Orphan drugs: are they worth their extra costs?

Results of a new study suggest that whilst orphan drugs confer greater average health gains for patients compared with non-orphan drugs, they also tend to be less cost effective.

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Results of a new study, led by James Chambers at the Center for the Evaluation of Value and Risk in Health at Tufts Medical Center (MA, USA), suggest that whilst orphan drugs confer greater mean health gains for patients compared with non-orphan drugs, they also tend to have less-favorable cost–effectiveness ratios. The findings are published in the Journal of General Internal Medicine.

Orphan drugs – drugs indicated for rare diseases – are often considerably more expensive than non-orphan drugs; therefore, despite the important therapeutic options they represent for patients living with rare conditions, their overall cost–effectiveness is frequently called into question.

In this study, investigators compared the value – utilizing quality-adjusted life years (QALYs) as a measure of health gains – incremental costs and cost–effectiveness ratios associated with 49 orphan drugs and 169 non-orphan drugs approved by the US FDA-approved from 1999–2015.

Compared with non-orphan drugs, orphan drugs were observed to offer significantly greater incremental health gains, with median QALY gains of 0.25 compared with 0.05 for non-orphan drugs. Further, seven of the ten drugs observed to offer the largest total QALY gains for their specified indications were orphan drugs.

At the same time however, orphan drugs were associated with substantially higher average costs of US$47,652, compared with US$2870 for non-orphan drugs. Similarly, calculated cost–effectiveness ratios for orphan drugs were substantially less favorable compared with non-orphan drugs (US$276,288 per QALY gained versus US$100,360 per QALY).

In the study, the authors concluded: “Our study suggests that orphan drugs often offer larger health gains than non-orphan drugs, but due to their substantially higher costs they tend to be less cost-effective than non-orphan drugs.”

In an interview with The Evidence Base®, Chambers commented: “On average, orphan drugs are five times more expensive than non-orphan drugs. These drugs become real issues for payers: how do they absorb the cost of these drugs whilst maintaining being fiscally responsible with their budgets?”

In the short term, Chambers continued: “Creative contracting, value-based contracting, paying by instalments; all of these will soften the blow and allow these therapies to be accessible.”

Read the full interview here>>


Chambers JD, Silver MC, Berklein FC, Cohen JT, Neumann PJ. Orphan drugs offer larger health gains but less favorable cost–effectiveness than non-orphan drugs. J Gen Intern Med. doi:10.1007/s11606-020-05805-2 (2020) (Epub ahead of print)

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