ICER Examines Possible Policies Aimed at Sustaining Future Rare Disease Drug Development

A white paper released this month examines 4 policy proposals that aim to address innovation and affordability in the realm of orphan drug development for rare diseases, including pricing and coverage.

The report was released by the Institute for Clinical and Economic Review (ICER) in collaboration with researchers at NORC at the University of Chicago.

“The Next Generation of Rare Disease Drug Policy: Ensuring Both Innovation and Affordability” does not advocate for any specific solution, ICER said. The white paper is the result of a meeting in December 2021, which included representatives from rare disease patient groups and ICER’s Policy Leadership Forum, which is made up of 30 payer and life science companies.

In 1983, Congress passed the landmark Orphan Drug Act (ODA), which created financial incentives to encourage companies to develop new drugs for rare diseases, including tax credits to offset some research and development costs; eligible products receive an extended 7-year market exclusivity.

However, in recent years, these products and their pricing have come under intense scrutiny, as several reports have noted that drugs with the orphan drug designation generate much of their use—and their resulting revenue—through expanded indications for diseases that are not rare.

In turn, this has led to concern about future sustainability, including for the development of ultra-rare diseases, which lack treatment. 

Treatments for ultra-rare conditions remain elusive, ICER said. The purpose of the paper was to present policymakers with the pros and cons of various reforms to “improve evidence generation, boost the chances for treatments of ultra-rare diseases, and reduce the prices for treatments whose clinical benefits do merit traditional 'orphan drug' level pricing.” 

More than 50% of FDA drug approvals now have the orphan designation, and a number of other policy developments and scientific advances since 1983 that should, in theory, facilitate development of these drugs exist, the paper noted, although that idea is also contested. 

“To secure a future in which innovation and affordability are both ensured, policymakers are going to have to consider potential reforms,” said Steven Pearson, MD, MSc, ICER’s president.

The potential reforms include:

• Encouraging ultra-rare drug development by setting a definition of ultra-rare disorders, increasing incentives to develop treatments, and using value-based pricing and reimbursement for these therapies
• Limiting incentives for partial orphans by setting a maximum revenue threshold to be eligible for ODA incentives, assessing FDA standards for defining distinct diseases, and ending 340B exclusions for partial orphans
• Strengthening evidence generation by updating International Classification of Diseases, 10th Revision, codes to reflect rare disease; fund patient registry development; and clarifying evidence expectations
• Reducing prices for rare disease therapies by expanding outcomes-based contracts, looking at indication-based pricing, pursuing value-based pricing, and using volume-based contracts

Each proposal has its own set of trade-offs, the authors note. For instance, the rare disease community—patients and advocates—are not in favor of a narrower bar for what is considered an “ultra rare” disease. European health care systems, for instance, use the threshold of 10,000 patients in determining whether a disease is ultra rare. In the United States, advocates fear that incentives to support innovation would fall over time and might not take into account quality-of-life issues.

Those who prefer the status quo are not likely to favor any of the proposed reforms, the paper noted, but broad access to continued innovation is at stake, the authors said.