The median annual list price for newly launched pharmaceuticals in the United States has more than doubled over the past four years, reaching over $370,000 in 2024 compared to $180,000 in 2021, according to a Reuters analysis of 45 medicines. This sharp increase coincides with a significant shift in the pharmaceutical industry toward developing treatments for rare diseases, which typically command premium prices.
Rare Disease Focus Driving Price Increases
The percentage of drugs launched for orphan diseases—conditions affecting fewer than 200,000 Americans—rose to 72% in 2024 from 51% in 2019, according to data from the Iqvia Institute for Human Data Science. Over 40% of these orphan drug launches were specifically for cancer treatment.
This trend reflects the pharmaceutical industry's strategic pivot toward rare disease markets, where scientific advances in genomics have opened new treatment possibilities and regulatory incentives provide longer market exclusivity periods.
The most expensive new therapy launched in 2024 is Lenmeldy, developed by Orchard Therapeutics for metachromatic leukodystrophy, a rare genetic disorder. This gene therapy comes with a staggering price tag of $4.25 million for a one-time treatment. Another notable high-priced treatment is Zevra Therapeutics' Miplyffa for Niemann-Pick disease type C, which costs over $1 million annually.
Scientific Advances and Market Dynamics
Decoding of the human genome, completed in 2003, has enabled better understanding of the genetic and biological foundations of rare diseases, leading to significant advancements in targeted therapies. Pharmaceutical companies are leveraging these scientific breakthroughs to develop highly specialized treatments.
William Padula, professor of pharmaceutical and health economics at the University of Southern California, explained the economic rationale: "For years we've had pretty good technology and solutions for a lot of the common conditions that many people have, like high cholesterol, high blood pressure, and managing the more common forms of cancer. For rare diseases, there are fewer patients and therefore the price per course of treatment is going to go up."
Despite the high prices, Boston Consulting Group projects that the 2024 crop of drug launches will reach peak annual sales of $60 billion, significantly lower than past averages due to the absence of mega-blockbusters—drugs with annual sales above $10 billion.
Regulatory Landscape and Industry Response
The FDA approved 57 novel drugs last year, including seven new cell and gene therapies at the agency's biologic division. This robust pipeline of innovative therapies continues despite growing concerns about drug pricing.
The price increases have occurred even as the U.S. government attempts to rein in prescription costs. Drug pricing has become a populist issue, with calls for manufacturers to bring U.S. prices in line with other high-income nations that pay substantially less for the same medications.
The Pharmaceutical Research and Manufacturers of America, the leading industry trade group, defends these pricing strategies, arguing that focusing on list prices for drugs that treat rare diseases "misses the broader context of how these drugs contribute to overall prescription drug spending, healthcare costs and value to patients."
Access Challenges and Potential Solutions
Even when covered by insurance, these high-priced medications can remain out of reach for many patients due to substantial deductibles and co-insurance requirements.
Tinglong Dai, a professor at Johns Hopkins University's Carey Business School and an expert in healthcare analytics, suggests alternative pricing models could help address affordability issues. He advocates for a "Netflix model" of pricing where deals are facilitated between states and drug manufacturers to set prices, or approaches similar to European systems where panels of patients, experts, policymakers, and insurance companies collectively determine pricing.
"Right now, being covered doesn't mean you get it. You have to pay a lot in deductibles and insurance," Dai explained, adding that the U.S. needs a better pre-authorization process. "We make it unnecessarily complicated."
Future Outlook
Pharmaceutical companies maintain that their new medicines offer value beyond the price tag, including potential cost savings from fewer emergency room visits and hospital stays. With some gene therapies, there's even the possibility of a cure rather than ongoing treatment.
Industry experts also note that the current GLP-1 boom, exemplified by drugs like Ozempic, may be influencing research priorities. "Everyone is searching for the next Ozempic," said Dai, pointing out that the drug was developed for diabetes but now has much wider applications. He suggests other niche drugs could follow a similar path, with "spillway effects" that expand their use to treat additional conditions.
As scientific capabilities continue to advance, particularly in genomics and precision medicine, the trend toward developing high-priced treatments for rare diseases shows no signs of slowing—at least until there is progress in lowering the cost of developing new therapies or significant policy changes to address drug pricing.
