The oft-quoted US$150,000 figure average orphan drug price likely comes from a 2019 EvaluatePharma report on Orphan Drugs. It was an estimate of the mean cost per US patient per year in 2018 of an orphan drug (US$150,854 versus US$33,654 for a non-orphan drug), based on the top 100 drugs in the US in 2018. This figure has probably risen since.
But that’s orphan drug pricing in the United States. Pricing and reimbursement varies from country to country and the whole process is horribly complex, subject to change and rarely transparent.
In Europe, pricing/reimbursement is negotiated on a country by country basis although countries will often reference other European countries’ drug prices when deciding their own. It has been estimated that European orphan drug prices are, on average, ~60% of US orphan drug prices. Some biotech/pharma (e.g. bluebird bio) have chosen to withdraw from the European market, claiming that they can’t get fair reimbursement for their drugs. The European discount to US prices could deepen further as Germany has recently toughened its stance on drug pricing and the European Commission is aiming for Europe to become a single market for medicines. However, as the Biden administration has made its own attempt to tackle high drug prices with the recent introduction of the Inflation Reduction Act, the comparative bar might be lowered.
Countries like China are even tougher. While sheer market size in China is highly attractive to pharma, the Chinese government drives a hard bargain with pricing. For example, Biogen was pressured to cut the price of Spinraza to about RMB 30,000 (around $4,800 USD) per injection, representing a 95% discount to US pricing, just 4 years after entry to China.
Predictably, some companies will maximise list pricing of their orphan drugs in the United States to accommodate price pressures like the 23% rebate demanded by US Medicaid and the inevitable discounting imposed in other jurisdictions.
For example, this year, Acadia Pharmaceuticals, the licensee of Neuren’s trofinetide, set a list price of US$575,000 – US$595,000 per year, although it typically refers to the “average net realized” price of US$375,000 per year. Trofinetide has yet to receive approval elsewhere but Acadia is almost certain to receive pushback on that pricing outside of the US.
At the moment, the most protected drugs in the drug pricing wars are first-in-class and best-in-class orphan drugs, approved in a single indication, with disease-modifying action in a serious condition with no other approved therapies. These drugs are currently protected from price negotiation under the US IRA and would escape the comparative drug assessment that is often applied to pricing elsewhere.
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