While orphan drugs may offer more health benefits than other types of prescription drugs, they aren't nearly as cost-effective, according to a study cited by STAT.
Orphan drugs are drugs that are approved to treat rare diseases that afflict 200,000 or fewer people.
The FDA gives drugs orphan designation as an incentive for more drugmakers to develop drugs for rare diseases with few treatment options. Orphan designation gives the drugmaker seven years of market exclusivity and a 25 percent tax credit.
Orphan drugs accounted for 4 percent of the total drug spend in the U.S. in 1997. In 2019, they accounted for 10 percent, according to STAT.
While orphan drugs are five times more likely to offer a health benefit than other drugs approved by the FDA, they aren't priced nearly as cost effectively, STAT reported.
Payers would have to spend 2.7 times more money on an orphan drug than another drug for a patient to gain an extra year of perfect health, according to the study, published in the Journal of General Internal Medicine.
The study identified 172 drugs approved by the FDA between 1999 and 2015 that received orphan designation.
The study had limitations, STAT reported, one being that drugs approved after 2015 weren't analyzed. FDA approval standards are also less stringent for orphan drugs, which may affect the quality of cost-effectiveness studies.
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