Look behind the lecture: The challenges of orphan drugs

In this interview, James Chambers (Tufts Medical Center; MA, USA) discusses his presentation from ISPOR (18—22 May 2019, New Orleans, LA, USA) on the challenges associated with orphan drugs.

Aug 08, 2019

Please can you introduce yourself and your institution?

I am an Associate Professor at Tufts Medical Center (MA, USA). I work in the Center for the Evaluation of Value and Risk in Health (CEVR) and my research focuses on how payers cover medical technology.

Your talk concerns whether health plans can address the challenges of orphan drugs; what are some of these challenges?

Orphan drugs are drugs indicated for rare diseases; in the USA, each of these drugs are used to treat less than 200,000 patients. Historically, there was little driving pharmaceutical companies to develop orphan drugs because the market for them is so small. The 1983 Orphan Drug Act, however, incentivized drug companies to develop orphan drugs by enabling a reduction in user fees and longer market exclusivity of these drugs, amongst other benefits.

Consequently, there has recently been a marked change in drug development; drugs are becoming much more targeted. Whereas previously a drug may have been developed to treat lung cancer, for example – and the lung cancer patient population is quite large – drugs are now developed for lung cancer patients harboring specific gene mutations only. By default, these drugs are much more targeted and many more of them fall into the orphan drug category. Roughly 50% of drugs approved since 2015 have been orphan drugs.

Historically, both the small numbers of orphan drugs and patients on them has meant that health insurance plans have never been particularly concerned about the impact of orphan drugs on their budgets. The problem today is that there are so many orphan drugs; even if any one of these does not impact significantly on budget, due to their sheer number, the collective impact may be large. On average, orphan drugs are five-times more expensive than non-orphan drugs. These drugs become real issues for payers: how do they absorb the cost of these drugs whilst maintaining being fiscally responsible with their budgets?

"Roughly 50% of drugs approved since 2015 have been orphan drugs."

 Another complication with orphan drugs is that they are desperately needed; my team is currently working on some research demonstrating that orphan drugs offer much larger health gains for patients compared with non-orphan drugs. We clearly need to get these drugs to patients, the problem is: how do we pay for them?

My teams’ research investigated how payers are responding to orphan drugs. Using our large database of drug coverage decisions, we assessed how medical insurance is restricting orphan drugs compared with non-orphan drugs. By ‘restricting’, we mean that, compared with the FDA label, health plans will only grant patients access to these drugs if they meet highly specific criteria. We found that health care plans restrict orphan drug access approximately one-third of the time. Although this is a high proportion, it is less than for non-orphan drugs. This suggests to me that whilst health plans are struggling with these products, they are beginning to manage their utilization such that the neediest patients get access to them.  

Does your database cover US-only patients? Have you looked at the UK or EU at all?

Our database covers US commercial payers only and does not include the elderly, those on Medicare or Medicaid. I very much hope to extend my team’s work and compare our findings from the USA with other countries. Currently, we are focusing on establishing our knowledge of our new database and US trends before we begin comparing and contrasting these with other countries. It will be fascinating to compare our current findings to those from NICE, for example, who explicitly look at value measurements. In the USA, it can be challenging because health plans should be assessing value, and they say they are; however, it is not clear how and if they are really doing so.

"...orphan drugs offer much larger health gains for patients compared with non-orphan drugs. We clearly need to get these drugs to patients, the problem is: how do we pay for them?"

Our database is showing variability in decisions; looking at the same coverage decisions across payers – the same drug for the same disease – we see differences in how payers behave. The question thus arises; how ‘evidenced-based’ are these decisions? Are health plans using different criteria to make these decisions? Is budget affecting some health plans more than others? This is what we are trying to look at now in the USA; ultimately, we hope to compare these trends to any observed in other countries.

Are there any trends in payer differences?

My team published a paper last July in Health Affairs that more generally assessed high-cost, specialty drugs. In that paper we named some payers that restricted drug access more than others. Whilst we still show that data, we now don’t name the payers because the goal for this work isn’t really to specify the most or least generous payer. Rather, we are concerned with highlighting the differences in payer generosity; to call into question transparencies in decision making and how we can make the overall process more predictable.

With the rise of orphan drugs, do you think we will see the rise of curative therapies instead of just their management?

I very much hope so. We have yet to see a real surge in curative therapies; however, we are on the cusp of the approval of a gene therapy for spinal muscular atrophy (SMA), called Zolgensma. This is a highly promising cure for SMA. Hopefully this marks the start of a big trend in the marketing of curative therapies as these are real game changers. Curative therapies certainly fall within the orphan drug category and many of the challenges we have discussed will apply to them.

"Orphan drug therapies, such as gene therapies, however, can offer QALY gains of 20 years. This is exponentially larger than what we have previously seen."

How do you think the payers will react to that?

I am not sure how payers will respond. Curative therapies are very different to any standard, current therapies; they offer health gains unlike anything we have seen before. The average quality-adjusted life year (QALY) – a common way of assessing the health gains associated with drugs and other medical technologies – gain for a given novel drug can be approximately 0.1; this is essentially equivalent to a gain of one month of perfect health. Orphan drug therapies, such as gene therapies, however, can offer QALY gains of 20 years. This is exponentially larger than what we have previously seen.

Nevertheless, we must be cautious as there are challenges associated with these therapies, such as the uncertainty of durability of their effects and their high upfront costs. Just because something is good value for money, it is not a given that you can afford it. I think this is going to be the case with these gene therapies; we may see them deliver good value for money with uncertain downstream benefits, but their affordability is a big problem.

In the UK, where there is the socialized NHS system, if an infant is treated with a gene therapy, the NHS will reap the benefits of the gene therapy until the patient dies. In the USA, however, it is more complex because there are lots of insurance companies. I believe, on average, that individuals stay with their employers for 3 years. As health insurance is tied to employment, when one switches employer, that can cause problems for drugs or treatments with high upfront costs; the health insurance company will have incurred the high cost but may not witness the downstream benefits.

"In the short term...Creative contracting, value-based contracting, paying by instalments; all of these will soften the blow and allow these therapies to be accessible."

Additionally, there is the question of how we will tackle Medicare, as a public payer, with private payers for treatments of patients enrolling in Medicare.

Historically, US payers have always found ways to ensure treatment access, even with large cost sharing, so we will have to see how they respond to gene therapy introduction. I would predict that, in the short term, there will be very few gene therapies marketed; payers will find ways to provide access for these. The situation will be akin to the old orphan drug situation, where due to the small number of them, they do not have a large impact on budget. Creative contracting, value-based contracting, paying by instalments; all of these will soften the blow and allow these therapies to be accessible.

However, none of these ‘solutions’ tackle whether the price for these therapies is appropriate in the first place. Ultimately therefore, I think we will see some pushback to these therapies. Another concern in the USA is that we are not aware of the actual prices that the health plans negotiate; that is proprietary information. That is why we developed the Specialty Drug Evidence and Coverage (SPEC) Database at Tufts; unless you have a database that shows payer differences and tracks these changes, you cannot determine why one plan is applying a restriction on an orphan drug, whilst another plan is not. We wanted to make this more transparent.

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