The findings have prompted calls for non-commercial involvement in the development of ‘orphan’ drugs, specifically developed for the treatment of rare conditions.
Researchers at Bangor University and the University of Liverpool conducted the study, which found that companies that market orphan drugs are five times more profitable and have up to 15% higher market value than other drug companies.
The study examined the performance of 86 publicly-listed companies which produce nearly 200 orphan drugs by comparing with 258 matched control companies which are not manufacturers of orphan drugs.
Lead researcher Dyfrig Hughes, professor of pharmacoeconomics at Bangor University, said that while higher prices are to be expected, “our evidence shows that companies are seeing orphan drugs as an opportunity to profit”.
“Investors are seeing this too, as shown by the higher market value of orphan drug companies,” he said.
Companies developing orphan drugs are offered incentives such as 10 years of market exclusivity, but the researchers believe incentives could be better designed, and linked to how much revenue each drug makes. They also believe a distinction should be made between drugs with specific use for one condition and those used in a number of conditions.
One of the costly orphan drugs to hit the headlines here was cystic fibrosis drug Kalydeco. Although the National Centre for Pharmacoeconomics did not recommend funding it, the Government relented to considerable public pressure. It is estimated to cost up to €14,000 per month per patient.