Understanding Orphan Drugs

An orphan drug is a medication developed to treat rare diseases. In the United States, a rare disease is defined as a condition that affects fewer than 200,000 individuals. Because of the limited number of patients with rare diseases, drug manufacturers used to spend very little time researching potential therapies. Although more research is done today for the treatment of rare diseases, drug manufacturers still do not dedicate many resources to the development of orphan drugs.

About 35 years ago, the U.S. Congress passed a law, called The Orphan Drug Act of 1983, to encourage increased development of drugs for rare diseases. It was further amended in 1984 to define rare diseases as those that affect less than 200,000 patients in the United States, but it also included drugs for diseases affecting more than 200,000 patients, provided that there was no commercial viability (the cost of developing and making a drug product available for a specific disease in the U.S. would exceed revenue from domestic sales).

Since passage of the Orphan Drug Act of 1983, the number of orphan designations increased from 1 in 1983 to 40 in 1984, to 503 in August of 2018. Of the 503 orphan drugs, 394 (78%) had only orphan indications and 109 (22%) had both orphan and non-orphan indications. Total drug spend in the United States in 2017 was $451 billion, with 9.6% of that spent on orphan drugs. While spending on orphan drugs has increased moderately, these drug still represent only a small part of the overall drug spend budget.

Orphan drugs can be expensive for both payers and patients. In 2017, the median annual cost for an orphan drug was over $46,800, and prices are expected to increase with the development and approval of more orphan medications. There are currently eighteen orphan drugs with applications pending FDA approval, and there are 178 more in the pipeline that are currently undergoing clinical trials.

As drug costs continue to rise, cost containment measures will play an increasing important role for smaller, self-funded health plans. WellDyneRx leverages traditional utilization management strategies and novel clinical programs to target specific patient populations and reduce costs for our clients. We ensure our clients have all of the information they need about all mediations, including orphan drugs and their associated costs, prior to approval. This partnership between WellDyneRx and our clients allows us to provide better service and proactive strategies to address the rising cost of medications.

2019 Quarter Two WellInformed Table of Contents

Read the full Q2 2019 WellInformed Newsletter