Orphan drug pricing and payer management in the United States: are we approaching the tipping point?

Abstract

The Orphan Drug Act of 1983 paved the way for the development of drugs that treat rare diseases, defined in the United States as those affecting fewer than 200,000 patients. Orphan drugs can cost hundreds of thousands of dollars annually, but insurers have traditionally covered these therapies because the small populations involved did not typically lead to significant cost exposure. Payer sensitivity to the cost of orphan drugs is rising, however, with the accelerated rate of new launches of these agents amid intensified economic pressure. Payers are showing increasing levels of concern and scrutiny about coverage of orphan drugs. A new payer survey conducted between February 2008 and March 2009 provides insights on how payers are managing orphan drugs and the way it is likely to evolve in the future. Survey findings show that the patient share of orphan drug costs is rising and is expected to continue to rise, barring sweeping changes in public health policy. This shift in benefit design could affect patient access to orphan agents and, therefore, drug utilization. Manufacturers will have to invest in research to understand payer impact on the uptake of their orphan drugs in development. They will also benefit from being prepared to develop strategies to ensure patient access to and affordability of their orphan agents.

Figure 1. At What Price (Per Patient Per Year) Does an Orphan Drug “Hit Your Radar Screen”?

Figure 2. Factors Driving Benefit Design or Restrictions for Orphan Agents, in Order of Importance

Figure 3. Restrictions for the Commercial Population for These Drugs

Figure 4. What Is the Average Cost-Sharing for These Drugs for the Common Commerical Plan?