans) made them unprofitable. The intent was to create incentives to encourage drug makers to develop treatments for rare diseases by enabling them to realize a modest profit. Unfortunately, drug makers have responded by building lucrative business models that empower them to achieve a gross profit margin of more than 80% – compared to an average gross profit margin of 16% for the rest of the pharmaceutical industry."

AHIP provides these takeaways from their report:

  - From 1998 to 2017, the average per-patient annual cost for orphan drugs increased 26-fold, while the cost for specialty and traditional drugs merely doubled
  - The average annual orphan drug cost rose from $7,136 in 1997 to $186,758 in 2017
  - Orphan drugs are 25x more expensive than non-orphan drugs
  - Today, 88% of orphan drugs cost more than $10,000 per year per patient
  - In 2017, 7 out of 10 best-selling drugs had orphan indications
  - Among newly launched drugs, the share of orphan drugs increased more than 4-fold, from 10% to 44%, over a 20-year period

While Orphan Drugs have an average annual drug cost of $123,543, Specialty Drugs average $38,309 and traditional drugs $4,961. For the past decade, Orphan Drugs averaged an annual drug cost of $138,919 and represented 42% if new drug approvals, compared to an average drug cost of $77,828 representing 23% of drug approvals in the decade before that.

AHIP concludes "The pharmaceutical industry points to small patient populations in order to justify exceptionally high prices on orphan drugs. Yet, the argument fails to explain the extraordinary year-over-year launch price increases for orphan drugs. Further, since orphan drugs throughout the study period address many of the same diseases, small target population cannot explain the continuous increases in orphan drug launch prices."
For More Information:

The Rise of Orphan Drugs
AHIP Issue Brief, September 10, 2019
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