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Pushback on Rare Drug Prices: Not So Rare After All


Rare Disease Day is a good moment to sound a warning that providers of rare medicines may be the next to land in the hot seat, writes Meg Alexander.

There’s no doubt the “pricing crisis,” has taken a heavy toll on the reputation of the biopharmaceutical industry.  The very industry that strives to improve and save peoples’ lives is at the center of a maelstrom of complaints about affordability and access to medicines.  

I have written and lectured at length about how companies can avoid becoming the next target of newspaper headlines. As medical communities across the world commemorated and organized events around this year's Rare Disease Day, it’s a good moment to sound a warning that providers of rare medicines may be the next to land in the proverbial hot seat.

Over the last two years, price tags on medicines for chronic or infectious diseases have drawn fierce scrutiny. Now, the focus may be shifting to drugs aimed at populations of 200,000 or fewer-the standard definition of rare or “orphan” diseases. The shift comes as the biopharma industry is dramatically boosting innovation in this area. Of the total number of novel drug approvals in 2016, nearly half (nine out of 22) were for rare diseases, according to FDA data.

Medically speaking, the explosion in orphan-designated therapies has led to miraculous results-a hopeful signal for rare disease patients and their families who previously had few options. Yet, our proprietary research shows that negative coverage on the cost of rare medicines has increased nearly five-fold since 2012. Critical news coverage and Congressional letters already prompted one manufacturer to “hit the pause button” on its launch of a new drug.

While the medical advances are inspiring, the era of insulated pricing in rare diseases may be coming to an end. To some, this won’t be surprising. Looking at a slice of the top 100 drugs in the US, consultants at EvaluatePharma determined that the average yearly, per-patient cost for an orphan drug appearing on the list was more than $140,000 in 2016.

What does this mean for patients? The picture is complicated. Many insurance plans are now requiring greater cost-sharing, meaning the additional percentage of costs that patients shoulder after paying their monthly premiums. This leaves some patients in a difficult bind: struggling to afford the medicines they have long-wished to see approved.

Reading about high orphan drug prices, many people don’t realize that drug developers make earnest efforts to get the medicines to patients regardless of insurance status-including, sometimes, giving the therapies away for free. These programs get little attention in the media  – and when they do they are often criticized as a band-aid.

Meanwhile, some members of Congress are investigating possible abuses of the 1983 Orphan Drug Act, designed to incentivize development of drugs for these rare conditions.  Such moves come on the heels of a related trend: chronic disease medicines successfully gaining special “orphan status” and stronger patent protections by showing efficacy in rare conditions, while simultaneously producing blockbuster profits based on their use in chronic diseases.

The headwinds against pricing of rare medicines are particularly forceful in the insurance sector. In research conducted in January by inVentiv Health, insurers representing nearly 145 million covered lives said they anticipate more situations where they will decline coverage when data on rare drug efficacy is “inadequate.” That is a concerning trend when many rare developers are striving to understand and demonstrate progress against the underlying mechanisms of rare diseases.  It begs the question, what will be adequate in the future?

Payers tell us that denying coverage is not a decision they take lightly. Most of them appreciate the need for new therapies tailored to rare diseases.  But they also foresee a high volume of expensive orphan drugs coming to market in the next few years, and a high associated cost burden. In such an environment, several insurers explained that additional pressure to restrict or exclude unproven medications comes from many directions. Politicians are concerned about the total cost of care at state and national levels. And employers tell insurance companies that the viability of their self-funded health plans are in jeopardy because of high monthly payouts for an increasing number of rare disease treatments.  

What does all this signal? A bumpier road ahead for investigational rare medicines racing toward the market. Here are a few tips rare developers should consider.

Cost. Strategic communications can’t cover up a bad pricing decision. When company executives consider pricing options for a new medicine, there’s often a discussion about the range in which it can be priced and get coverage, versus what it should cost. In this environment we advise our clients to consider appropriate prices to get fair return while carefully weighing the cost pressures on other stakeholders – and the need for patients to have access.

Context. All too often, the background discussion of rare diseases in the press is simplified to the list price and the uncommon hallmarks of the condition. Companies must communicate the actual costs patients pay after discounts and financial assistance programs. Further, if developers of rare disease medicines believe insurers have misstated the overall cost burden these products impose on society, then they must present a more accurate picture. Perhaps that includes comparing the cost of these medicines to other care costs we readily pay as society.  

Collaboration. With insurance design changes on the near horizon, rare drug developers must work with advocates to steer patients toward the right plans for their conditions. Developers must also work with government officials to better illuminate the high financial risk and life-saving implications that rare medicines offer for very small patient populations.

I wish I could say time will solve the pricing conundrum. Unfortunately, the opposite may be true. In the area of oncology, we are already seeing hyper-personalized immunotherapies, which are none other than rare disease treatments, and almost always priced accordingly.

Racing to catch up with oncology, hyper-targeted treatments and gene therapies are emerging for cardiovascular illnesses, a spectrum of autoimmune disorders and other disease categories. In the world of precision medicine, “any of our illnesses might be classified as rare diseases,” says Christina Waters, CEO and founder of the nonprofit advocacy organization Rare Science, who talked about drug pricing in a recent interview.

As we share ideas and aspirations on Rare Disease Day, there is so much pioneering medical science that merits admiration-even gratitude. But as medical breakthroughs hurtle ahead, our society will need to consider equally innovative approaches to drug pricing and insurance design to address what may otherwise become an unsustainable system. Somewhere down the road, the very word “rare” should not conjure fears of expense, but rather the small number of diseases we have yet to conquer.

Meg Alexander is Head of Reputation & Risk Management, inVentiv Health.





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