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The Pricing Power Of Orphan Drugs

February 12, 2013

Clarification Posted 02/12/13 : Per the Reuters article referenced below, the cost of Glybera is “$1 million per patient” and not “$1 million/patient/year”.
Per a July 2012 article from FT.com, Jorn Aldag, UniQuare’s Chief Executive, said the drug probably will cost €250,000 a year for 5 years, with a total bill of €1.25 million per patient.

The Orphan Druganaut Blog has documented the expensive price of orphan drugs from Alexion Pharmaceuticals’ Soliris (Eculizumab), to the recent pricing controversy of NPS Pharmaceuticals’ Gattex (Tedglutide), and the potential launch of a $1,000,000 drug in Europe in the Spring of 2013 (Reuters article).

Orphan drugs historically have received the highest drug prices due to their small patient populations and high cost of development. Because most orphan drugs serve small populations and meet with few competitors compared to other indications, payers, such as commercial insurance companies, will cover these drugs with no pushback.

Payers are now taking a hard look at the category of orphan drugs and attempting new programs with the aim of lowering costs. Assuming that payers can’t deny coverage overall, it then comes down to a strategy by the payers to manage or control the costs in some way. What is happening is that in more crowded therapeutic areas, like colorectal cancer or chronic myeloid leukemia (CML), payers are starting to choose preferred products since there are more choices and thus cheaper alternatives. In other situations, the payers may require particular or additional clinical tests, or limit the treatment rounds or cycles. Without therapeutic alternatives or any real competition for many orphan or rare diseases, if there is a drug approved in an area of unmet need, there really is not a lot that payers can do.

Starting April 2013, one organization that will be reviewing the high cost of orphan drugs is the UK’s Health Technology Assessment (HTA) group, NICE (National Institute For Health & Clinical Excellence).  NICE is going to start reviewing and evaluating what it calls the “very high cost of drugs for people who suffer with rare conditions” under UK’s new Health and Social Care Act of 2012. NICE will conduct assessments of orphan drugs’ value relative to its cost, societal impact, and benefit to patients

The Pharmalot Blog has published an interesting article titled, “Orphan Drugs & Value Propositions: Randy Explains”, that is an interview with Randy Vogenbert on the topic of orphan drug pricing.

Soliris is currently the world’s most expensive drug, costing approximately $409,500/year/patient. Soliris treats ultra-rare diseases such as Paroxysymal Nocturnal Hemogloginuria (PNH) and Atypical Hemolytic Uremic Syndrome (aHUS). SeekingAlpha.com’s article, “Alexion Pharmaceuticals: On The Road From Orphan Drugs To Blockbuster Profits”, discusses and analyzes how Alexion Pharmaceuticals’ only marketed drug, Soliris has generated blockbuster profits from multiple indications for ultra-rare diseases.

According to a January 2013, Forbes.com article, Gattex is the 4th drug that is approved in 2012 with a price tag of > US $200,000/patient/year. Twp of the other drugs are :

– Kalydeco (Ivacaftor) for Cystic Fibrosis (Vertex Pharmaceuticals) – $294,000

– Elelyso for Gaucher Disease (Protalix BioTherapeutics & Pfizer) – $150,000.

Two recently approved competing orphan drugs for Familial Homozygous Hypercholesterolemia (HoFH) are Kynamro (January 2013) and Juxtapid (December 2012). Along with the 2 approvals are the high price tag : $235,000 – $295,000 annual price tag for Juxtapid and $176,000 annual price tag for Kynamro.

Hyperion Therapeutics’ recently approved (February 1, 2013) orphan drug Ravicti (Glycerol Phenylbutyrate) for the treatment of Urea Cycle Disorders (UCDs), has a price tag of $250,000 – $290,000/year. The competitor orphan drug Buphenyl (Sodium Phenylbutyrate) for UCDs is roughly $240,000 at the maximum dose.

UniQure’s lead orphan product Glybera (Adeno-associated vector expressing the human lipoprotein lipase protein), for the treatment of Lipoprotein Lipase Deficiency (LPLD), is estimated to cost close to $1 million/patient when it launches in the Summer of 2013 in Europe, according to Reuters. UniQure is a European company based in The Netherlands. Glybera is the 1st gene therapy to receive approval in the West.

References

FierceBioTech.com January 2013 article titled, “Million-dollar therapy will test payers’ tolerance of orphan drug prices”

Forbes.com January 2013 article titled, “Inside the Pricing of a $300,000-A-Year Drug”

Reuters.com January 2013 article titled, “Analysis: Entering the age of the $1 Million Medicine”.

TheStreet.com January 2013 article titled, “NPS Pharma: Controversy Over Super-Expensive Orphan Drug Prices”

Copyright © 2012-2013, Orphan Druganaut Blog. All rights reserved.

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