U of C researchers take aim at high cost of ‘orphan drugs’

Haley Chisholm has tried everything when it comes to treating her C3 glomerulopathy, a condition she’s had since she was about 10.

The condition, which causes chronic inflammation in the filters in the kidneys, has worsened as the 19-year-old from High River grew older.

She’s gone from taking a couple pills a day to an intravenous medication and nothing has worked. When Chisholm was in Grade 12, her doctor said her kidneys were eventually going to fail if a suitable treatment wasn’t found.

“We had to kind of find a way to try something else out,” Chisholm said.

About two years ago, she was introduced to a drug called Soliris, with the hope it could be the answer. But with a price tag of about $700,000, her family simply couldn’t afford it themselves.

“We weren’t able to get funding from Alberta Health, we weren’t able to get funding from the company. We kept trying and trying,” Chisholm said. “We went through a bunch of insurance companies. They weren’t able to help us out.”

Drugs used to treat rare disorders can be costly, but researchers at the University of Calgary are offering a new approach they feel could drive prices down and still keep pharmaceutical companies happy.

Orphan drugs, as they are called, are often so expensive because they’re needed by relatively few people and developed by few companies, according to Kent Fellows of U of C’s School of Public Policy.

But the cost of developing any drug is high, regardless of how much demand for it exists, due to lab tests, randomized trials, regulatory approvals and marketing expenses.

“For most of those costs, it doesn’t matter how many patients you’re treating. They don’t scale with the patient, that’s just sort of a fixed cost of getting the drug developed and approved,” said Fellows, who co-authored the report, released Wednesday, along with researchers Daniel Dutton and Aidan Hollis.

“But then for orphan drugs you’re splitting those across a very small population base. So high cost, small population, you end up with a very, very high cost per patient. This becomes a problem for drug plans, whether it’s a public insurer or a private insurer.”

Because a single company often has the monopoly over an orphan drug it has developed, prices can be even more expensive, said Fellows.

He said insurers have no mechanism to bargain with drug manufacturers over the price, leaving them to decide based on a costeffectiveness analysis whether the benefit to the patient outweighs the cost.

Fellows said regulators in recent cases have ordered companies to lower their drug prices, leading to lengthy court battles. But regulatory measures borrowed from other industries, like pipelines and electricity generation, could help keep prices reasonable through a cost-based pricing approach.

“You look at the costs of producing the good or the service and you charge a price that’s equal to the average cost,” he said.

“The firm gets compensated for the costs that they ’re incurring but nothing more. They’re not able to exercise market power driving that up ... you’re not just letting a monopoly firm charge you whatever price that they want to.”

He said the researchers are hoping the Patent and Medicine Prices Review Board, which reviews the price of all Canadian pharmaceuticals, will consider the idea, one that has translated into similar policies in jurisdictions like the U.K.

“We’re really hoping that by getting this idea out there, it might spur something in policy-makers’ minds to take this a little bit more seriously and hopefully follow the approach that we’re advocating here,” he said.

He acknowledged it might be a tougher sell for pharmaceutical companies, which would no longer be able to raise orphan drug prices to their liking, but said even they could benefit from the proposed system.

“Obviously companies like higher revenues but they also like certainty of revenues.” Fellows said.

“If they come into Canada and the insurers decide not to cover the drug, they’re not making any return here, they’re not making any revenues in Canada. If they were pricing on cost of service, they know they’re going to recoup at least Canada’s share of their total development costs.”

Chisholm is now taking a trial drug and has about a year to show it is helping her condition improve.

“If not, then I guess I have no other option because the Soliris seems to be out of the question,” she said.

“I’m going to university next year and if I could get better and be off all my other drugs, that would change my life and be so much easier for me.

“I’m at a point right now where I’m just sitting back waiting for something to happen.”