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Generic Competition for Drugs Treating Rare Diseases
Kesselheim, Aaron
Kesselheim, Aaron
Abstract
Prescription drugs are usually very expensive until patents on the brandname product expire, but prices of many older off-patent medicines have risen in recent years in the absence of effective generic competition. In 2015, for example, Turing increased the price of pyrimethamine, a 62-year-old drug to treat toxoplasmosis, by 5000%. More recently, Teva announced that it would price its
generic version of trientine (Syprine), a treatment for a deficiency in copper metabolism, at $18,375 per month — 28 times the list price for the brandname product in 2010.
One common feature of these two cases is that they involve drugs indicated for rare diseases. It has been estimated that over 7,000 rare diseases affect about 10% of Americans, few with effective treatments. In 1983, the Orphan Drug Act created a set of incentives for manufacturers to invest in the development of drugs for rare diseases, including a 7-year period in which the FDA cannot approve generic versions of the drug for the rare disease indication (“orphan drug exclusivity”). Since passage of the act, rare disease drugs have comprised an increasing share of new drug approvals. Between 1994 and 2004, 17% of new drugs had a rare disease indication; the following decade, 25% did.5 However, the prices of new drugs for rare diseases are often set extremely high and may be unaffordable for patients or strain payor resources.6 While manufacturers have justified high prices by pointing to the high cost of new drug development and the small size of rare disease markets, such prices have been tied to reduced adherence.
Like patients with more common diseases, patients with rare diseases benefit from low prices associated with the introduction of generic drugs for their conditions. However, generic drugs are only inexpensive if enough market entrants spark robust price competition. Previous research has found that a single generic competitor leads to reductions in price of about 10-15%, with prices not dropping by more than 50% until there are 4 or more generic manufacturers serving a market.8 Yet nearly one third of eligible drugs lack sufficient generic competition and are therefore at risk for high prices.
Drugs treating rare diseases may be at elevated risk of insufficient generic competition because generic manufacturers may avoid niche markets and prioritize drugs treating more prevalent conditions. To assess this hypothesis, we sought to determine the prevalence of generic availability and patent challenges — two measures of generic competition — among rare disease drugs stratified by measures of market size.