• How is the Orphan Drug act being exploited by the pharmaceutical industry as a means to raise drug cost?
• How does the Orphan Drug act affect the drug industry’s viability in continuing research and development of medications for the rare disease population?
Whereas the Orphan Drug act promotes rare disease drug research and development, consequently, the negative effect of increasing patient drug costs can be attributed to the pharmaceutical industry’s practice of the exploitation of the act for profit and in their determination if orphan drugs are viable.
Transparency in pricing
• How do factors, such as research and development, contribute to the high cost of medication?
• How much does competition contribute to price determination?
Another issue involving the Orphan Drug Act that has caused great conflict and controversy is the market exclusivity it provides as an incentive. In 1989 Amgen’s drug erythropoietin was approved by the FDA to treat anemia. Amgen was given exclusive marketing rights for seven years and erythropoietin became one of the most successful drugs in history. In these types of instances, the issue is that these companies have essentially created a monopoly where they have complete control. [6][7] Since there is no competition, companies have the opportunity to drive up the prices forcing people to be left with the ultimatum of either paying high out of pocket prices or leaving their condition untreated. The reduction in competition also severely limits the access to treatments for patients with rare diseases. [6]
There are multiple health concerns worldwide and more and more drugs are needed every day. Many drugs however, are extremely expensive to develop, test, and produce. According to the Tufts Center for the Study of Drug Development (2002), it costs up to $802 million to bring a new drug to the market. In 2002, pharmaceutical companies spent $34 billion in research and development (Center-Watch, 2003). In addition to the costs, the overall time from the discovery to approve and market the drug can take up to 15 years.
Pharmaceutical companies are provided with temporary monopoly rights on the production of new drugs which result in a higher cost on consumers. If competing companies were allowed to produce generic forms of those drugs, consumers will be able to afford those medications even in cases where those consumers have no insurance coverage. The company responsible for developing and inventing the original medication could be offered incentives to invent in the future by either obtaining tax breaks or NIH funding for future research. They could even be offered a percentage of the sales of the generic drugs. Economist Gary S. Becker advocates dropping many FDA requirements that, in his opinion, provide no additional safety measures but rather delay the development of new drugs.[12] Betamethasone, for example, has been part of the standard prenatal care in Europe since the late 1970’s while it got adopted in the U.S. after 1997. On many occasions, the FDA ignores all scientific evidence concerning certain drugs because the manufacturer did not follow their mandated bureaucratic standards.
The pharmaceutical industry is one of the most powerful and greedy industries in our country, with a goal to make as large a profit as possible, at the expense of the sick.
In 2015, the pharmaceutical industry spent over 27 billion dollars on advertising. The two greatest components of this effort were promotional advertising and free medication sampling, which the pharmaceuticals invested 15.5 and 5.7 billion dollars respectively (“Persuading the Prescribers”). Promotional advertising involves direct contact with health professionals, the most common being extravagant lunch conferences held for physicians and their staff. On the other hand, sampling involves distributing free sample of medications to physicians, who then have a choice of providing these samples to patients. As a result of these methods, the industry has seen revenue around $400 billion with 90% of physicians having a relationship with a drug company (Campbell 2007). Moreover, the prices of prescriptions continue to rise; a copay of a generic drug is $11.72, preferred brand drug is $36.37 and a specialty drug is $58.37 (Coleman and Geneson 2014). Although the profits are immense in the numbers demonstrated above, it is no surprise when pharmaceutical drug companies elevate their prices even more. For instance, recently Turing Pharmaceuticals raised the price of their medication Daraprim from $13.50 to $750. Keep in mind, this medication is used for threatening parasitic infections, aids, and cancer with alternative options currently found to be inefficient (Pollack 2015). Another example of this practice involves cycloserine, a drug used to
Janus Pharma requests that Alfatose Alfa (STRENSIQ) be granted an Orphan Drug Designation for use in the treatment of patients with Juvenile Onset Hypophosphatasia
Under the Ronald Reagan administration the Orphan Drug Act allows the federal government to help out in the making of new drugs for these rare diseases. Incentives are given to the drug manufacturer in order to intise them to find a cure or develop a drug that will help out. To find a cure can become very expensive and time consuming for the drug companies. There are incentives given to the drug manufacturers like grant funding, assistance in the drug development, seven-year patent on the drug post-Food and Drug Administration approval, and so forth. In the end, the drug company has the better end of the deal.
