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What Does The Scrutiny on Orphan Drug Pricing Mean For Manufacturers and Consumers?

Ongoing changes in U.S. healthcare reform and the Congressional inquiry into the Orphan Drug Act’s effect on drug pricing have created a number of emerging risks for the biopharma industry, and especially for manufacturers of rare orphan and specialty products. The shift to value-based reimbursement, industry-wide consolidation, and a potential decrease in access to affordable care are among the market dynamics that require clinical stage companies to anticipate and manage commercial risks much earlier in the drug development phase.

The National Organization for Rare Diseases (NORD) estimates that nearly 30,000 Americans suffer from 7,000 rare diseases. Rare diseases are legally defined as diseases affecting less than 200,000 patients. The development of orphan drugs and specialty biopharmaceuticals is incentivized by the Orphan Drug Act of 1983 through offering manufacturer's 7 years of marketing exclusivity, up to 50% tax credit on R&D costs, and R&D grants for clinical trials.

Worldwide orphan drug sales are forecast to total $209 billion and growing at a rate of 11.1 percent from 2017 to 2022, approximately double overall prescription market growth, according to Evaluate’s latest report ‘EvaluatePharma Orphan Drug Report 2017’.

The market for orphan drugs is set to be 21.4 percent of worldwide prescription sales by 2022 (excluding generics). At the same time, median cost per patient differential will be 5.5 times higher for orphan drugs compared to non-orphan.

What are the implications for pre-clinical and clinical stage companies developing products in the orphan and specialty space?

Intensified scrutiny by policymakers and the public on drug pricing means that companies must collaborate with external stakeholders to define value much earlier in the development phase in order to build the necessary support that will help meet business objectives.

  1. How will a product address the needs of patients and their caregivers), while also satisfying the different requirements of commercial (providers, payors, investors and the media) and federal (CMS, Veterans Administration, policy-makers, regulators) stakeholders?

  2. How does a small clinical stage company that is fully-focused on research and development establish external relationships that will take time to develop in order to inform the business strategy?

Start with Diligentia: We engage with all stakeholder groups at the start of program development to understand their priorities and to reflect those into fit-for-purpose commercialization strategies and tactical plans. Early stakeholder engagement also leads to formation of long-term relationships that will be instrumental to achieving business success. For lean, resource-efficient clients, Diligentia can also implement strategic initiatives, acting as an extension of your team.

Diligentia invites pre-clinical and clinical stage manufacturers to learn more about our commercial expertise and how, together, we can optimize the value your innovation will deliver to consumers, healthcare systems and society. For more information contact

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