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Orphan drugs - Statistics & Facts

A rare disease is characterized by the number of people that it affects in comparison to the general population. In the United States, a disease is qualified as 'rare' if it affects less than 200 thousand people. Based on European standards, a disease is considered rare if it impacts one person per 2,000. There are approximately up to eight thousand rare diseases and many are considered chronic and life-threatening conditions. It is also possible that a rare disease in one region may be relatively common in a different region of the world.

Overlooked for a long time

Rare diseases have long been under-researched and many doctors and politicians were unaware that these conditions existed. At the time, both health policies and research that target rare diseases were limited. For pharmaceutical companies there were also market-related reasons: since there are only small numbers of patients potential revenues were believed to be small, too. But since then, the number of treatment has risen significantly, which has made it easier for patients living with these diseases to live more comfortably. Nevertheless, patients living with rare diseases may have to spend significantly more on treatments than those with more common diseases due to the high prices of orphan drugs.

The Orphan Drug Act as a turning point

The change came in 1983. Pharmaceutical medications that are used to treat rare diseases are known as orphan drugs. In the United States, the Orphan Drug Act of 1983 started to incentivize the production of orphan drugs. In 2017, there was a record high of 461 orphan drug designations accepted, while ten years before, there were only 120 such designations. Roche produces one of the most successful pharmaceutical drugs for rare diseases, Rituxan, a drug originally designed for treatment of rheumatoid arthritis. Combined, Roche and Novartis, both Switzerland-based pharmaceutical companies, are expected to generate more than 26 billion U.S. dollars in orphan drug revenues worldwide by 2024.

Alluring high profits

Today, orphan drugs are highly profitable. Studies showed that pharmaceutical companies with orphan drugs in their portfolio are more profitable than those without. One reason is there are so many rare diseases that it is unlikely that another company will do research for a drug treating the same condition. Through the Orphan Drug Act, up to 50 percent of R&D costs for an orphan drug can be cut through tax credits and other incentives. Additionally, since there are not so many patients available, clinical trials are much smaller and less expensive. However, in the meantime, practices took place that are partially criticized. For example, pharmaceutical companies are looking to see whether treatments already on the market for common diseases could potentially be effective for a rare disease. If that is the case, the orphan drug status automatically includes seven years of market exclusivity, a higher price tag, and thus higher revenues - with a minimum of cost and research efforts.


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