Economics orphan drugs

The development of drugs for these diseases, intended for a limited number of patients, often requires considerable research, and is consequently costly. A particular approach of ethical, political and economical problems relevant for development and disposal of orphan drugs is also required. 

In Section VI survey evidence about the response of private investment in R D to changes in economic incentives. Evidence about a number of policies (including R D tax credits, intellectual property, defense procurement, and the Orphan Drug Act) and events suggests that private vaccine development and production is likely to be quite responsive to enhanced incentives (or diminished disincentives), and that expansion of the government s role is likely to crowd out private investment. Conclusions are presented in Section VI. 

Lichtenberg, F., and J. Waldfogel. 2003. Does Misery Love Company Evidence from Pharmaceutical Markets before and after the Orphan Drug Act. National Bureau of Economic Research Working Paper 9750. 

Although classification of orphan drugs may be made along several lines, no single classification has been accepted as universally acceptable. In fact, several classifications have been proposed (Spilker, 1991). This section briefly mentions the criteria on which a classification scheme could be based and describes a simple classification based on economic value combined with medical value. 

An economic classification is one of the most relevant alternative classifications to consider, particularly for companies considering the development of orphan drugs. Five categories of drugs can be described. These are as follows. 

Promote "orphan drug" legislation to encourage development of compounds with insufficient economic potential for unsubsidized development. 

Innovative drugs, particularly orphan drugs, present economic problems for health administrators. The same is true at the other end of the spectrum, for drugs that have been on the market for many years and are out of patent. The original... 

Orphan diseases are those that affect such a small number of patients that the market caimot sustain the cost of research to find treatments. For some time, the agency, the industry and patient support groups had recognised the problem indeed, the FDA worked with various drug firms to find homes for potentially valuable orphan products. Nevertheless, the economics worked against those with rare diseases. 

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