The Cost of Drugs For Rare Diseases Is Threatening the US Health Care System (hbr.org)

An anonymous reader shares an article: There are 7,000 rare diseases affecting 25 million to 30 million Americans. The average drug approved under the Orphan Drug Act of 1983 (ODA), which governs rare disease approval, costs $118,820 per year. Assuming a similar cost, if a single drug were approved under the ODA for 10% of rare diseases, the total would exceed $350 billion annually -- more than 10 percent of the total amount that America spends on health care and much more than the health care costs attributable to either diabetes or Alzheimer's disease and other forms of dementia. If this seems far-fetched, consider the two drugs for treating Duchenne muscular dystrophy that the FDA approved in the last six months: eteplirsen, which is sold by Sarepta Therapeutics and costs $300,000 annually per patient, and deflazacort, which is sold by Marathon Pharmaceuticals and costs $89,000 annually per patient. However, approval of such costly drugs exposes an uncomfortable truth: scientific discovery has outpaced health care economics. [...] In the United Kingdom, the National Institute for Health and Care Excellence (NICE) determines the cost effectiveness, or value, of newly approved drugs based on their impact on quality-adjusted life years. These determinations inform the National Health System's (NHS) treatment-coverage decisions. In contrast, the FDA is prohibited from considering cost or value in its decision making, and there is no U.S. governmental equivalent of NICE.

Comments

Wait!

[war4peace]

I wonder what's the markup on those drugs.
Are they that costly to produce?

Re:Wait!

[Solandri]

When it costs $2.5 billion to get FDA approval for a drug, and your potential market is a few thousand or tens of thousands of people, you have to price it that high just to recoup your costs.

The real problem is that we have buyers (insurance and government) who will pay that price regardless of whether the drug actually provides that much value to the patients. It's a noble sentiment to believe that every life is worth saving. But practically, when you try to do that you just end up burdening society with costs which give you a negative return on investment (you're throwing away money - people's productivity that they've sent in good faith to government and to insurance companies).

Nonsense

[c]

What's threatening the US health care system is putting profit ahead of lives.

Good luck. You poor saps are going to need a lot of it.

I'm shocked the drug companies are so greedy

[frovingslosh]

We all know these drugs have an insane markup. The drug companies are getting rick because they set astronomical prices for drugs the might help people, even a little. And they get it because insurance is forced to pay for it, not individuals who could never come up with the money on an individual basis. We have created the problem by mandating insurance and then letting the drug companies pilfer it blind.

This is just another facet of the problem that drug companies use U.S. public funding for the research to help develop most of these drugs, then turn around and charge the American taxpayer more for the drugs than they sell them in other countries, both third world countries like the African nations and first world countries like Canada. And, of course, they spend a lot on expensive lobbying to buy politicians to make sure we in America don't get access to those drugs they sell in Canada.

The cost of drugs for rare diseases?

[Lucas123]

Common statin's (for lowering cholesterol) can cost more than $700 for a 30-day prescription if you don't have insurance. I think the cost issue goes well beyond prescription drugs for rare diseases, and in fact, is more detrimental in a broader sense.

But, when we as citizens don't insist our politicians address campaign finance reform, policies favoring corporations will continue to guarantee price gouging will continue. Campaign finance reform should be made the top issue... Every. Single. Election.

No it won't

[rsilvergun]

The industry doesn't do much research. Not the expensive kind. They do a few clinical trials after the government has done the really expensive stuff (what's called "Basic Research", IIRC).

Also, what you're seeing here with these rare disease drugs is the style of capitalism popularized by Bane Capital: Find something undervalued and buy it up then extract the value for yourself. Usually this takes the form of liquidating the company. But in these cases they're selling life saving medicine. It's literally a matter of life or death (or a life worse than death). These are small markets with a high barrier to entry where the customers depend on the product to live. This is exactly the sort of thing no decent society would leave in the hands of unregulated capitalism. American on the other hand...

Re:It's likely the PRICE, not the cost

[geek]

You sound like a sociopath

Re:value of human life

[Altrag]

That's just not true. We value human lives very little. What we value is the lives of our friends and families.

If your brother gets shot in Iraq, its a tragedy to you personally. If an Iraqi's brother gets shot, its a statistic to you. And the Iraqi thinks the exact same thing except in reverse.

This is a good part of why Americans are so resistant to a decent healthcare system.. Joe is happy to spout off things like "well I'm not sick and nobody I know is sick so why should I be paying for Jane from 6 miles down the road?" But of course if Joe gets sick himself a year later, suddenly he's bitching about the cost of doctors and medicine. Because now it actually matters to him personally. His life is worth paying for but Jane's isn't. And Jane thinks the same way about Joe.

Basically it all comes down to that "Monkeysphere" concept we hear about, combined with "greed solves everything" capitalism and some American-dream style eternal (if unfulfilled) optimism about a person's own potential.