Orphan Drug Costs Continue to Push Spending Limits

Savings from biosimilars may not offer much relief due to development and manufacturing costs, according to Catamaran report.

The cost of orphan drugs continues to be an issue for the various stakeholders in the specialty market, while the impending arrival of biosimilars may not offer the significant cost relief initially anticipated, according to a recent drug trend update from the Catamaran Corporation.

The pharmacy benefit management company projects that by 2018, orphan drugs will account for worldwide sales of $127 billion with a compound annual growth rate of 7.4% over the next 4 years, an amount that is double the overall prescription market growth, excluding generics.

“Specialty drug costs continue to escalate, and the issue of orphan drugs remains a high-profile and concerning topic for patients, prescribers and payers alike,” the report states. “While drug costs are higher for specialty medications, those within the oncology class, as well as orphan drugs and those deemed breakthrough therapies, seem to be the costliest.”

In the last 2 years, there were at least 5 orphan drugs (Iclusig, Cometriq, Signifor, Imbruvica, Pomalyst) with an annual cost that is close to or exceeded $150,000 per patient. Additionally, 3 orphan drugs (Gattex, Kalydeco, Juxtapid) cost nearly $300,000 or more annually per patient.

Catamaran noted that orphan drugs lacking therapeutic competition are 2.6 times more expensive than orphan drugs that have competition.

While the high cost of specialty drugs remains a controversial issue, the anticipated arrival of biosimilars to the US market may not be a panacea. Despite a discount of up to 40% for biosimilars estimated by the Congressional Budget Office, higher development and manufacturing costs are likely to lead to more modest savings compared with traditional generic medications, according to Catamaran.

Based on the experience of biosimilars outside the United States, the discount from biosimilars may be closer to 10% to 15%.

There have still been no true biosimilars approved in the United States as defined by the 351(k) approval pathway developed by the FDA, though some alternatives to biologics have been approved through the Biologic License Application or New Drug Application process. Catamaran notes the FDA approval pathway has placed biosimilar developers at a disadvantage due to the requirement that they disclose the dossier used as part of the approval, which is not required by European guidelines.

“Although some progress has been made in the area of biosimilars, a number of items are yet to be fully addressed by the FDA, including interchangeability and product nomenclature,” the report states. “However, some individual states have already passed legislation regarding substitution policies.”

The specialty pipeline continues to expand with a focus on targeted and personalized disease treatment. Catamaran cites a report from PhRMA that finds US biopharmaceutical research companies are developing 907 medicines and vaccines targeting more than 100 diseases by using biologic processes.

“With such development, pharmacogenomics testing appears poised to represent a significantly greater role in the initiation and management of specialty drug therapy in the future,” Catamaran writes. “As such, healthcare systems and payers will be pressed to develop or enhance internal mechanisms to not only evaluate the scientific evidence of these drugs themselves, but also the reliability and cost-effectiveness of any companion diagnostics that may come along with them.”