Which was written by James Love and appeared in the January 13, 1997 edition of Marketletter
Letter to the Editor:
James Love in the January 13 Marketletter doubts the accuracy of the Tufts and OTA [Office of Technology Assessment] estimates of the cost of new drug development. His basis for questioning the estimates is the discrepancy he finds between the Tufts/OTA estimate and the average cost of developing an orphan drug, as reflected in data from Orphan Drug Tax Credit payments. The difference in data is easily explained. Clinical trials for orphan drug candidates nearly always involve far fewer patients. The reason, of course, is there are fewer patients available with rare diseases and they are often geographically dispersed. Also, it is clear that FDA [the US Food and Drug Administration] applies a more lenient standard to approval of orphan drugs, in some cases, granting approval on the basis of existing literature.
For these reasons - ie, lower regulatory requirements and smaller clinical studies - the cost of orphan drug development is often substantially less than other new molecular entities. It is not surprising that Love found differences in the cost of development for the two categories of drugs, but the finding should not be used to cast doubt on the Tufts/OTA figure. Love also indicates incorrectly that the source of the Tufts/OTA data was PhRMA. My understanding is that the Tufts study was based on information obtained directly from individual companies on a confidential basis during two years of extensive data gathering.
Jeffrey C Warren
Pharmaceutical Research and Manufacturers of America.
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