Children's Health & Safety Association

Issue 43: July 2018

Thursday, 15 November 2012 11:33

Children with Rare Diseases Will Receive Access to New Drugs and Treatment but at WHAT COST! Feature Story

Written by 
"Rare diseases affect about 1 in 12 people in Canada.  Many of these diseases have serious consequences for patients and their families and most have no treatment.  It is estimated that 80% of rare diseases are genetic, and 75% involve children."  

Excerpt - Orphanet Canada 2012

On October 3, 2012, the Harper Government proposed a regulatory framework for 2.8 million people with rare diseases approving 'orphan drugs', and providing 'Orphanet', a database reference portal that contains new tools for gathering and sharing information, registration of clinical trials, and facilitating patient participation.

The drugs used to treat these rare diseases are called 'orphan drugs' and they affect a very small number of patients - typically less than 5 in 10,000 persons. It is commercially unfeasible for drug companies to develop and market orphan drugs, therefore regulated policies and methodology towards the development, evaluation, and approval were essential in addressing these vey important issues.

Currently, orphan drugs are approved in Canada through the same regulatory pathways as other drugs but these changes do not reflect or address the pricing or reimbursement of orphan drugs.

"Those affected by rare diseases are also more psychologically, socially, economically and culturally vulnerable.  Due to the lack of sufficient scientific and medical knowledge, many patients are not diagnosed. Their disease remains unidentified. These are the people who suffer the most from difficulties in receiving appropriate support."    

Excerpt - Orphanet Canada 2012

A rare disease affects 1 person out of approximately 2,000 people and there are over 7,000 rare diseases, which for the most are genetically linked. Children that have a rare disease face considerable challenges. Receiving a correct diagnosis can be a painful and arduous process, and the course to obtain relevant information, proper treatment, and medications is infused with a tremendous amount of anxiety, stress, and suffering for the entire family.

The Honourable Leona Aglukkaq, Minister of Health stated, "Too often, Canadians dealing with rare diseases are faced with difficulties in accessing the information and medication they need. I am pleased to announce that our Government will introduce a new approach that will better support the development and authorization of drugs for rare diseases and launch a new Web portal to assist patients in finding the information and services they need."

The key focus of this new approach will be the sharing of information and collaboration on a global platform towards the development and regulation of orphan drugs, which will enable Canadian scientists and regulators to participate with trusted counterparts to utilize their resources and thereby benefit Canadian patients. With the support from the Canadian Institute of Health Research (CIHR), 'Orphanet', coordinated from France and led by an expanding consortium of over 35 countries, will be the world's online reference portal for information on rare diseases and its comprehensive database of information contributes to improvements in the diagnosis, care, and treatment of patients with rare diseases.

"With this launch, Canada becomes the first country from North and South America to participate in this exciting initiative," said Dr. Paul Lasko, Scientific Director of the CIHR Institute of Genetics", and he added, "There are many Canadian families who are affected by one of the several thousand different rare diseases. Through this one user-friendly site, families will now benefit from services such as specialized clinics, medical laboratories, patient organizations, research projects, biobanks, clinical trials, and registries."

Orphanet is in the final design stage and will soon be targeted for public consultation. Orphanet website provides access to the following services:

  • Inventory, classification and encyclopaedia of rare diseases
  • Assistance-to-diagnosis tool
  • Emergency guidelines
  • Inventory of Orphan drugs
  • Directory of medical laboratories providing diagnostic tests
  • Directory of expert centres
  • Directory of ongoing research projects, clinical trials, registries and biobanks
  • Directory of patient organizations
  • Directory of professionals and institutions
  • Newsletter
  • Collection of thematic reports: Orphanet Reports Series


Steven Simoens, Professor of Faculty of Pharmaceutical Sciences at the Research Centre for Pharmaceutical Care and Pharmaco-economics in Belgium stated in the 'Orphanet Journal of Rare Diseases' published in June 2011, that pricing and reimbursement of orphan drugs are a high priority issue for policy makers, legislators, health care professionals, industry leaders, academics and patients. While drug pricing, in general, follows the same economic logic, the monopolistic power of orphan drugs results in high prices for the reasons listed below:

  • Orphan drugs benefit from a period of marketing exclusivity
  • Few alternative health technologies are available
  • Third-party payers and patients have limited negotiating power
  • Manufacturers attempt to maximise orphan drug prices within the constraints of domestic pricing and reimbursement policies; and
  • Substantial Research and Development costs need to be recouped from a small number of patients.

A clear and evidence-based approach towards pricing and reimbursement of orphan drugs is essential and needs to specifically target relative effectiveness, cost-effectiveness, cost structure, and economic viability of orphan drugs together with an analytical report for pricing and reimbursement decisions.

Monopoly Market on Orphan Drugs

Under the current policy, drug manufacturers have an opportunity to create a monopoly market by splitting up a disease into several sub-diseases. This practice is called 'disease sub-setting' or 'disease stratification' wherein artificial sub-sets of a common disease are created so they can qualify as several rare diseases. Pharmacogenomics and oncology are prime targets for creating a new rare disease.

The monopolistic power granted to orphan drugs results in high prices and although these conditions apply to some orphan drugs, it should be noted that they do not apply to all orphan drugs. Manufacturers have an incentive to 'game the system' by artificially creating monopolistic market conditions.

Disease stratification or disease sub-setting may have many benefits for a manufacturer:

  • The company can benefit from measures to stimulate the development of its products.
  • The company creates a monopolistic market where chronically ill patients receive long-term treatment with its orphan drug.
  • The company incurs lower marketing costs as it needs to reach fewer medical specialists.
  • Marketing exclusivity erases the possibility of 'me-too' competitors.
  • The small market reduces the economic viability for generic drugs.

