The Dilemma with Orphan Drugs

August 1, 2013
Nathan Jessop

Nathan Jessop is a columnist for Pharmaceutical Technology Europe.

Pharmaceutical Technology Europe

Pharmaceutical Technology Europe, Pharmaceutical Technology Europe-08-01-2013, Volume 25, Issue 8

Orphan drugs for rare diseases are a major area of investment for pharmaceutical companies, but are they becoming too expensive for Europe to afford them?

Rare diseases present an area of substantial unmet medical need. In Europe, a disease is defined as rare if it affects less than five people per 10,000 (1). More than 6000 different rare diseases have been identified to date, and it has been estimated that approximately 30 million people living in the EU suffer from a rare disease (2). Most rare diseases are caused by genetic defects, but environmental exposure during pregnancy or later on in life, often in combination with genetic susceptibility, could also be a cause (1).

Addressing unmet medical needs

Most pharmaceutical companies have shown little interest in developing drugs for rare diseases because these drugs were unlikely to generate sufficient return on investment. As a result, treatments for these disorders became known as 'orphan drugs'. To stimulate research in this area, a number of governments developed specific orphan-drug legislation, which provided incentives to companies who invested in this area. The types of incentives included are reduced fees for marketing-authorisation applications, scientific advice or protocol assistance, and protection from market competition once the drug is authorised (2). In 1983, the US adopted the Orphan Drug Act, with Japan and Australia implementing a similar legislation in 1993 and 1997, respectively. Europe followed relatively late in 1999 when it adopted Regulation (EC) N° 141/2000 on orphan drugs, but the legislation has been widely considered to be successful. Since its introduction, the European legislation has resulted in the review and approval of 69 treatments for some 55 different conditions (2, 3).

Despite improvements in the situation for patients with rare diseases and their families, efforts are continually being made by stakeholders to raise awareness of the condition, widen access to treatment and ensure appropriate medical representation. Due to the political make-up of the EU, competencies for healthcare are split across countries; hence, the authorisation of a particular orphan drug does not necessarily mean that it is available to all patients in the region. A key annual event to raise awareness is Rare Disease Day, which is held on the last day of February (2). A main coordinator of this event is the European Organisation for Rare Diseases (EURORDIS), which represents 585 rare disease patient organisations in 54 countries covering over 4000 diseases (4).

A market too successful?

A controversial issue regarding orphan drugs is their pricing. Although they receive incentives to develop orphan drugs, particularly market exclusivity for 10 years in the EU, companies argue that they must still charge high prices to guarantee sufficient return. European healthcare systems are already struggling to cover the costs of treatment for citizens and there is a concern that orphan drugs are now placing too much pressure on the system.

Although the need for orphan drugs is recognised, critics argue that industry is taking advantage of the incentivised system to maximise profits and that healthcare systems cannot cope with such pricing in the long term. In the past, small specialised companies focused on orphan drugs, but in recent years, a growing number of large pharmaceutical companies have moved into this field. Thomson Reuters Life Sciences estimated that the current global market for orphan drugs is worth US$50 billion and growing at 6% per year (5).

Companies continue to state that it costs around US$1 billion to develop a new drug and that they need substantial revenue to cover the costs of developing drugs that fail during R&D (5). However, many observers believe that a number of the orphan drugs on the market have exceeded the costs of their development by a wide margin. A report by the BBC in January 2013, based on the views of Dr Carl Heneghan, director of the University of Oxford's centre for evidence-based medicine, suggested that approximately one in 10 orphan drugs has generated more than £620 million of revenues (6). Furthermore, the pricing of these drugs in relation to the patient population appears to be very high. For example, nine of the most expensive orphan drugs on the market, which cost more than £125,000 a year, treat diseases afflicting fewer than 10,000 patients (6). Soliris (eculizumab), used to treat patients with paroxysmal nocturnal haemoglobinuria and atypical haemolytic uraemic syndrome, was approved in 2007 and is frequently cited as one of the world's most expensive drugs, at £250,000 a year (6, 7). Nevertheless, the manufacturer, Alexion, believes that the price is fair. It states that one third of patients died within five years before Soliris was available (5).

