THE BURNED OVER DISTRICT

On the face of it, the orphan drug priority review was meant to spur pharmaceutical companies to continue necessary but unprofitable drug production. Instead Big Pharma has used it as a legal means to jack up prices sky high.

An old steroid treatment, long available outside the United States, received approval this week for a rare disease that afflicts about 15,000 Americans. Though not previously approved in the United States, the drug, deflazacort, has for years been available to patients suffering from the devastating and fatal disease Duchenne muscular dystrophy; families can import it from abroad for about $1,200 per year on average.

The new list price for the drug? $89,000 a year.

After rebates and discounts, the net price will be $54,000 a year, said Marathon Pharmaceuticals Chief Financial Officer Babar Ghias in an interview.

The company sought approval for deflazacort as an “orphan drug,” a special approval pathway intended to encourage the development of drugs for very rare diseases. With orphan designation, the company gets seven years of exclusive rights to sell the drug in the U.S., even though it has long been available as a generic in other countries.

The company also scored a valuable “priority review” voucher, essentially a ticket that it can use to get a future drug reviewed by regulators faster — or that it can sell to another company for hundreds of millions of dollars.

In theory, these vouchers exist for a good reason: Regulators want to encourage companies to invest in developing drugs for rare diseases that afflict children. But when old drugs already being used for a disease go through the approval process to earn a voucher — and a high price — it has raised questions about whether the incentives are being misapplied.

“It seems like it’s yet another example of gaming the system,” said Aaron Kesselheim, an associate professor of medicine at Harvard Medical School. “How many examples of this do we have to see before we can start to rethink the priority review voucher as a means of incentivizing innovation? This also seems to be another example of gaming the Orphan Drug Act, which was intended to try and encourage research into new therapeutic entities for people who have rare diseases — and it doesn’t seem like this is that.”

The greed of pharmaceutical companies is extraordinary in the ease with which it can turn a well intentioned law into just another paving brick on the road to Hell.