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Owen Marks, Omgen, has extensive experience and expertise in rare disease and gene therapy product launch strategies. Owen shares his insights into the complexities of pricing considerations when looking at generic medicines versus those for rare diseases

For those working in rare disease, pricing remains one of the most uncomfortable topics to discuss openly. It is emotionally charged, frequently misunderstood and too easily reduced to soundbites that obscure more than they illuminate. Yet if we are serious about improving access for patients with rare conditions, not just today, but for the decades ahead, we must be prepared to engage honestly with the economic realities that underpin innovation.

In my previous article, I argued that sustainability in rare disease medicine launches is not a corporate convenience, but a moral and systemic necessity. This follow-up explores one of the most persistent misconceptions undermining that sustainability.  This is the belief that rare disease medicines could, or should, be priced like generics, or that governments could realistically develop and provide them at scale instead.

Neither position stands up to scrutiny. And if we persist with them, patients will ultimately pay the price.

The fixed-cost reality of rare disease development

At the heart of the misunderstanding lies a basic economic truth: rare disease drug development is dominated by fixed costs, not variable costs.

Whether a medicine treats 50 patients or five million, the overwhelming majority of costs are incurred long before the first patient is treated. Discovery research, pre-clinical work, manufacturing scale-up, toxicology studies, clinical trials, regulatory submissions and post-approval commitments all demand investment years ahead of any revenue.

Industry analyses consistently estimate the average cost of developing a new medicine at £1–2 billion, once failures are included. Rare disease programmes do not escape this reality. In many cases, they face higher costs per patient due to complex biology, fragmented populations, bespoke trial designs and limited clinical infrastructure.

When these fixed costs are spread across hundreds, sometimes only dozens, of patients globally, the economics are fundamentally different from those of common conditions. No amount of goodwill can change that arithmetic.

Why marginal-cost logic fails in rare disease

One of the most frequently cited arguments against rare disease pricing is deceptively simple: “It only costs a few pounds to manufacture each dose.”

While this may be true for some small, non-biologic molecules, it is largely irrelevant to the total enterprise of bringing a medicine from laboratory to patient. Manufacturing cost reflects marginal cost, not total cost. In rare disease, marginal costs are a rounding error compared with the investment required to create, approve and sustain a therapy over time.

Even after approval, companies remain responsible for funding long-term pharmacovigilance programmes:

• disease registries to understand real-world outcomes
• ongoing manufacturing readiness for very small batch sizes
• medical education to support diagnosis in often under-recognised conditions
• continuous regulatory compliance across multiple jurisdictions

None of these obligations disappear once a medicine reaches the market. Pricing that reflects manufacturing cost alone ignores the ecosystem required to deliver safe, effective treatment to patients over decades.

If marginal-cost pricing feels attractive, it is often because the costs, risks and failures that made the medicine possible are assumed to have been absorbed elsewhere.

Why governments cannot simply “do it themselves”

It is sometimes argued that governments, rather than industry, should develop rare disease medicines, removing profit motives altogether. While appealing in theory, this position does not withstand practical examination.

Public and academic research plays a vital role in early discovery. But late-stage development, global regulatory navigation, manufacturing at scale and long-term supply require infrastructure, capital and risk tolerance that governments have historically struggled to sustain.

To put this into context, fewer than 10% of medicines that enter clinical trials ultimately reach approval. Governments would therefore need to fund not only the small number of successes, but also the roughly 90% of programmes that fail. Given that a single failed Phase III trial can cost hundreds of millions of pounds, this represents a financial burden that public funding has neither historically borne, nor is likely to be able to sustain.

No health system, particularly one already under acute financial strain, has demonstrated the ability to absorb that level of risk repeatedly, across hundreds of rare conditions, while also funding frontline care.  The truth is that without private capital and commercial incentives, most rare disease medicines would simply never be developed.

The hidden costs that patients never see

Rare disease medicines do not exist in isolation. They require systems around them to function.

Many patients endure a diagnostic odyssey lasting years or even decades. Accelerating diagnosis requires sustained investment in clinician education, testing infrastructure, specialist centres and coordinated care pathways.

