Ultra-orphan drugs: can we afford the price

“High prices for orphan drugs strain families and insurers” – National Public Radio, 17 January 2017 [1]

“Orphan drugs attract rich return for pharmaceuticals” – Financial Times, 20 February 2017 [2]

Headlines such as the above reflect the charged nature of the world of orphan drugs. In 2017, it is estimated that orphan drug sales worldwide will hit US$209 billion and by 2022 constitute 21.4% of all prescription sales (excluding generics). These drugs reportedly have median costs that are 5.5 times higher than those of non-orphan drugs [3]. Ultra-orphan drugs are even more expensive and often offer the only active treatment option available. In general, their safety and efficacy have been established by regulatory bodies before they reach payers’ desks. Thus, the main question facing payers (in a social insurance or private insurance market) is whether they can afford to pay for them.

What does ‘affordability’ mean? It may be defined as a measure of an organization’s ability to pay for a good or service. It describes whether that organization, given limited resources, is ‘able to make such a purchase without unreasonable or unacceptable sacrifices’ [4]. One might then ask, ‘What is a reasonable or acceptable sacrifice?’ It can be viewed as a choice that fair-minded individuals would deem sensible and, therefore, likely accept based on the complex set of values broadly embraced by society. These values underpin the health care, legal, social, and economic systems in which an organization is embedded. When operationalized, they simultaneously lead to different, but interconnected perspectives [5].

Health-care systems (perspective: equitable access to care, regardless of the disease)

Patients with rare diseases often comment that they did not choose to be afflicted with a rare disease and deserve to be treated the same way as those with common diseases. Unlike treatments for rare diseases (e.g. orphan and ultra-orphan drugs), interventions targeting common diseases are, in most cases, available in health systems around the world. Further, often there are multiple options. Equity or fairness is a factor relevant to health systems around the world and could be a consideration in determining whether ultra-orphan drugs should be provided, just like treatments for common diseases [6].

Legal systems (perspective: we are already paying for them)

Over the past decade, health-care systems in Europe, the United States, Canada, and Australia have been providing access to many of the orphan and ultra-orphan drugs on the market, setting a precedent for future therapies [7]. Most have relied on ‘safety net’ programs, which typically offer conditional, time-limited coverage for a particular drug and patient [8]. In general, requests are made by an individual physician on behalf of his/her patient, and eligible drugs comprise those that either failed to receive a positive recommendation through a centralized drug review or have yet to be reviewed by one. These drugs span rare cancer and non-cancer indications, almost all of which are chronically debilitating or life threatening, and they often represent a ‘last chance’ therapy or the only active treatment option. However, they have challenged traditional evidence expectations of review processes. Nonetheless, systems have found ways to make them available. Can we reasonably expect that future therapies will somehow be different enough to be able to break precedent, given that precedence serves as the foundation of most legal systems?

Economic systems (perspective: health systems drive innovation and should continue to do so)

An economic system describes how goods and services are produced, allocated, and distributed within a society. In jurisdictions with some form of socialized health care, public payers represent an important source of capital for innovators, who in this case are the producers of orphan and ultra-orphan drugs. If such payers are unable to afford these drugs, the capital needed in order to meet shareholders’ expectation and continue R&D will be limited. With the most expensive ultra-orphan drug now exceeding one million US dollars per patient per year and more like it in the pipeline, public payers’ fears of long-term sustainability of socialized health care may soon realized. While ‘pay-for-performance’ schemes may help to minimize the consequences of a wrong coverage decision (i.e. poorer health outcomes and wasted resources), they do not address issues of affordability. Innovation policies that leverage the role of public payers in generating the capital required for ongoing interest and investment in therapies for ultra-rare diseases must be formulated. Revenue caps adjusted for risk may be one option.

Social systems (perspective: towards transparent pricing as a necessary condition of true collaboration)

A social system may be defined as a patterned relationship among mutually dependent groups who cooperate to preserve a recognizable whole. While each group has a specific place and role, its relationship with other groups is what makes it active and binds it into reality [9]. This requires trust and accountability among groups, neither of which can be achieved without transparency. In health care, the relevant groups are payers, innovators (companies), health-care providers, and patients. The tensions among them, particularly around the most expensive ultra-orphan drugs, have been well documented. Such tensions are, in part, a result of the lack of transparent pricing. Some have argued that certain companies practice ‘price-gouging’ by setting list prices that have widely been considered unreasonable for their drugs. In reality, payers rarely pay that price. Companies typically offer substantial price discounts specified in confidential contractual agreements, which present no option for transparency unless ‘whistle blowers’ reveal such information. There are exceptions to this, such as the US government purchasing arrangements [10]. Nonetheless, without transparent pricing policies, relationships between payers and companies will remain constrained by a lack of trust.

When the perspectives of each of these systems are layered onto one another and analyzed using systems thinking, the complexity of the affordability question becomes clear. Yes, as the headlines quoted at the beginning (and many others like them) indicate, orphan and particularly ultra-orphan drugs face challenges in today’s health systems. Yes, the potential opportunity costs associated with paying for very expensive treatments are significant. However, conventional ‘silo-based’ thinking is unlikely to yield satisfactory outcomes for any group. If a systems thinking approach is applied to the development of reimbursement policies for these drugs, the question about whether we can afford these drugs should no longer be a relevant one. Instead, pithy though it may sound, it should be ‘can we afford not to?’

Declaration of interest

The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

Additional information

Funding

This work was supported by a New Emerging Team grant from the Canadian Institutes of Health Research on “Promoting Rare Disease Innovations within Sustainable Mechanisms (PRISM).