Drug Pricing

Why Drug Pricing Matters

Over 30 million Americans live with one or more rare diseases that often result in burdensome medical, indirect, and non-medical expenses. Patients and families are left to navigate how to manage expenses from multiple inpatient and outpatient encounters, costs for prescription therapies and medical devices, and the support services that are critical for managing their health and wellbeing. 

The National Economic Burden of Rare Disease Study in the United States estimated in 2019 the overall annual economic burden of rare disease exceeded $966 billion.

Of the total economic burden, the largest costs were:

• indirect costs from productivity losses at $437 billion,
• direct medical costs at $418 billion, and
• non-medical and uncovered healthcare costs of $111 billion, absorbed directly by families living with rare diseases.

Aside from absenteeism, inpatient care was the biggest expense, accounting for nearly 15% of the overall economic burden, while prescription medication and administration costs accounted for about 10% and outpatient care for about 6%.

Meaningful policy engagements around affordability must focus on more than just one aspect of the overall health care system.^¹ 

Lowering the cost of health care, including prescription drug therapies, is an important but nuanced goal of multiple legislative proposals under consideration in Congress and state legislatures.

Policies Around Drug Pricing Must Understand the Nuances of Rare Diseases

As elected officials consider different policy options, they must recognize the unique complexities of rare disease drug development and the high unmet need faced by the more than 30 million Americans living with rare diseases.^²

While exciting advances in science and medicine have propelled new rare disease therapies into reality, about 95% of the over 10,000 identified rare diseases still have no FDA-approved treatment.

For those living without approved treatments, policies intended to lower drug costs without consideration of the impact on incentives for rare disease research and development infrastructure will mean lives are lost and unnecessary suffering will be extended. 

It is imperative that policymakers understand why rare disease research and development is more challenging, time consuming, and costly than non-orphan products, despite existing incentives such as those created by the Orphan Drug Act.

To qualify as a rare disease, a condition must affect less than 200,000  in the U.S.³ However, in many cases, innovative therapies are being developed for diseases with much smaller populations, sometimes even as few as 12 patients. The trend toward smaller patient populations will likely only continue as diseases are better understood, with therapies targeting genetic subsets of a disease.

Clinical development programs for very small populations require extensive investment to generate enough evidence to understand the natural history of the diseases, to overcome diagnostic uncertainty, and to validate outcome measures among other factors. The time it takes to conduct clinical trials for rare disease products is twice that of non-orphan products,^⁴ all while the risks of failure are higher. 

Any policy solutions that move forward must be patient-centered and focused on improving the access environment for rare disease therapies, while not resulting in unintended harm to the delicate research and development ecosystem.

When governments set the price of medications, medical innovation slows and patients lose access to lifesaving treatments. The extended delays on medicine access could mean the difference between life and death for American patients in need of treatments. Other countries have delayed access to innovative treatments due to the price controls imposed by their governments, rare disease patients in the U.S. cannot be subject to these delays. 

The principles outlined below have been developed in collaboration with the rare disease community to convey the goals that any proposed drug pricing policies should be evaluated against. 

Principles to Guide Drug Pricing Policy

Many of the transformational therapies that are approved face access barriers that prohibit or delay these life-changing treatments from reaching patients. This counteracts the benefits of expedited pathways that speed the availability of drugs to treat serious diseases that are intended to ameliorate unmet patient needs and reduce long term costs by allowing for early access to innovative treatments. 

Further, utilization management techniques are employed by public and private payers to limit their expenses, but these policies have the effect of increased costs for patients and often irreversible disease progression and loss of life.

In addition to utilization management techniques, value assessments are increasingly being used by payers as a tool to support limited product access. While the use of value assessments and innovative value-based payment arrangements may be one way to understand a product’s value within a patient subpopulation, it should not be used as a singular tool to control costs.

It is also important to note that current value assessments conducted of rare disease therapies are not based on frameworks and models that enable accurate assessments of value. Limitations include that calculation of the Quality-Adjusted Life Year (QALY) gained is widely considered to be discriminatory towards patients with disabilities, patient heterogeneity and subgroup analyses are often not considered, and additional elements of value afforded by innovative therapies, such as increased productivity and reduction of caregiver burden, are often not included. 

Congress has already recognized there are differences in the resources required to develop a new treatment for a rare disease through their work on the Orphan Drug Act, 21st Century Cures and more. We urge Congress and all those policymakers working on drug pricing policies to once again consider the extensive unmet needs and scientific challenges inherent in the rare disease community and ensure policy proposals adhere to the principles developed by the collective rare disease community.