IDEAS home Printed from
   My bibliography  Save this paper

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.

Suggested Citation

  • Stefano Capri, 2013. "The economics of orphan drugs: the case of osteosarcoma treatment," LIUC Papers in Economics 265, Cattaneo University (LIUC).
  • Handle: RePEc:liu:liucec:265

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Head, Keith & Mayer, Thierry & Ries, John, 2009. "How remote is the offshoring threat?," European Economic Review, Elsevier, vol. 53(4), pages 429-444, May.
    2. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
    3. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact of Outsourcing and High-Technology Capital on Wages: Estimates For the United States, 1979–1990," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 907-940.
    4. Pol Antràs & Luis Garicano & Esteban Rossi-Hansberg, 2006. "Offshoring in a Knowledge Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 121(1), pages 31-77.
    5. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    6. Crinò, Rosario, 2010. "Employment effects of service offshoring: Evidence from matched firms," Economics Letters, Elsevier, vol. 107(2), pages 253-256, May.
    7. David Hummels & Rasmus J?rgensen & Jakob Munch & Chong Xiang, 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," American Economic Review, American Economic Association, vol. 104(6), pages 1597-1629, June.
    8. Oecd, 2005. "Potential Offshoring of ICT-intensive Using Occupations," OECD Digital Economy Papers 91, OECD Publishing.
    9. Anna M. Falzoni & Lucia Tajoli, 2011. "Offshoring and the Skill Composition of Employment in the Italian Manufacturing Industries," Rivista di Politica Economica, SIPI Spa, issue 1, pages 121-153, January-M.
    10. Jagdish Bhagwati & Arvind Panagariya, 2004. "The Muddles over Outsourcing," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 93-114, Fall.
    11. Paul A. Samuelson, 2004. "Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 135-146, Summer.
    12. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-1997, December.
    13. Rosario Crinò, 2009. "Offshoring, Multinationals And Labour Market: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(2), pages 197-249, April.
    14. Jacob Funk Kirkegaard, 2007. "Offshoring, Outsourcing, and Production Relocation—Labor-Market Effects in the OECD Countries and Developing Asia," Working Paper Series WP07-2, Peterson Institute for International Economics.
    15. Peter D. Ørberg Jensen & Jacob Funk Kirkegaard & Nicolai Søndergaard Laugesen, 2006. "Offshoring in Europe—Evidence of a Two-Way Street from Denmark," Working Paper Series WP06-3, Peterson Institute for International Economics.
    16. Anna Maria Falzoni & Alessandra Venturini & Claudia Villosio, 2011. "Skilled and unskilled wage dynamics in Italy in the 1990s: changes in individual characteristics, institutions, trade and technology," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(4), pages 441-463.
    17. Alexander Hijzen & Mauro Pisu & Richard Upward & Peter W. Wright, 2011. "Employment, job turnover, and trade in producer services: UK firm-level evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 44(3), pages 1020-1043, August.
    18. repec:hrv:faseco:4784031 is not listed on IDEAS
    19. Rosario Crinò, 2010. "Service Offshoring and White-Collar Employment," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 595-632.
    20. James Markusen & Bridget Strand, 2008. "Offshoring of Business Services in Small Open Economies: Toward a General-Equilibrium Modeling Approach," Journal of Industry, Competition and Trade, Springer, vol. 8(3), pages 231-246, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:liu:liucec:265. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laura Ballestra). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.