Economics and Politics in Rare Disease Treatments: The Rising Cost and Challenges
Orphan Drug Boom but at a High Cost
Rare diseases affect small groups of people, but they often need lifesaving drugs called orphan drugs which can be incredibly expensive and hard to develop. Recent policy changes are shaping how these drugs are developed, priced and approved in the U.S. In 2024, 72% of all new drugs approved were for rare diseases; a big jump from just 51% in 2019. While this shows increased focus on helping rare disease patients, there’s a catch. The average cost of these drugs is now over $370,000 per year per patient. This puts serious pressure on health systems and families who need access to these treatments.
Loopholes for Orphan Drugs
In July 2025, the One Big Beautiful Bill Act (OBBBA) was signed, giving expanded protection to orphan drugs under Medicare’s price negotiation system. Now, if a drug is only approved for rare diseases (even multiple ones), it is exempt from price negotiation unless it gets approved for more common uses later. Critics warn this could cost Medicare $5 billion over the next 10 years as companies may avoid expanding uses of their drugs just to keep prices high.
Drug Pricing Plan: “Match the Lowest”
In May 2025, an executive order was signed to lower U.S. drug prices by matching the lowest prices paid by other developed countries. This move could cut costs by 30–80%, but for now, it applies only to Medicaid and new drugs; not to everyone. Drug companies were given 60 days to comply or face penalties like import restrictions.
Innovation is Slowing in Rare Diseases
While approvals are up, investment in cutting-edge solutions is down. Gene therapy, a major hope for rare disease cure, has seen funding collapse from $8.2 billion in 2021 to just $1.4 billion in 2024. Many biotech companies are redirecting resources to high-profit sectors like weight-loss drugs, leaving rare disease research once again underfunded.
NIH Funding Cuts Add to the Pressure
The National Institutes of Health (NIH), historically the backbone of rare disease research, has faced budget tightening. Inflation-adjusted NIH funding for rare disease programs has dropped by double digits since 2022, with some grants delayed or canceled entirely. For ultra-rare conditions that rely almost entirely on NIH-backed early-stage research, this creates a “valley of death” where promising discoveries stall before reaching clinical trials.
Global Research Partnerships Under Strain
New national security-driven restrictions on NIH grants are tightening the rules for U.S.-based scientists collaborating internationally. This is a significant setback to rare disease research, which often relies on global patient pools to gather meaningful data.
FDA Rejections Heighten Patient Anxiety
The Food and Drug Administration (FDA) recently rejected a treatment for Barth syndrome, an ultra-rare and often fatal disease, citing insufficient clinical evidence, despite backing from expert reviewers. For rare diseases, where recruiting large trial populations is nearly impossible, such decisions can mean years of delay or the end of hope for patients.
The Bottom Line
More orphan drugs are reaching patients, but prices remain staggering.
Loopholes may encourage companies to keep prices high by limiting drug indications.
Funding for transformative therapies like gene editing is drying up.
NIH budget cuts are choking early-stage rare disease research.
Global collaboration is harder, which slows discovery.
Regulatory hurdles risk blocking treatments even when there is a strong patient need.
While some policies are trying to make drugs cheaper, others are creating barriers for innovation and access, especially for people living with rare diseases. Balancing cost control, patient needs, and scientific progress will be crucial in the years to come.
