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Open Access Publications from the University of California

Estimating the clinical cost of drug development for orphan versus non-orphan drugs

  • Author(s): Jayasundara, Kavisha
  • Hollis, Aidan
  • Krahn, Murray
  • Mamdani, Muhammad
  • Hoch, Jeffrey S
  • Grootendorst, Paul
  • et al.

BACKGROUND:High orphan drug prices have gained the attention of payers and policy makers. These prices may reflect the need to recoup the cost of drug development from a small patient pool. However, estimates of the cost of orphan drug development are sparse. METHODS:Using publicly available data, we estimated the differences in trial characteristics and clinical development costs with 100 orphan and 100 non-orphan drugs. RESULTS:We found that the out-of-pocket clinical costs per approved orphan drug to be $166 million and $291 million (2013 USD) per non-orphan drug. The capitalized clinical costs per approved orphan drug and non-orphan drug were estimated to be $291 million and $412 million respectively. When focusing on new molecular entities only, we found that the capitalized clinical cost per approved orphan drug was half that of a non-orphan drug. CONCLUSIONS:More discussion is needed to better align on which cost components should be included in research and development costs for pharmaceuticals.

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