Drug prices are set by pharmaceutical companies to cover research and development costs. While R&D costs clearly need to be covered, markets in developed countries already pay for most R&D of new products. Because of this, it makes moral and economical sense to establish a two-tiered pricing system; for R&D costs to be paid for by developed countries, allowing significantly reduced prices to be charged in developing countries.
Elisabeth Rosenthal, a non-practicing doctor and reporter for New York Times writes, “The Soaring Cost of a Simple Breath”(2013), which describes the effect the high-cost of pharmaceutical drugs has on a patient's ability to access that drug and the reasons for that high cost. To start, Rosenthal describes a real-life situation involving two girls who rely heavily on the Asthma medication Albuterol to be able to function normally. She uses the context of these individuals to describe the wide range of drugs that are priced too high, affecting a patient's ability to be treated. Rosenthal argues that this is a very simple thing to fix, but in America there are four core problems that primarily contribute to this epidemic. The first thing Elizabeth
Another area of concern is that huge pharmaceutical corporations are missing all the techniques to sort out the winners from the losers ahead of time, and establish a difficult process for obtaining license. Add to this, the demand for advanced products to receive reimbursement from third payers, and one can see why so many drugs (medication) now in the biotech pipeline neglected for meeting the mark.
Extremely risky drug discovery and development, lengthening development times which increase development cost, return on investments, and generic competitors.
Orphan drug research and development is a laudable initiative as it seeks to find cures for the rare and devastating diseases of today. Still, orphan drug companies must also engage in additional operations in order to generate business sustainability.
The healthcare industry is often monopolized by select medications that are very expensive. However, the FDA recently approved Ocrevus, a drug that treats severe multiple sclerosis, and is available at a slightly more reasonable price. An article in the New York Times by Katie Thomas summarized the pricing, “Genentech, which is owned by the Swiss pharmaceutical giant Roche, said Tuesday that it would charge a list price of $65,000 a year, which – though expensive – is 25 percent less than an existing drug, Rebif, that was shown to be clinically inferior to Ocrevus in the two clinical trials that led to Ocrevus’s approval” (March 28th, 2017). I agree with the Thomas’ assessment that we are making improvements in terms of pharmaceutical drug pricing.
To compete with generic treatments, multinational pharmaceutical companies are investing in promising start-ups offering new drugs and biological medicines, or biologics for chronic conditions. Another strategy: research focused on often-neglected “orphan” drugs for rare conditions.
The pharmaceuticalceutical industry has advanced since the early 1900 but continues to face challenges of development, cost of research/development, testing, FDA approval, marketing, distribution and access; however it has played a major role in the health welfare of patients. Due to the advancement in the pharmaceutical industry there has been a 40 percent of the 2 year gain achieved in life expectancy, however the discovery phase requires thousands of scientist, engineers and physicians to research the disease, its components, develop the medicine and carefully/methodically to establish the benefits and risks (Williams & Torrens, 2008). However, during the 1990 the USA was leading in pharmaceutical R&D due to the teams of engineers, biologist, chemists and physicists that spend long hours determining how to mass produce a medicine and studying the side effects to discover an unacceptable side effects (Williams & Torrens, 2008). The process of development of new pharmaceutical once cost $2 billion in 1980 grew to $18 billion by 1997 and only 5 out of 5,000 compounds make it to human clinical trials (Ely, Simki & Thomas, 2003). Furthermore, in 2007 pharmaceutical companies spent $33 billion (a 7% increase over the previous year) and the average time from research to treatment approved by FDA can take 10-15 years (Williams & Torrens, 2008). FDA requires the pharmaceutical to follow elaborate procedures (preclinical safety assessment, preapproval of safety assessment in