Another driving force in the pricing of orphan drugs occurs following marketing authorization where regulatory authorities tend to impose expensive post-marketing surveillance programs.

Innovative methods have been proposed for the reimbursement of orphan drugs. Risk-sharing arrangements are strategies where the manufacturer shares the risk with the health care payer and if the product is not effective for a particular patient, the company may lose some or all product revenue, or needs to provide a replacement product. Such an arrangement may require physicians to be trained in the appropriate use of the drug, and necessitate the implementation of a follow up tracking system.

There is a need to assess orphan drugs on an individual basis to determine whether their specific features warrant high prices. This assessment should take into account:

  • Current and planned indications,
  • The existence of alternative health technologies,
  • The total number of patients across registered and off-label indications, and
  • Research and Development costs.

Health care payers could impose a requirement to justify the price based on detailed information about the Research and Development (R&D) costs and return on investment at a global level. This approach would include regular monitoring throughout the product's lifecycle and necessitates that health care payers make a subjective judgement about an appropriate level of return on their investment.

A number of mechanisms to optimise R&D of orphan drugs and to control prices of orphan drugs have been proposed. Auctions of patents have been suggested as a way to reward manufacturers for successfully developing a new orphan drug. Advance purchase commitments entail that the health care payer agrees to pay a specific price for a specified number of units of an orphan drug, thereby guaranteeing a minimum reward for the innovator. Under pay-as-you-go strategies, the health care payer provides additional rewards as a potential drug candidate progresses through the R&D process. Authorities should carefully consider the right incentive strategy for R&D of orphan medicines for rare diseases.

To gain reimbursement, a formal economic evaluation needs to be performed in some, but not all European countries. National authorities tend to demand data on the effectiveness of orphan drugs in a real-world setting rather than on their efficacy in a structured setting. Also, as the cost-effectiveness of an orphan drug is calculated relative to a relevant comparator, there is a need for comparative data, and both factors have implications for the design of patient and disease registries. For orphan drugs that provide a first-in-class therapy for unmet clinical needs, the cost-effectiveness can be calculated based on studies comparing the orphan drug with placebo. For orphan drugs that are marketed in the presence of competitor health technologies, there is a need to compute the cost-effectiveness based on head-to-head studies of the orphan drug relative to a relevant comparator.

Pricing & Reimbursement of Orphan Drugs resourced from http://www.ojrd.com/content/6/1/42

To contact Steven Simoens, This email address is being protected from spambots. You need JavaScript enabled to view it.


 Health care in Canada is a responsibility shared between the federal government and provincial and territorial partners wherein:

  • The role of the federal government is to evaluate and monitor the safety, efficacy and quality of drugs.
  • The federal government regulates, through the Patented Medicines Prices Review Board, the prices of patented drugs to ensure they are not excessive.
  • The provincial and territorial partners are responsible for managing drug formularies -- a list of drugs for which public reimbursement from government drug plans is

Health Products and Food Branch (HPFB) has a Special Access Programme (SAP) that allows health care professionals to gain limited access to drugs that have not been authorised for sale in Canada. Special access can be requested for emergency use if conventional therapies have failed or are unsuitable or unavailable to treat a patient. SAP is not intended to be a mechanism to promote or encourage the early use of therapeutic products where the degree of risk and efficacy may not be known or to circumvent the regular therapeutic product review process, but rather to provide compassionate access to therapeutic products on a case-by-case basis.

The above information was resourced from Christelle Legault, Media Relations Officer of the Communications and Public Affairs Branch of Health Canada on October 12, 2012.

torysTORYS, an international business law firm that provides cross-border services for clients on both sides of the United States and Canada border as well as internationally, made the following statement on Orphan Drugs dated October 5th, 2012.  

"Changes to the Food and Drug Regulations will be required to implement the new regulatory framework. Once proposed regulations are published, the public will have an opportunity to comment before final regulations are in force. Health Canada has previously consulted with stakeholders, including the Canadian Organization for Rare Disorders (CORD), in making its decision to support orphan drug development. At this stage, it is unclear how an orphan drug will be defined in Canada."

While Health Canada is in the process of implementing a new approach to bring orphan drugs to the Canadian market, these changes do not address the pricing or reimbursement of orphan drugs.


The poignantly written excerpt below was resourced from an article titled "Canada's Orphan Drug Policy" published by the 'Canadian Organization for Rare Disorders' (CORD) in 2005.

"The government has an ethical and moral obligation to formulate an orphan drug plan which ensures that Canadian citizens do not have to choose between death and bankruptcy."  

Excerpt from
'Canada's Orphan Drug Policy' 
Canadian Organization of Rare Diseases (CORD) – 2005

"Perhaps the benefit of being one of the last to develop an Orphan Drug Policy allows Canada to incorporate best practices and learn from other countries. To effectively serve Canadians with rare diseases, it is important that a Canadian drug policy address not only research and development and regulatory approval but also affordable access and funding for drug coverage. To these ends, a made-in-Canada orphan drug program must address the roles of the federal and provincial or territorial governments. A national orphan drug plan would assist in ensuring that Canadians with rare diseases have equal access to the Canadian health care system. The government has an ethical and moral obligation to formulate an orphan drug plan which ensures that Canadian citizens do not have to choose between death and bankruptcy."

To obtain more information, please click on the following links:

Orphanet Canada

Canadian Institute of Health Research (CIHR)

CIHR Institute of Genetics (IG)

Canadian Institute for Rare Disorders (CORD)

Health Canada Public Inquiries – please call 1-866-225-0709

Read 132613 times Last modified on Friday, 22 August 2014 19:20


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