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The economics of orphan drugs: the case of osteosarcoma treatment

There is still an unmet need for intensified research into health economic evaluation models of orphan drugs. In the first part of the paper some main issues related to the limits of cost-effectiveness in rare diseases are developed. In order to investigate the theoretical aspect in practice, a cost-effectiveness analysis has been performed to a new drug in osteosarcomas.Osteosarcomas are rare tumors: approximately 750 to 900 new cases are diagnosed each year in the United States, of which 400 arise in children and adolescents younger than 20 years of age. In the second part of the paper the cost-effectiveness of mifamurtide as add-on treatment to standard chemotherapy for the high grade resectable non metastatic osteosarcoma, compared to standard chemotherapy alone has been evaluated by using a Markov model. The horizon was lifetime and the perspective of the Italian National Health Service has been applied. The undiscounted results show that the ICER for mifamurtide added on maintenance chemotherapy over maintenance chemotherapy alone is € 32,111per Quality Adjusted Life Year (QALY). When discounting is included, the ICER changes to € 73,151 per QALY. The primary reason that discounting (of the outcomes) has a significant effect on the ICER is that the majority of the treatment costs are incurred within the first two years of the model but the clinical outcomes are obtained throughout the whole time horizon and thus discounting the outcomes (benefits) reduces the QALY difference between the treatments which adversely affects the cost-effectiveness of mifamurtide. The Probabilistic Sensitivity show that at a WTP threshold of €£50,000 around 76.4% of the iterations were below this limit (undiscounted), but only 19.4% when discounted. 19.4% of the iterations were below this limit. However, the value of € 73.151 per QALY gained seems to be relatively low when compared to the ICER of orphan drugs already marketed and reimbursed in Europe.

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Paper provided by Cattaneo University (LIUC) in its series LIUC Papers in Economics with number 265.

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Length: 28 pages
Date of creation: May 2013
Date of revision:
Publication status: Published in LIUC papers, no.265, 2013 - Economia e Impresa 70
Handle: RePEc:liu:liucec:265
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  1. Dyfrig Hughes, 2006. "Rationing of Drugs for Rare Diseases," PharmacoEconomics, Springer Healthcare | Adis, vol. 24(4), pages 315-316.
  2. Bethan George & Anthony Harris & Andrew Mitchell, 2001. "Cost-Effectiveness Analysis and the Consistency of Decision Making: Evidence from Pharmaceutical Reimbursement in Australia (1991 to 1996)," PharmacoEconomics, Springer Healthcare | Adis, vol. 19(11), pages 1103-1109.
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