88 % of orphan drugs cost more than $10,000 per year per patient. 7 /10 best-selling drugs in 2017 had orphan indications. 80 %+ is the gross profit margin for the rare disease industry.
The pharmaceutical industry average gross profit margin is 16%. Orphan drugs are being approved - and entering the market - at higher rates than ever before.
"Between 2000 and 2012, orphan drug companies had a 9.6 percent higher return on investment than non-orphan drug producers.6 "I think the traditional model of a blockbuster drug, [such as] statin, where you've got low cost and [you're] prescribing to hundreds of millions of people, has changed," Hughes says."
"Express Scripts, a drug benefits manager, told Kaiser Health News that it currently has four orphan drugs on its formulary with $70,000 price tags for a 30-day supply-$840,000 annually. Twenty-nine more orphan drugs have price tags of $28,000 for a 30-day supply-$336,000 annually"
Novartis receives FDA Orphan Drug Designation for NIS793 in pancreatic ... Jul 27, 2021Novartis receives FDA Orphan Drug Designation for NIS793 in pancreatic cancer Jul 27, 2021 Novartis today announced that the US Food and Drug Administration (FDA) has granted Orphan Drug Designation (ODD) for NIS793 in combination with standard of care chemotherapy for the treatment of pancreatic cancer.
More than 30 years ago, to foster drug innovation for rare diseases, Congress passed the Orphan Drug Act. The law helps drug companies make big profits on drugs that treat rare diseases–orphan drugs–which affect fewer than 200,000 people. As it turns out, the Orphan Drug Act also enables drug companies to drive up drug prices, along with profits, whenever they can show that their mass-market drugs treat rare diseases.
One in ten Americans has a rare disease, and there are more than 7,000 rare diseases. But, until 1983, drug companies had no profit motive to develop drugs to treat these diseases. The Orphan Drug Act gives drug companies substantial tax credits and seven more years of monopoly pricing power for drugs classified as orphan drugs after their patents expire. In 2016 alone, according to a Kaiser Health News Investigation, the drug companies received $1.76 billion in tax credits for their development and almost $50 billion in tax credits are projected between 2016 and 2025.
While the law has led to drug innovations to treat rare diseases, it also has led to a number of mass-market drugs being reclassified as orphan drugs, with all accompanying financial benefits. The Orphan Drug Act legally entitles them to these benefits as many times as they can show the FDA that a drug treats a rare disease. For example, Gleevec, a cancer treatment, has nine orphan drug approvals, even though it was originally intended to treat far more than 200,000 people. Novartis, its manufacturer, has successfully sliced up the population into small special needs groups and found ways to show that Gleevec meets their unmet needs.
To date, pharmaceutical companies have “developed” 450 new orphan drugs with billions of taxpayer dollars. Of those drugs, the FDA has classified more than 70 mass-market drugs, including seven of the top ten best-selling drugs, as orphan drugs. Crestor, which helps lower cholesterol, Abilify, which treats schizophrenia and depression, and Humira, which treats rheumatoid arthritis, are all now classified as orphan drugs. It’s no wonder that orphan drug sales are expected to account for more than 20 percent of all brand-name drug sales.
The prices for these orphan drugs are astronomical. The Kaiser Health News investigation reveals that in 2014, the yearly cost of an orphan drug was $111,820 instead of $23,331 for other drugs. Express Scripts, a drug benefits manager, told Kaiser Health News that it currently has four orphan drugs on its formulary with $70,000 price tags for a 30-day supply–$840,000 annually. Twenty-nine more orphan drugs have price tags of $28,000 for a 30-day supply–$336,000 annually. And sales of orphan drugs are growing rapidly, at a projected rate of 12 percent a year.
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