DOSE OF REALITY: STUDY FURTHER HIGHLIGHTS THE COST OF BIG PHARMA’S BLOCKBUSTER BAILOUT

Analysis Finds Excluding Brand Name Drugs Approved to Treat Rare Diseases from Solutions to Lower Prices a “Missed Opportunity to Help Patients”

A recent analysis published in The American Journal of Managed Care (AJMC) highlights the outsized impact brand name prescription drugs approved to treat rare diseases under the Orphan Drug Act have on prescription drug spending — and how exempting certain blockbuster brand name drugs approved to treat rare diseases from solutions to lower prescription drug prices, “substantially limits potential savings for patients and the health care system.”

Earlier this year, Congress passed a Big Pharma-backed policy without the right information from the Congressional Budget Office (CBO) on which brand name drugs would be impacted – or its true cost to the American people – that exempted certain medications approved for rare disease status from solutions to lower drug prices. CBO previously estimated that this pharma-backed policy, The Optimizing Research Progress Hope And New (ORPHAN) Cures Act, would cost seniors and taxpayers $4.9 billion in higher prescription drug spending. A revised estimate from CBO projects the ORPHAN Cures Act will cost $8.8 billion between 2025 and 2034, by exempting blockbuster drugs like Merck’s Keytruda from solutions to lower drug prices.

The new analysis in AJMC “measured public and private US spending on high-revenue drugs targeting rare diseases in 2022,” and found that “19 of the 100 prescription drugs with the highest annual net sales in 2022 were solely approved to treat rare diseases,” meaning “[a]pproximately 1 in 5 of the highest-revenue prescription drugs in the US in 2022 was approved to treat only rare conditions.”

The analysis also notes that while “[t]he increase in drugs approved to treat rare conditions has been heralded as a success…in recent years, the necessity of Orphan Drug Act incentives has been questioned due to the high prices and substantial revenues associated with treatments for many rare diseases.” As the analysis notes, “[a]verage launch prices for new drugs with Orphan Drug Act designations are 7 times higher than prices for nonorphan drugs [and] [s]everal gene therapies approved to treat rare conditions, including spinal muscular atrophy, have been priced at well over $1 million.”

The study concludes “excluding these drugs from [policies meant to lower prescription drug prices] is a missed opportunity to help patients struggling with high prescription drug costs because these drugs account for a sizeable share of US pharmaceutical spending.”

In addition to the recent AJMC analysis, several other studies have noted the outsized impact rare disease drugs have on U.S. prescription drug spending – and the impact policies such as the ORPHAN Cures Act will have on U.S. patients, taxpayers and the health care system.

Key Facts on the ORPHAN Cures Act

The CBO’s updated analysis estimates that the ORPHAN Cures Act will cost $8.8 billion between 2025 and 2034, up from its original estimate of $4.9 billion.
CBO’s analysis now includes several blockbuster drugs, including Johnson & Johnson’s cancer drug Darzalex, Merck’s blockbuster cancer drug Keytruda and Bristol-Myers Squibb’s cancer drug Opdivo.
The Wall Street Journal first reported that the CBO originally estimated the pharma-backed policy would cost seniors and taxpayers $4.9 billion in higher prescription drug spending, but “[t]he true tally of the new provisions could be far higher because CBO missed certain drugs such as Keytruda.”
An analysis published in Health Affairs in August by Jennifer C. Chen and Anna Kaltenboeck of Verdant Research stated there are at least 10 brand name drugs that could be impacted by the recently passed Big Pharma-backed provision, and gross Medicare spending on these drugs in 2023 amounted to $13.8 billion, and nine of the 10 drugs that could be impacted are for certain forms of cancer.
A second analysis in Health Affairs, also published in August by researchers associated with the University of Washington’s School of Pharmacy, identified at least 13 brand name drugs that could be impacted by the ORPHAN Cures Act. These 13 drugs, between Medicare Part B and Medicare Part D, had a projected gross spending of more than $33 billion in 2024.
The Kaiser Family Foundation (KFF) released an analysis and found at least 18 brand name drugs that could be impacted by the provision. These 18 drugs combined for $17.5 billion in Medicare spending in 2023.

As the full impact of the Big Pharma bailout for high-priced blockbuster drugs comes to light, Congress should act to protect seniors and taxpayers from billions of dollars in higher prescription drug prices.

Read the full analysis from the American Journal of Managed Care HERE.