Chemical & Engineering News, known for its coverage of research, business, the chemical industry, and related industries, is not known for 10,000-word stories looking at social issues. In the current issue, however, Lisa M. Jarvis tackles the orphan drug problem in a long, comprehensive piece with a surprising turn: Orphan drugs, it seems, are no longer orphans. The headline on the piece is "Orphans Find a Home."
That's not true for all of them, but it's true for a growing number, as pharmaceutical and biotech companies, and investors, suddenly see that producing drugs for a disease that affects only a few thousand patients can be a potent money maker. This has not always been true, which is why orphan drugs were orphaned. Pharmaceutical companies were looking for drugs such as Lipitor that they could sell to millions of people. Now, however, drug makers are discovering that they can make money on orphan drugs (for illnesses that affect fewer than 200,000 people) because they can charge huge prices for them.
One of the first orphan drugs to chart this new path was a drug developed by Genzyme for an illness thought to affect only 1,500 people around the world. The FDA approved the drug in 1994, and "Genzyme charged an unprecedented $200,000 per year," Jarvis writes. "Although insurance companies balked at the cost, they eventually agreed to cover it."
Jarvis writes that one important reason why orphan drugs are becoming more profitable is that the FDA Safety & Innovation Act, passed last year, allows accelerated approval for orphan drugs and allows companies to show effectiveness using so-called surrogate endpoints–technical measures that indicate effectiveness–rather than data that show improved survival or quality of life.
She has turned in a strong story, which nicely mixes medical reporting with business reporting. It would be a much less interesting story if it had slighted one or the other.
I do have a question, however, that I think the story fails to address. And it is this: How will the accelerated development of orphan drugs affect healthcare costs overall?
Nobody wants to argue that the development of drugs should stop–and people should die–because the drugs cost too much. But Jarvis's story shows that drug makers can charge whatever they like for their drugs–and get reimbursed. I don't think anybody should argue that that is a good idea either. If it cost Genzyme–let's guess, a billion dollars?–to develop its $200,000/year drug, it could earn that back in five years if a mere 1,000 people took the drug. Everything after that would be pure profit–$200 million per year. I'd eagerly bet my last billion on a deal like that.
If the government is going to encourage drug makers to produce orphan drugs and put no limits on prices, we will quickly see healthcare costs go even more out of control than they are already. A graphic in Jarvis's story estimates that there are 30 million Americans with orphan diseases. If drugs were developed for all of them, and sold for $100,000 per year, the annual costs of that medication would total 3 trillion dollars, by my accounting. Per year! The U.S. economy cannot absorb that on top of current medical costs. So what will the result be? People with orphan illnesses will die.
Jarvis brings us up to date on some important developments in orphan drugs, but I think she and her editors might have stepped back for a moment and taken a look at the bigger picture. I can't see how drugs that cost $100,000 or $200,000 a year can ever be provided to the millions of people who need them.
What I'm afraid we will see is that people who couldn't get orphan drugs because they didn't exist will now face a perhaps more distressing scenario in which the drugs exist–but patients cannot afford them.
-Paul Raeburn
Leave a Reply