One of the harder arguments for companies to justify in today's cost-conscious healthcare environment is when an existing therapy has been modified and adapted to become an orphan drug. In the BBC report, Dr Heneghan cited the example of oral ibuprofen, which costs approximately £0.08 per gram (6). The drug also exists on the market as an intravenous form (Pedea) for the treatment of the orphan disease patent ductus arteriosus, where it costs £6575 per gram (6). To account for this price variation, Orphan Europe, the manufacturer, explained that the drug was specially developed for a rare-disease population and should not be compared in such a straightforward manner with ordinary oral ibuprofen (6).

The case of Firdapse

In 2009, Firdapse, which contains the active substance amifampridine, was approved in the EU as an orphan drug for Lambert-Eaton myasthenic syndrome. However, a 2012 paper in the Orphanet Journal of Rare Diseases suggests that the branded product represents a slight modification of an unlicensed and low-priced compound that has been available for several decades (3). The unlicensed drug is 3,4 diaminopyridine (base form) whereas Firdapse is the phosphate-salt formulation of 3,4 diaminopyridine (7). It was suggested that the pricing of the Firdapse was 50- to 70-fold higher compared to the unlicensed formulation (6).

This issue prompted a number of physicians to write an open letter in the British Medical Journal (BMJ) to UK prime minister David Cameron complaining about the way in which companies were unfairly using orphan-drug legislation to their advantage (8). A series of exchanges between BioMarin, the manufacturer, and the signatories to the BMJ letter took place, culminating in the lead author writing an FP10 prescription for the cheaper unlicensed drug, 3,4-diaminopyridine (8, 9). Although BioMarin then voluntarily cut its prices for Firdapse by 10%, the UK commissioners network did not recommend funding of the drug (8). The UK commissioners network took the view that although legally Firdapse and 3,4 diaminopyridine were two separate clinical entities, the two forms of the drug could be considered to be bioequivalent (7). It was calculated that on average, the base form of the drug costs £1200 per patient per annum, whereas Firdapse costs, on average, £44,000 per patient per annum (7). This development apparently led to some prescriptions of the unlicensed 3,4 diaminopyridine (base form), which could be legally challenged by the UK's Medicines and Healthcare Products Regulatory Agency (MHRA) or Biomarin (8). However, as the lead author of the BMJ letter pointed out, such a legal challenge might prove embarrassing for these organisations (8).

So what's next now?

Despite the controversy concerning certain high-cost orphan drugs, at present, these treatments only account for a small percentage of the overall European drug budgets. In 2007, orphan drugs accounted for 1.7% of the French drug budget, 2.1% in Germany, 1.0% in the UK, 1.5% in Italy and 2.0% in Spain (3). However, healthcare systems need to be designed to cope with future demand, and given that most rare diseases are not well treated, there is a likelihood that countries will be asked to fund additional orphan drugs in the future. One study suggested that there will be between eight and 12 new orphan drugs approved in Europe each year (10). With patients wanting access to these treatments but companies seeking to maximize revenues, European governments are now placed in a difficult situation of over pricing. Although there has been speculation that governments will take a tough line with the industry, it remains to be seen what form such action will take and whether they will remove some of the specific market incentives that were designed to stimulate orphan drug R&D in the first place (11). A delicate balance will need to be struck so as not to reverse the advances made in orphan-drug development and treatment access.


1. European Commission website, "Rare Diseases,", accessed 1 July 2013.

2. European Medicines Agency website, "28 February 2013—Rare Disease Day: Rare disorders without borders,", accessed 1 July 2013.

3. W. Hughes-Wilson et al., Orphanet Journal of Rare Diseases 7 (74) (2012), accessed 1 July 2013.

4. European Organisation for Rare Diseases (EURORDIS) website,, accessed 1 July 2013.

5. K. MacDonald, BBC, "Orphan drugs: Remarkable drugs at remarkable prices," Press Release, 16 Jan. 2013.

6. BBC website, "A GP's view: Orphan drug costs prohibitive,", accessed 1 July 2013.

7. West Midlands Commissioning Policy (WM/35),, accessed 1 July 2013.

8. D. Nicholl, British Medical Journal website, "It's the BMJ wot won it, and the NHS should think like Tesco,", accessed 1 July 2013.

9. V. MacDonald, Channel 4 News, "Drug companies exploiting law for profit,", accessed 1 July 2013.

10. European Organisation for Rare Diseases (EURORDIS) website, "Orphan drugs: rising to the challenge to ensure a better future for 30 million patients in Europe,"

, accessed 1 July 2013.

11. S. Bennet, Bloomberg Businessweek, "Orphan drugs could lose their government subsidies," Press Release 11 Apr. 2013.