Orphan Drug Expenditures in the United States Expected to Stabilize

February 2015 Vol 8, Special Issue: Payers' Perspectives in Oncology
Wayne Kuznar

San Francisco, CA—The increase in orphan drug expenditures is expected to slow, said Victoria Divino, Senior Consultant at IMS Health, at ASH 2014. Ms Divino and colleagues evaluated the trends in orphan drug expenditures over time in the United States, calculating the total expenditures for branded orphan drugs from 2007 to 2013 and projected drug expenditures for ­2014 to 2018.

“Future trend analysis suggests that while orphan drug expenditures in 2014 to 2018 will increase, there will be a slowing down in growth, and growth will remain fairly stable as a proportion of total drug expenditures,” said Ms Divino.
“Concerns that growth in orphan drug expenditures may lead to unsustainable drug expenditures do not appear to be justified,” she emphasized.

Orphan drug development is increasing in hematologic malignancies. “Despite the clinical value of orphan drugs, payer sensitivity to orphan drugs is increasing, due to the perceived potential impact on payers’ drug budgets,” Ms Divino said. “Little evidence and data have been generated as to the actual burden of orphan drug expenditures in the United States.”

Of the 356 branded orphan drugs analyzed, 291 (82%) “orphan-only” drugs were included in a primary analysis. In a secondary analysis, expenditures were adjusted for 65 (18.3%) of the 356 orphan drugs, which were identified as “partial orphans,” because they are approved for orphan and for nonorphan indications.

Study Details
In the primary analysis of orphan-­only drugs, the expenditures represented 4.3% to 7.7% of the total US drug expenditures from 2007 to 2013. Overall, the orphan drug expenditures totaled $15 billion to $30 billion, representing 4.8% to 8.9% of the total US drug expenditures from 2007 to 2013.

“While we observe a trend for increasing costs, it’s also important to note that the number of drug approvals has increased over time,” said Ms Divino. There was a total of 210 unique orphan drugs in 2007, which increased to 286 drugs in 2013.
In addition, oncology was the most common therapeutic class of orphan drug approved, with 101 (32.0%) of the total 356 orphan drugs with an orphan indication for oncology.

In 2007, $15.08 billion was spent on orphan drugs, with 29.3% representing cancer-related orphan drugs compared with $30.08 billion in 2013, of which 40.7% was for cancer-related orphan drugs.

Using sales data from 2007 to 2013, the investigators estimated the orphan drug expenditures to be $33.5 billion to $44.2 billion for 2014 to 2018, representing 8.8% to 9.5% of the total US drug expenditures.

The future costs were estimated as the number of new approvals times the average cost per drug annually added to the previous year’s total orphan drug sales. Orphan drug expenditures of $34.9 billion to $54.9 billion were estimated for 2014 to 2018, representing 9.2% to 11.8% of the total US drug costs.

Although select orphan drugs may be costly, the population using these orphan drugs is small.

The adjusted drug expenditures for 64 partial orphan drugs represented 0.5% to 1.2% of the total US drug sales from 2007 to 2013.

A disease-factoring analysis suggested that most unadjusted partial orphan drug sales were for nonorphan indications. “Following adjustment, orphan indication costs were minimal and represented only 7.2% to 10.5% of total unadjusted partial orphan drug expenditures in 2007 to 2013, respectively,” Ms Divino said.

“While associated orphan drug expenditures have increased, these drugs benefit many patients with previously underserved rare conditions. While this study examined drug expenditures, it’s important to consider the value of orphan drugs to both patients and society, such as health and quality-of-life improvements, reductions in costly hospitalizations, increased productivity, and the ability to go back to work,” said Ms Divino. “The annual expenditures on orphan drugs are small relative to the total pharma drug expenditures,” she ­concluded.

Last modified: May 4, 2015
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