The Orphan Drug Act grants orphan drug status to pharmaceutical companies and “is designed to encourage the development of drugs which are necessary but would be prohibitively expensive/un-profitable to develop under normal circumstances.” Past developments have included drug treatments for such conditions as cystic fibrosis and multiple myeloma.
The result can be high-priced treatments for rare conditions. From the article:
Politicians say they are not opposed to drug companies earning strong returns on the costs of researching innovative drugs, and understand the high prices of many medications. But they are investigating whether some companies are price-gouging, concerned more about executive stock options than about running innovative companies.
But the sometimes prohibitive costs of orphan drug treatments is, as you may have guessed, too expensive—to the point where insurance companies may deny payment. The article provides an example of an already-developed drug that jumped from a cost of $1,600 per vial to $23,000 per vial after it was granted orphan drug status.
But here’s the interesting part. The prohibitive cost of the orphan drug spurred a doctor to search for lower cost solutions. And he found one with comparable efficacy.
Curiously, though, he found that the price hike “was one of the best things that could have happened.” Why? “Because we found something better and cheaper.” Far cheaper, it turns out. “We spent a few days going through all the medical literature, looking for what works, what doesn’t.”
The cost of the alternative treatment? $15.