Orphan Drugs Offer Larger Health Gains but Less Favorable Cost-effectiveness than Non-orphan Drugs

J Gen Intern Med. 2020 Sep;35(9):2629-2636. doi: 10.1007/s11606-020-05805-2. Epub 2020 Apr 13.


Background: Orphan drugs offer important therapeutic options to patients suffering from rare conditions, but are typically considerably more expensive than non-orphan drugs, leading to questions about their cost-effectiveness.

Objective: To compare the value of orphan and non-orphan drugs approved by the FDA from 1999 through 2015.

Design: We searched the PubMed database to identify estimates of incremental health gains (measured in quality-adjusted life-years, or QALYs) and incremental costs that were associated with orphan and non-orphan drugs compared with preexisting care. We excluded pharmaceutical industry-funded studies from the dataset. When a drug was approved for multiple indications, we considered each drug-indication pair separately. We then compared incremental QALY gains, incremental costs, and incremental cost-effectiveness ratios for orphan and non-orphan drugs using the Mann-Whitney U (MWU) test (to compare median values of the different distributions) and the Kolmogorov-Smirnov (KS) test (to compare the shape of different distributions).

Results: We identified estimates for 49 orphan drug-indication pairs, and for 169 non-orphan drug-indication pairs. We found that orphan drug-indication pairs offered larger median incremental health gains than non-orphan drug-indication pairs (0.25 vs. 0.05 QALYs; MWU p = 0.0093, KS p = 0.02), but were associated with substantially higher costs ($47,652 vs. $2870; MWU p < 0.001, KS p < 0.001) and less favorable cost-effectiveness ($276,288 vs. $100,360 per QALY gained; MWU p = 0.0068, KS p = 0.009).

Conclusions: Our study suggests that orphan drugs often offer larger health gains than non-orphan drugs, but due to their substantially higher costs they tend to be less cost-effective than non-orphan drugs. Our findings highlight the challenge faced by health care payers to provide patients appropriate access to orphan drugs while achieving value from drug spending.

Keywords: access; cost-effectiveness; managed care; orphan drugs; rare disease.

MeSH terms

  • Cost-Benefit Analysis
  • Humans
  • Orphan Drug Production*
  • Quality-Adjusted Life Years