Estimating the budget impact of orphan medicines in Europe: 2010 - 2020

Orphan drugs are a growing issue of importance to European healthcare policy makers. The success of orphan drug legislation in Europe has resulted in an increasing number of licensed medicines for rare diseases, and many more yet unlicensed products have received orphan drug designation. Increasingly the concerns amongst policy makers relate to issues of patient access and affordability, yet few studies have sought to estimate the future budget impact of orphan drugs. The aim of this study was to predict the total cost of orphan medicines in Europe between 2010 and 2020 as a percentage of total European pharmaceutical expenditure.

A disease-based epidemiological model was created based upon trends in the designation and approval of new orphan medicines, prevalence estimates for orphan diseases, and historical price and sales data for orphan drugs in Europe (defined as Eurozone + UK). The analysis incorporated two stages:

1) Predicting the number of diseases for which new orphan drugs will be approved over the next decade, based on an analysis of trends from the EU registry of orphan medicines;

2) stimating the average ex-factory drug cost across an orphan disease life cycle, from the year in which the first orphan medicine is launched to the point where the first medicine loses marketing exclusivity.

The two sets of information were combined to quantify the annual cost of orphan drugs from 2010 through 2020.

The results from the model predicted a steady increase in the cumulative number of diseases for which an orphan drug is approved, averaging just over 5 new diseases per year over the next 10 years. The annual per patient cost of existing orphan drugs was seen to vary between €1,251 and €407,631, with the median cost being €32,242 per year. The share of the total pharmaceutical market represented by orphan drugs is predicted to increase from 3.3% in 2010 to a peak of 4.6% in 2016 after which it is expected to level off through 2020, as growth falls into line with that in the wider pharmaceutical market. In sensitivity analysis peak-year orphan drug budget impact ranged between 3% - 6.6%.

Although European orphan drug legislation has led to an increase in the number of approved orphan drugs, the growth in cost, as a proportion of total pharmaceutical expenditure, is likely to plateau over the next decade as orphan growth rates converge on those in the broader pharmaceutical market. Given the assumptions and simplifications inherent in such a projection, there is uncertainty around the base case forecast and further research is needed to monitor how trends develop. However, fears that growth in orphan drug expenditure will lead to unsustainable cost escalation do not appear to be justified. Furthermore, based on the results of this budget impact forecast, the European orphan drug legislation is not leading to a disproportionate impact on pharmaceutical expenditure.