Drugs approved to treat rare disorders have been spiking in price over the past few years, with a new report from the insurance industry raising questions about their affordability.
America's Health Insurance Plans, the leading lobbying group for the industry, released a report on the costs for orphan drugs. Last year, nearly half of all drugs approved by the Food and Drug Administration were orphan drugs, which are intended to treat rare diseases.
A company that pursues an orphan drug receives extra market exclusivity, a tax credit for research and development costs and a waiver for the $2.4 million filing fee, the report said. The incentives are designed to entice drug makers to produce products for ailments with lower patient populations, which don't make a large profit.
However, it appears that the drugs are being used for other types of treatments, which is mostly responsible for the big price increases. After the orphan drug gets approved, a drug maker can expand sales through getting a new indication for the drug and keep the price, the report said.
A sample of 46 drugs available between 2012 and 2014 showed that almost half were prescribed for treating non-orphan conditions. The orphan drugs also can be used for off-label conditions. That means a doctor can prescribe a drug to treat an ailment that the product wasn't approved to treat.
Doctors are not prohibited from prescribing products "off-label," but drug companies are largely prohibited from advertising those uses.
The report found that the price of the 46 drugs increased by an average of 26 percent from 2012 to 2014.
"The greatest price increases (37 percent) occurred for orphan drugs prescribed mostly for non-orphan uses, while orphan drugs almost exclusively used for their orphan indications saw the smallest prices increases (12 percent)," the report said.
The insurance industry has been locked in combat with the pharmaceutical industry for some time, as both are major lobbyists in Washington. The pharmaceutical industry's main lobbying group has said the the insurance industry is to blame for high prices because it is not shouldering more of the cost and is passing off too much to their customers.