Pricing and reimbursement of orphan drugs are an issue of high priority for policy makers, legislators, health care\r\nprofessionals, industry leaders, academics and patients. This study aims to conduct a literature review to provide\r\ninsight into the drivers of orphan drug pricing and reimbursement.\r\nAlthough orphan drug pricing follows the same economic logic as drug pricing in general, the monopolistic\r\npower of orphan drugs results in high prices: a) orphan drugs benefit from a period of marketing exclusivity; b)\r\nfew alternative health technologies are available; c) third-party payers and patients have limited negotiating power;\r\nd) manufacturers attempt to maximise orphan drug prices within the constraints of domestic pricing and\r\nreimbursement policies; and e) substantial R&D costs need to be recouped from a small number of patients.\r\nAlthough these conditions apply to some orphan drugs, they do not apply to all orphan drugs. Indeed, the small\r\nnumber of patients treated with an orphan drug and the limited economic viability of orphan drugs can be\r\nquestioned in a number of cases. Additionally, manufacturers have an incentive to game the system by artificially\r\ncreating monopolistic market conditions.\r\nGiven their high price for an often modest effectiveness, orphan drugs are unlikely to provide value for money.\r\nHowever, additional criteria are used to inform reimbursement decisions in some countries. These criteria may\r\ninclude: the seriousness of the disease; the availability of other therapies to treat the disease; and the cost to the\r\npatient if the medicine is not reimbursed. Therefore, the maximum cost per unit of outcome that a health care\r\npayer is willing to pay for a drug could be set higher for orphan drugs to which society attaches a high social\r\nvalue.\r\nThere is a need for a transparent and evidence-based approach towards orphan drug pricing and reimbursement.\r\nSuch an approach should be targeted at demonstrating the relative effectiveness, cost-effectiveness and economic\r\nviability of orphan drugs with a view to informing pricing and reimbursement decisions.
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