Formulary guidance and transparency from P&T to point of care

Perspectives on Orphan Drug Reimbursement (Pt. 1)

Posted by Matt Breese on Aug 23, 2016

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To some, the name itself — orphan disease — suggests a condition that is less noteworthy. Rarely do orphan diseases gain the same kind of notoriety that broader-based diseases, such as breast cancer or HIV, have achieved. Few orphan diseases have designated colored ribbons or national events to gain public support for research and development (R&D) that could lead to new drug therapies.

According to the National Institutes of Health, there are nearly 7,000 orphan diseases — those that affect fewer than 200,000 people in the United States. Among the names on that list are diseases such as cystic fibrosis, Huntington disease, mesothelioma, and some rare, inherited breast, ovarian and colon cancers. These diseases may not be well known, but living with them is no less devastating than living with other, more “popular” diseases. And, the cost of treatment for orphan diseases can be extraordinarily more challenging for patients and their families.


Congress passed the Orphan Drug Act of 1983 (ODA), clearly acknowledging the need to spur R&D into drug therapies for orphan diseases and the financial risk pharma takes in pursuing that R&D. The ODA provides grant funding, tax credits, clinical study design assistance, seven years of market exclusivity after receiving approval, and waivers of Prescription Drug User Fee Act (PDUFA) filing fees. This support has led to the development and approval of more than 400 orphan drugs since 1983. In 2015, the U.S. Food and Drug Administration (FDA) approved 21 new orphan drugs.

Usually orphan drugs are only effective on symptoms associated with one rare disease. Sometimes, however, usage grows to additional orphan indications, non-orphan indications or off-label use. Examples of orphan drugs that are now used more widely include:

  • Epoetin alfa (Epogen/Procrit) for anemia from chemotherapy or chronic kidney disease
  • Rituximab (Rituxan) for non-Hodgkin’s lymphoma and chronic lymphocytic leukemia
  • Infliximab (Remicade) for inflammatory diseases, such as rheumatoid or psoriatic arthritis, and Crohn’s disease

Large pharmaceutical companies account for about 53 percent of the global orphan drug market. Abbott Laboratories, Bayer Healthcare Pharmaceuticals, Bristol-Myers Squibb, GlaxoSmithKline, Johnson & Johnson, Pfizer and the pharmaceutical division of F. Hoffman-La Roche AG are key players in orphan drug development. Despite government support through the ODA, these companies often spend an exorbitant amount of their time and resources developing and marketing orphan drugs, which leads to higher associated costs.

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Topics: Specialty, Industry Trends, Payer