Orphan Drugs PoliciesA Suitable Case for Treatment?

Michael Drummond

Centre for Health Economics

University of York, UK

AdrianTowse

Office of Health Economics

London, UK

Outline of Presentation

• Some background

• Clarifying society’s values

• Revising pricing and reimbursement

policies

• Defining research priorities

• Developing joined-up policies

• Conclusions

Some Backgroud

• Current orphan drug policies are unsatisfactory when viewed from almost all perspectives

• Patients find that access to care is sometimes restricted

• Manufacturers, having responded strongly to incentives to conduct research into rare diseases, find that payers are reluctant to pay for the therapies, once developed

• Payers find that most orphan drugs do not justify funding based on standard value for money criteria, but face political problems if they fail to provide funding

Orphan Drugs in the Netherlands Lead to

Debate about Technology Assessment

Differing Academic

Perspectives• On a utilitarian basis, the opportunity cost

of treating rare diseases is too high

(McCabe et al, 2005)

• The notion of ‘social benefit embodied in

current health technology assessment

processes is too narrow (Drummond et al,

2007)

• Manufacturers make ‘excessive profits’

and there are several examples of ‘orphan

drug creep’ (Coté and Keating, 2012)

Clarifying Society’s Values

• Several surveys indicate that the general public would prioritize serious conditions, but would not wish to give priority to a disease just because it was rare

• The largest study, by Desser et al (2010), surveyed a random sample of 1547 Norwegian citizens

• Found that despite a strong general support for statements expressing a desire for equal treatment rights for patients with rare diseases, there was no support for funding rare diseases at the expense of common ones

Issues With Existing Surveys

• Despite the existing surveys, many policy

makers still feel that restricting access to

orphan drugs is politically unacceptable

• Do the surveys sufficiently confront

respondents with the implications of their

responses?

• Tension between the notions of horizontal

and vertical equity

Ways Forward

• Consider asking more questions that explicitly explore trade-offs in the use of health care resources

• Consider asking more direct questions (egshould any funding be specifically earmarked for the treatment of rare diseases? If so, how much?)

• Explore other examples where a premium is paid to allow access to services by a minority group (eg people living in sparsely populated areas)

Revising Pricing and

Reimbursement Policies

• Pricing

• Reimbursement

Pricing Orphan Drugs

• Often claimed that prices are ‘excessive’ and that orphan drugs can be very profitable

• General problems over lack of transparency in drug pricing

• Development cost of orphan drugs is thought to be around 50% of that of a conventional pharmaceutical

• Trend towards ‘value-based pricing’ in many jurisdictions

• Difficult to justify the prices of orphan drugs by value-based approaches, even by using ‘multiple criteria decision analysis (MCDA) techniques to introduce factors for ‘seriousness of condition’ and ‘availability of suitable treatment alternatives’

• Drugs for orphan diseases may also be licensed for other, non-orphan, conditions

• The growth of stratified medicine means that an increasing number of drugs could potentially claim orphan status

Ways Forward

• Consider other approaches for establishing a fair price for orphan drugs (eg cost-plus, or rate-of-return), whilst recognizing the problems of cost attribution and the payment for ‘failures’

• Rate of return on orphan drugs could be based on that from conventional pharmaceuticals under value-based pricing, adjusted for any differences in R&D risk, or commercial risk

• Develop rules for revoking orphan status, based on the profits made, or total sales (in all licensed indications), whilst recognizing the need for incentives to develop orphan indications

Reimbursement of Orphan Drugs

• Orphan drugs challenge current thresholds

of cost-effectiveness

• Because of the difficulties of conducting

clinical trials of the appropriate size or

duration, there is often more uncertainty

over the benefits of therapy

• Countries differ in respect of whether they

have a separate process for reimbursing

orphan drugs

Ways Forward

• Establish data requirements based on reasonable expectations, given the size of the available patient population(Winquist et al, 2012)

• Consider the use of ‘coverage with evidence development’ and ‘pay for performance’ arrangements

• Assess the pros and cons of a separate process, with its own budget cap, for reimbursing orphan drugs, based on:

(i) societal views on the need for funding

(ii) specific analytic requirements for technology assessment, and;

(iii) political perspectives on the wisdom of earmarking funds

Defining Research Priorities

• In several jurisdictions, manufacturers have been given incentives to undertake research into orphan diseases (including subsidies, tax concessions and market exclusivity)

• Manufacturers are then free to respond to the incentives as they see fit

• A recent report lists several hundred untreated rare diseases within the European Union (Orphanet, 2012)

• With the advent of value-based pricing regimes, the existing incentives for research may be tempered by increased uncertainty about pricing and reimbursement

Ways Forward

• Be more explicit about priorities for

treatments among the various untreated

orphan diseases

• Consider new funding mechanisms for

orphan disease research (on the national

and international level)

eg the TB Alliance

Developing Joined-up Policies

• Perhaps the biggest current concern is that the policies for stimulating research and providing research are at odds with one another

• This leads to substantial inefficiency, because resources are invested in the development of treatments that may not be used

• If society would like to have treatments for rare diseases, more coordination is required

Ways Forward

• More public debate about priorities for treatment for rare disease and the implications for research

• More international collaboration on research into rare diseases (eg within the EU)

• Consider developing public-private partnerships for research into rare diseases

• Consider tendering arrangements, or prizes, where the R&D is publicly funded, but the drugs, when developed, would be made available at generic prices

Conclusions

• Current orphan drugs policies are

unsatisfactory and require revision

• Improvements are required in several

areas, including:

- Clarifying society’s values

- Revising pricing and reimbursement policies

- Defining research priorities

- Developing joined-up policies