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The growing ranks of FDA-approved orphan drugs for rare diseases have saved and improved many lives. But the high-priced drugs are also a major cost burden.
Orphan drugs are for rare diseases, but they are becoming a common cost and pharmaceutical management challenge for payers, Magellan Rx Management executives explained at a session on rare diseases at AMCP Nexus 2021 in Denver.
Favorable tax treatment, lack of FDA user fees, federal research grants and market exclusivity rules have made it attractive for companies to developing orphan drugs, explained Yuqian Liu, Pharm.D., director, specialty clinical solutions at Magellan Rx Management. In the United States, orphan drugs are primarily defined as medications for diseases affecting less than 200,000 people.
Liu shared an assortment of facts and figures illuminating the growth in both the number and cost of orphan drugs. Liu explained the same drug may be given orphan drug status by the FDA for several diseases. Conversely, a rare disease may have many orphan drugs approved for this treatment. “We have rare diseases that are getting crowded with products,” she said, citing hemophilia as an example. Liu said there are 30 orphan drug products approved for the disease.
The number of drugs designated as orphan drug by the FDA grew from 132 in 2004 to 335 in 2018. Liu shared pipeline data showing that 33% of applications submitted to the FDA are for orphan drugs and 35% of drugs in phase 3 trials are for orphan drugs. In 2019, the FDA approved 25 new orphan drugs, which accounted for 52% of all approvals, Liu said.
Many of the orphan drugs have high prices, and Liu said the cumulative effect is a major cost burden on payers. She also illustrated the cost burden of drugs for particular diseases for a hypothetical health plan with a million members. For example, such a plan could expect to have about 15 members with hereditary angioedema that would, as a group, cost the plan $400,000 in drug costs annually. A million-member plan could expect to have about 100 members with hemophilia with a drug cost of $300,000. But Liu also noted that plans will see some variation in the patient population with rare diseases. A plan within a region with a center for excellence for hemophilia might, for example, have more than the typical number of people with hemophilia in its membership.
Liu and her colleague, Erin Ventura, Pharm.D., manager, specialty clinical programs at Magellan Rx, also spoke about how plans are attempting to rein in their burgeoning orphan drug costs. Ventura discussed some of the difficulties, which include the absence of treatment guidelines commonly developed for more common disease as such as diabetes and coronary heart disease, and off-label use for the rare diseases that don’t have FDA-approved drugs. Notwithstanding the increasing approved rugs for orphan diseases, 95% of rare diseases don’t have an FDA-approved drug, Ventura noted. Another obstacle is the lack of competition, which means many common formulary strategies can’t be applied.
Ventura and Liu said experts are often crucial to making formulary and coverage decisions when there is limited data go on.
“There is no one-size-fits-all,” said Liu. “Every drug that comes to market is a little bit different. We look at the specific clinical trial that led to the approval of the product. And right now, the process in the payer space is that we also look for guidance from the providers in our network, the key opinion leaders who out there, the world-renowned people who are doing the research and who are actually using these drugs to treat patients every day. They are the ones we look to for guidance.”
Ventura sketched comprehensive prior authorization and enhanced utilization strategies for orphan drugs. She said combining utilization management with supportive care management is one way to achieve good outcomes.