Unbiased Analysis of Today's Healthcare Issues

Orphan Medical Products

Written By: Jason Shafrin - Apr• 12•17

Should health insurers cover orphan drugs?  Although the clear answer appears to be yes, the issue is tricky.  An orphan drug is one which treats a limited number of people.  In Europe, this designation generally applies to patients with a disease with an overall prevalence between 5 and 10,000 individuals.

In order to incentivize innovators to create treatments for these rare diseases, prices need to be high.  Even if a drug costs $100,000 per year, if there are only 10 people with the disease it is unlikely a life sciences firm would be able to recoup their investment.  On the other hand, payers do not want to cover treamtents that are a poo rvalue, even if it is for an orphan disease.  Society could prioritize covering drugs that affect a large number of people which could deliver a bigger bang for the buck, but also perhaps less social equity.

To address the issue of ophan medical products, the European Working Group for Value Assessment and Funding Processes in Rare Diseases (ORPH-VAL) proposes nine principles to guide the assessment of orphan drugs and medical products. These recommendations are largely for European regulators and payers and may be less relevant for a U.S. context.  Regardless, the nine principles are:

  1. Orphan medical product (OMP) assessments should consider all relevant elements of product value in a multi-dimensional framework. In particular, decision-makers should consider the perspective of patients, the healthcare system and wider society.
  2. Pricing and reimbursement decisions should be adjusted to reflect other considerations beyond product value.  ORPH-VAL recommends loosening the cost-effectiveness thresholds for rare diseases in order to promote innovation in these areas.
  3. Those making pricing and reimbursement decisions at a national level should take into account regulatory and HTA undertaken by other countries
  4. Healthcare professionals and patient perspectives should be included in the assessment
  5. Value assessment, pricing and reimbursement decisions should be adaptive based on patient need and the availability of new information over time.  In particular, any assessment should take into account, disease prevalence, disease severity and unmet need.
  6. All eligible patients within the authorized OMP label should be considered in any pricing and reimbursement decisions, but decision-makers should also evalaute value for sub populations when relevant.
  7. Funding should be provided to ensure patient access to OMPs
  8. Evidence based funding mechanisms should be developed to guarantee long-term availability of these treatments.
  9. Coordination of OMP value assessment should be better coordinated across European countries.

These guidelines are helpful. However, the question still remains, how much is too much (or alternatively, how much is not enough).   The balance between measuring treatment value for individual patients and incentivizing innovation for rare treatments is a fine line to walk.

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