Once treatment begins, rare disease patients often need specialist monitoring, long-term follow-up, data collection to refine understanding of benefit and risk and care coordination across highly specialised services.

These activities are not optional extras. They are essential to delivering safe, effective care and they must be funded somehow.  How these costs are treated today determines whether tomorrow’s medicines are ever pursued.

The signal we send — and who is listening

Perhaps the most dangerous consequence of unsustainably low pricing is not its immediate impact but the signal it sends.

Every pricing decision becomes a precedent. When manufacturers are pressured into agreements that fail to reflect long-term sustainability, the message received is clear: this market does not value rare disease innovation.

We are already seeing the effects. Companies increasingly delay or avoid launches in markets perceived as unpredictable or hostile. The UK, once a leader in early access, risks becoming a “late-launch” or “no-launch” country for rare disease therapies.

Patients may never see the medicines that are not developed but they are no less real for that.

Overpricing perceptions, value extraction and long-term sustainability

A recurring point of contention in public and political discourse is the concern that rare disease medicines are “overpriced,” and that high list prices are evidence of corporate profiteering. There is no doubt that outlier cases exist where prices appear strikingly high in isolation, particularly where benefit is modest or populations are larger than “ultra-rare.”

However, isolated outliers should not be mistaken for systemic malpractice. The economics of rare disease medicine differ fundamentally from many conventional healthcare segments because of high fixed development costs, very low patient numbers, and substantial ongoing evidence and safety obligations, realities that are fundamentally incompatible with marginal-cost pricing.

This is precisely why wealthier health systems such as the UK rely on expert value-assessment bodies rather than list price alone. The National Institute for Health and Care Excellence (NICE) evaluates the relationship between cost and benefit using cost-per-QALY (quality-adjusted life year) analysis, drawing on clinical, patient and economic expertise and subjecting new medicines to a uniquely rigorous and transparent appraisal process.

For over two decades, NICE operated within a reference range of £20,000–£30,000 per QALY. Following extensive consultation, this was increased to £25,000–£35,000 per QALY in 2025. This was the first substantive adjustment since NICE’s inception, reflecting inflationary pressures and the increasing complexity of modern innovation. Importantly, these thresholds guide deliberation rather than guarantee acceptance at the upper bound; they are negotiated, evidence-based ceilings designed to balance taxpayer value with patient access.

By contrast, common claims that “existing NHS care delivers health gains at around £15,000 per QALY” rest on highly aggregated, system-level estimates of average marginal productivity. While informative at a conceptual level, such figures necessarily mask enormous variation across services, pathways, and patient populations, and are derived using methods far less granular than those applied to new medicines. Treating this crude average as a like-for-like comparator to NICE-appraised thresholds risks overstating the certainty of displaced health and introduces a structural bias against therapies subjected to far more stringent evidentiary scrutiny.

Unchecked use of negotiating power can therefore have unintended consequences. If high-income economies seek to extract ever-lower prices by invoking imprecise opportunity-cost benchmarks, without equivalent scrutiny of incumbent spending, the result may be delayed launches, reduced local investment and paradoxically worse access for patients over time. This risk has been increasingly recognised in UK life-sciences policy discussions and underscores the need for a more balanced, system-wide approach to value and sustainability.

Reframing price as continuity, not profiteering

None of this is an argument for unchecked pricing, nor for ignoring affordability within the NHS. It is an argument for precision in how we think, negotiate and communicate.

In rare disease, price should be understood as a mechanism that enables:

• continued investment in new therapies
• long-term supply and safety monitoring
• a viable pathway for future innovation

When pricing becomes a blunt instrument used solely to extract short-term concessions, it undermines the very system patients depend upon.

A shared responsibility

Patients with rare diseases have waited too long for progress to allow us the comfort of easy narratives. Industry, government, clinicians and patient groups all share responsibility for building models that work ethically, clinically and economically.

Avoiding uncomfortable truths may feel compassionate, but it is honesty, not comfort, that ultimately serves patients. If we want rare disease innovation to continue we must be brave enough to explain why it costs what it does and wise enough to design systems that make those costs sustainable for everyone.

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