According to a 2015 report published by EvaluatePharma, the economics of orphan drugs mirrors the economics of the pharmaceutical market as a whole but has a few very large differences. The market for orphan drugs is by definition very small, but while the customer base is drastically smaller the cost of research and development is very much the same as for non orphan drugs. This, the producers have claimed, causes them to charge extremely high amounts for treatment, sometimes as high as $700,000 a year, as in the case of Spinraza (Biogen), FDA approved in December 2016 for spinal muscular atrophy, placing a large amount of stress on insurance companies and patients. An analysis of 12 orphan drugs that were approved in the US between 1990 and 2000 estimated a price reduction of on average 50% upon loss of marketing exclusivity, with a range of price reductions from 14% to 95%.
Governments have implemented steps to reduce high research and development cost with subsidies and other forms of financial assistance. The largest assistance are tax breaks which can be as high as 50% of research and development costs. Orphan drug manufacturers are also able to take advantage of the small customer base to cut cost on clinical trials due to the small number of cases to have smaller trials which reduces cost. These smaller clinical trials also allow orphan drugs to move to market faster as the average time to receive FDA approval for an orphan drug is 10 months compared to 13 months for non-orphan drugs. This is especially true in the market for cancer drugs, as a 2011 study found that between 2004 and 2010 orphan drug trials were more likely to be smaller and less randomized than their non-orphan counterparts, but still had a higher FDA approval rate, with 15 orphan cancer drugs being approved, while only 12 non-orphan drugs were approved. This allows manufactures to get cost to the point that it is economically feasible to produce these treatments. The subsidies can total up to $30 million per fiscal year in the United States alone.
By 2015, industry analysts and academic researchers agreed, that the sky-high price of orphan drugs, such as eculizumab, was not related to research, development and manufacturing costs. Their price is arbitrary and they have become more profitable than traditional medicines.