So-called “orphan” drugs that treat diseases affecting fewer than 200,000 Americans earn pharmaceutical companies as much money as mainstream medications. Credit: WVU Photo/Holly Leleux-Thubron
Key points:
- The manufacture of drugs for orphan diseases has risen 38% since the late 1980s.
- Congress has incentivized pharmaceutical companies that manufacture orphan drugs.
- One law professor says the incentives are so high that other populations are becoming increasingly marginalized.
Drugs used to treat rare conditions are earning pharmaceutical companies almost as much as those marketed to the general public, says a new study.
This is attributable to the incentives Congress gives pharmaceutical companies that manufacture orphan drugs, including a waiver of prescription drug user fees, tax credits, seven years of market exclusivity—rather than the standard five years—and easier Food and Drug Administration review.
“There has been a dramatic increase in the number of orphan drugs over the past three decades,” said study author Sean Tu, a law professor at West Virginia University.
In the late 1980s, 5% of new drugs were directed to orphan indications. In 2023, that number has risen to 43%.
For example, Orkambi is an orphan drug used to treat cystic fibrosis. Only around 30,000 Americans have been diagnosed, but Tu’s study data shows the drug made $5 billion over the last five years. In contrast, Entyvio, a drug used to treat Crohn’s disease or ulcerative colitis, also made $5.5 billion over the last five years, but treats around one million Americans.
While addressing rare diseases is a good thing, Tu says his study shows the incentives tied to orphan drugs may be too excessive.
The purpose of the Orphan Drug Act—enacted in 1983—was to compensate pharmaceutical companies for doing research and investing in orphan drugs. Congress assumed drug companies would not make profits when investing in rare diseases.
“This assumption was incorrect,” Tu said. “The Orphan Drug Act came from a good place and we still need companies to invest in orphan drugs. However, we shouldn’t have a system where we only invest in orphan drugs. Under the current system, we are getting more and more drugs developed for rare diseases, leaving other populations increasingly marginalized.”