Go Ad-Free
logoThe People's Perspective on Medicine

How Can Orphan Drugs Be So Outrageously Expensive?

Congress and the FDA have seemingly forgotten the reason behind orphan drugs! People with rare diseases were supposed to get new meds at affordable prices.

Everybody knows what an orphan is. But what are “orphan drugs” and why should you care? How did pharmaceutical manufacturers take what was supposed to be a charitable concept and corrupt it to make billions in profits? Can orphan drugs ever be returned to the high-minded vision its founders imagined?

Why Was the Idea Behind Orphan Drugs?

The Orphan Drug Act got its start in 1983 when Congress recognized the need to encourage pharmaceutical companies to develop medications for rare diseases. The FDA originally called such medicines “significant drugs of limited commercial value.”

That was because everyone assumed that companies would not be able to make a profit from drugs that would be needed by relatively few patients. In those days medications were priced affordably.

The idea that a company might charge thousands of dollars for a treatment was preposterous. To make big bucks on a medication, a drug company had to develop a product that would be taken by millions of people, like a treatment for heartburn, high cholesterol or hypertension.

A pharmaceutical industry executive once confided to us that if a company discovered a cure for cancer it would almost have to give the medicine away. He and his colleagues within Big Pharma believed that if they charged what the market would bear the industry would become a pariah and be punished for such bad behavior. Sadly, times have changed!

Orphan Drug Incentives Have Been Subverted:

The people in Congress and at the FDA who wanted to encourage drug companies to develop medicines for rare conditions knew that they would have to offer lots of incentives. The regulators assumed that if drug companies couldn’t make huge profits to develop such medications, then there would have to be other rewards.

Congress offered big tax breaks to companies working on orphan drugs. In addition, these pharmaceutical manufacturers were offered patent and market exclusivity. In some cases clinical research was partially subsidized. The FDA waived certain fees and companies received valuable drug review vouchers. The assumption was always that any medicines that evolved from this program would be kept affordable.

Now, though, orphan drugs that might only treat a few thousand patients a year can generate unbelievable amounts of revenue for their manufacturers. Consider the latest orphan drug approval, eteplirsen (Exondys 51). The FDA has just approved this medication to treat a subset of patients with a rare disease, Duchenne muscular dystrophy. There are perhaps 2,000 boys in the US with this X-linked genetic condition.

The manufacturer plans to sell the drug at $300,000 a year after discounts. Let’s hope that all those young men in wheelchairs have really good insurance coverage, because otherwise they might have little access to a drug that might help them have a better quality of life.

Greed and the Orphan Drug Act:

When this legislation was passed decades ago drug companies still had some sense of shame. The pharmaceutical industry was highly profitable even though drug prices were reasonable. That has totally changed. There are no controls on drug pricing in the United States. Neither the FDA nor Congress has any interest or ability to alter the cost of life-saving medicines.

In recent years a drug company that developed an orphan drug could make as much money on it as on a widely prescribed medication. That’s because of the ability to price orphan drugs into the stratosphere. One example is the hepatitis drug sofosbuvir (Sovaldi), initially priced at $1000 per day. Cancer drugs like ipilimumab (Yervoy) or pembrolizumab (Keytruda) run well over $100,000 per course of treatment.

Another rare condition, Gaucher disease, is treated with an orphan drug called eliglustat (Cerdelga), that can cost over $300,000. No wonder the maker of Exondys 51 put its price at $300,000.

Is Exondys 51 worth $300,000 a Year?

You might well argue that extending or saving the life of a boy with Duchenne muscular dystrophy is worth $300,000 a year. And you might be right. The question is, however, whether Exondys 51 will actually do that. The drug was approved based on astonishingly little data. The study included 12 patients and had no control arm. No one knows how well the drug will actually work.

FDA’s advisory committee did not recommend approval for the drug, but the director of the agency’s Center for Drug Evaluation and Research, Janet Woodcock, MD, overruled the committee. She said, “We eagerly await learning more about the efficacy of this drug through a confirmatory clinical trial.” We hope the FDA will also learn more about safety.

Advocates for patients with Duchenne muscular dystrophy probably tipped the balance for approval when they showed up at the FDA’s hearing with emotional appeals for their wheelchair-bound boys. We hope that they will not end up cruelly disappointed in a drug that will be so costly.

What Are Patients To Do?

Recent testimony by the CEO of Mylan (make of EpiPen) has revealed that the company played fast and loose with its reporting of profits. Here is a link to the latest in this sordid story.

Angry Americans:

Visitors to this website reveal the depth of their anger:

Sylvia in Michigan points out that insulin prices are also skyrocketing:

“The Epi-Pen is not the only drug that has had a shocking increase in price. There are several others. My husband’s Lantus insulin has been around for years but has recently become so expensive that we are considering substituting an inferior insulin because we cannot afford the Lantus. I hope it will not adversely affect his health to change but we have no choice.

“The pharmaceutical industry sees the handwriting on the wall as a result of their greed and is spending lots of money on propaganda to make us believe these increases are necessary for their survival. What about the patients who cannot pay the price? I guess we just lay down and die quietly.”

Chris in California is sick and tired:

“Why do Americans have to pay more for drugs than Canadians, Europeans and anybody else? Because of lobbyists and the deafness of the Congress to the angry voices of the American people. The only solution to the greed and corruption of pharmaceutical corporations are laws governing price increases.

“Other than Big Pharma, who wants these astoundingly high drug prices? Something must be done. You know, we’re sick and tired and we don’t want to take it anymore!”

Penelope in Florida says competition is critical:

“Big Pharma needs a good dose of competition; we should be allowing importation of drugs from Canada (which does much better screening than the US).”

Can Americans Cut Drug Costs?

If you would like to learn more about Canadian pharmacies and pricing policies you may find our Guide to Saving Money on Medicines of practical value. Not only do we review a number of online pharmacies, but we provide tips on how Americans can reduce their pharmacy bills. If Congress and the FDA won’t protect us we will have to protect ourselves from the greed of the pharmaceutical industry.

Rate this article
4.9- 13 ratings
About the Author
Joe Graedon is a pharmacologist who has dedicated his career to making drug information understandable to consumers. His best-selling book, The People’s Pharmacy, was published in 1976 and led to a syndicated newspaper column, syndicated public radio show and web site. In 2006, Long Island University awarded him an honorary doctorate as “one of the country's leading drug experts for the consumer.”.
Tired of the ads on our website?

Now you can browse our website completely ad-free for just $5 / month. Stay up to date on breaking health news and support our work without the distraction of advertisements.

Browse our website ad-free
Join over 150,000 Subscribers at The People's Pharmacy

We're empowering you to make wise decisions about your own health, by providing you with essential health information about both medical and alternative treatment options.