Could Orphan Drugs Turn Health Economics on its Ear?

November 22, 2011
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When is $100,000 a year more expensive than $500,000 a year? The answer: when developing drugs to treat common diseases (e.g., cancer) rather than rare diseases. According to a new article in Forbes magazine, governments and insurers are willing to pay upwards of $200,000 and as much as $500,000 for new orphan drug treatments that attack rare diseases (usually caused by a single gene).

When is $100,000 a year more expensive than $500,000 a year? The answer: when developing drugs to treat common diseases (e.g., cancer) rather than rare diseases. According to a new article in Forbes magazine, governments and insurers are willing to pay upwards of $200,000 and as much as $500,000 for new orphan drug treatments that attack rare diseases (usually caused by a single gene). Since people suffering from these diseases have a known genetic profile, these targeted treatments are far more effective than most cancer drugs, for which insurers will usually cover up to $100,000 per patient per year.

National Institutes of Health (NIH) Director Francis Collins is urging companies to find more treatments for rare diseases. Of the 7,000 diseases that affect humans worldwide, 6,000 are rare. Traditional drug discovery and development methods for mass populations won’t be effective against these diseases. But more targeted approaches, with specific biologics and companion diagnostics, could be.

What do you think? Are companies like Agios a flash in the pan? Does $500,000 a year per patient sound like a viable pricing strategy? Are orphan diseases and drugs to treat them the future of medicine? Share your thoughts with us.

 

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