The economics of moonshots: Value in rare disease drug development

• Published in: Clinical and translational science 2022-04, Vol.15 (4), p.809-812
• Main Authors: Yates, Nathan, Hinkel, Jennifer
• Format: Article
• Language: English
• Subjects: Biotechnology industry; Clinical trials; Costs; Decision making; Disease; Drug Development; Drugs; FDA approval; Funding; Humans; Innovations; Insurance coverage; Legislation; Next-generation sequencing; Patients; Personal health; Pharmaceutical industry; Precision medicine; R&D; Rare diseases; Rare Diseases - drug therapy; Reimbursement; Research & development; Tax credits; Trends
• ISSN: 1752-8054; 1752-8062
• DOI: 10.1111/cts.13270

Financial incentives for rare drug development in the US were codified in the 1983 Orphan Drug Act (ODA), which includes tax credits, waives Food and Drug Administration (FDA) user fees, and increases marketing exclusivity for rare indications. While some researchers have argued that the ODA has not significantly impacted market exclusivity for drugs that would have patent protection regardless of the legislation, others have shown the increase of rare disease approvals as an indicator of the ODA’s relative success. 2,3 Meanwhile, as the rise of “precision medicine” based on molecular diagnostics and next-generation sequencing technologies influences clinical decision-making and patient population definition, potentially more and more diseases, including subindications of more prevalent conditions, can be categorized as “orphan”; as an example, nearly half of requested orphan designations are for rare cancers. 4 Rare disease products are comparably more available to US patients than to patients in other countries (primarily due to broad FDA labeling), yet US patients still face a number of barriers, financial and otherwise, as detailed in a 2020 report commissioned by NORD. 5 The sheer number of rare diseases, not to mention the paucity of research available on many of these illnesses, creates enormous challenges in drug development. Since much pharmacological research is undertaken by for-profit entities, a large number of rare diseases are never investigated for treatment simply because they afflict so few people. A 2020 study from University of Michigan found that while spending on rare disease therapies increased from 2013 to 2018, patient out-of-pocket costs did as well, nearly doubling from $486 to $866 per year. 6 However, coverage across plans is highly variable, with restriction frequency for orphan drugs ranging from 11% to 65% in a 2019 study. 7 An earlier study found that 93% of orphan drug approvals are covered by payers, but formulary management and utilization management may lead to restrictions, high cost shares, and similar mechanisms that impact access to such products. 8 CURRENT “VALUE FRAMEWORKS” AND INSUFFICIENCIES AS APPLIED TO RARE DISEASE Assessing the “value” of rare disease treatments presents numerous challenges and is a topic of debate not only in the US but in countries with more formalized Health Technology Assessment (HTA) programs that determine insurance coverage or approval for new therapies.