According to a story from Regulatory Affairs Professionals Society, a recent study found that the research and development costs for new molecular entities that were classified as orphan drugs was projected to be nearly half that of non-orphan drugs. An orphan drug is a therapy that is intended to treat a rare disease and would otherwise not be profitable without government assistance.
In 2018, around 60 percent of new drug approvals in the US were made for orphan drugs. The study found that the out of pocket costs for developing an orphan drug averaged around $166 million dollars. For a non-orphan drug, the average cost neared $291 million.
So what is the explanation for the research and development costs being considerably cheaper for orphan drugs? Government incentives for developing rare disease drugs, such as Orphan Drug and other such designations, can help reduce development costs, but it is doubtful that these programs make up the difference in its entirety. This evidence also appears in an environment in which the prices of these rare drugs are often extremely high, running into the hundreds of thousands of dollars for a single patient to receive treatment per year.
As always, these extreme prices are typically justified by the limited pool of patients who will ever use the drug and, despite this clear evidence to the contrary, the development of orphan drugs is often portrayed as exceedingly high.
With all of these factors in consideration, the authors of the review state that perhaps the findings indicate that there is a need to re-ignite discussion as to what costs should really be included in the overall research and development costs for a drug. The authors also make it clear that more in-depth study should be conducted in order to more clearly determine drug development costs and develop standards as to what costs should be a part of such an analysis.
The authors also call into question whether the need to make up development and research costs should ultimately be considered when pricing drugs anyway.
This review was originally published in the Orphanet Journal of Rare Diseases and can be found here.