The first installment in this two-part series examined rising costs associated with orphan drugs and two related case studies. This second part provides actionable suggestions for developers.

Payer receptivity to high orphan drug (OD) prices and, hence, revenue, will almost certainly begin to wane as budgets are increasingly strained by new therapies and as payers increasingly scrutinize the value of ODs. Indeed, there are signals that payers are becoming increasingly sensitive to the cost of newly approved ODs, even those that confer a clear clinical benefit to patients. Still, despite the complex maze of challenges developers must navigate to create a commercially successful OD, there remains a lucrative path forward for developers committed to bringing novel, effective therapies to market. A few lessons for success in the OD space follow.

1. Engage with payers early.

Payers in the U.S. vary in their approaches to formulary coverage decisions for ODs. Research conducted by DRG, for example, indicates payers are split with regard to how they categorize rare diseases (i.e., by therapy area, recognizing rare diseases as a group, or considering each as a stand-alone disease). Developers can benefit from recognizing the continuing uncertainty surrounding orpahn drug trial design, pricing mechanisms, and formulary coverage in the U.S. They should proactively approach payers about the most compelling data, clinical trial design, and acceptable pricing.

Furthermore, although regulatory agencies have exhibited a willingness to broaden the labels of some agents beyond the subpopulation(s) in which they were tested (e.g., Spinraza’s broad label for 5q spinal muscular atrophy, despite placebo-controlled trials having been completed in only Type I patients at the time of FDA submission), payers continue to push back when uncertain about the likelihood of a clinical benefit in other key patient populations, often restricting access to therapy beyond its indicated use. In many cases, early discussions with payers could allow developers sufficient time to pivot clinical trial design to satisfy key requests, such as surrogate endpoints when typical clinical endpoints are not tenable due to sample size, effect size, or clinical parameters that vary among patient subpopulations (e.g., the selection of a six-minute walk test endpoint in Duchenne muscular dystrophy [DMD] patients does not apply to nonambulatory patients). Broadly, anticipation of payer skepticism should prompt developers to adopt convincing value frameworks with which to ensure favorable formulary coverage and tiering, which can ultimately maximize revenue and benefit patients.

Payers have also signaled a willingness to consider other economic burdens of rare diseases. Highlighting the tertiary costs of rare diseases in advance of payer formulary coverage decisions, for example, can help justify a high price (e.g., family burden that has the potential to generate medical costs through travel, long-term sleep loss, or nutritional deficits in caregivers represents a potentially quantifiable cost to payers).

2. Engage with regulatory agencies early to validate pivotal clinical trial design and extrapolation of data.

Challenges in clinical trial design that are common across many indications can be compounded in rare diseases, and, for better or worse, drugs for rare diseases must meet the same standards required of all therapies to secure FDA approval. Recruitment challenges in rare diseases can lead to small sample sizes, which places many constraints on clinical design; for example, small sample sizes can diminish the likelihood of statistical power, greatly constrain the number of allowable dosing arms (sometimes even making a placebo-controlled trial untenable), or make it difficult to ensure similar baseline characteristics between treatment arms.

Furthermore, understanding of disease pathophysiology and course is often lacking for rare diseases, complicating the identification of validated disease measures that can serve as primary endpoints. In addition, extrapolation of trial results to a potentially broader addressable population has been observed for several recent OD approvals (e.g., Spinraza), and early communication with regulators will maximize that opportunity. For these reasons, it is critical that developers engage with the FDA early to establish a mutually acceptable clinical trial design that is most likely to secure approval upon its success. However, engaging European health technology assessment (HTA) agencies is just as important when designing clinical trials because standard-of-care can vary greatly between the U.S. and Europe.

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3. Target indications lacking approved therapies.

Premium pricing is sustainable for novel therapies addressing an unmet need for effective treatments, especially when buttressed by several years of market exclusivity and, more generally, a dearth of competitors. It also is possible orphan designation may be more likely for therapies targeted to indications lacking an approved therapy. Furthermore, there may be a societal appetite in the U.S. and single-payer healthcare systems for premium prices in particularly rare or pediatric diseases, long described by ethicists as a “rule of rescue” characterized by individuals’ ethical proclivity to save lives at any cost, even if allocation of resources to a larger population might confer a greater benefit.

One major challenge when developing a drug for an indication without approved agents is the inability to offer regulatory agencies data from traditional comparative studies.  Rarely will patient populations in these indications have absolutely no therapeutic interventions. Rather, in the absence of approved agents, patients will be treated off-label with available drugs, sometimes leading to large variability in “standard-of-care.”  As such, assessment of efficacy can be confounded by the absence of a single primary active comparator. Nevertheless, drug developers should not shy away from such indications; however, careful selection of primary end points and clinical recruitment criteria are critical.

4. Engage early with patient advocacy groups.

Sarepta’s Exondys 51, an antisense therapy approved for certain DMD subpopulations, receives a great deal of vocal support from patients and advocacy groups even without compelling evidence of efficacy. Ultimately, such pressure from patients and advocacy groups can substantially influence physician prescribing decisions and, quite possibly, impact market access negotiations between developers and payers in a manner beneficial to patients and developers. Support from patient advocacy groups can also highlight costs of rare diseases that are not well-researched, such as cost burdens to families or caregivers. Although these secondary costs are less quantifiable than accepted cost-analysis frameworks, payers are not commonly subjected to patient journeys, leaving developers in a prime position to push the value added in excess of the value defined by common cost-effectiveness metrics.

Patient advocacy groups undoubtedly played a major role in the FDA’s approval of Exondys 51. And although they may have tipped the balance toward approval of Exondys 51, pressure from advocacy groups is unlikely to supplant true measures of efficacy for novel therapies via clinical trial data. However, the power of patient advocacy groups for DMD was evident prior to Exondys’ controversial approval. In 2015, the FDA published a draft guidance for the development of drugs for DMD; the first patient advocacy group-initiated guidance document (Parent Project MD, accessed May 30, 2017; available at Not only did the DMD patient groups contribute to discussions about trial design, but they also conducted internal studies among patients and families to gauge patient sentiment for certain drug attributes, like tolerance over drug safety. These studies fed into the draft guidance. Further, advocacy groups can be instrumental in accelerating development by facilitating clinical trial recruitment through access to patient registries and real-time feedback on clinical trial protocols. Post-approval, patient advocacy groups can be highly influential in negotiating patient access to approved agents via funding of grants and other drug access programs. As such, drug developers and marketers can benefit from early and regular engagement with advocacy groups.

5. When pricing therapies, present the economic value through compelling cost-effectiveness analyses.

While pricing of assets at “what the market will bear” might approximate market value in some sectors, pricing of pharmaceuticals is complicated by problems of knowledge asymmetry and moral hazard. Still, a strong case can be made that some high-priced agents provide a great deal of economic value to society through improvements in standard-of-care for well-defined sets of patients. Although value metrics would usually include a weighted analysis of quality-adjusted life year (QALY) improvements, improvements in long-term care costs, and nonmedical costs such as lost wages, stakeholder efforts to establish value assessment frameworks are ongoing.

Research recently conducted by DRG indicates payers vary with respect to the specific cost-effectiveness metrics most valued for cystic fibrosis (CF) and DMD drugs; however, cost-benefit, cost-of-illness, and cost-utility analyses were favored by over half of surveyed payers (2017 Orphan Drugs Access & Reimbursement | U.S.). For this reason, attentiveness to the cost-effectiveness analyses performed by HTA bodies can provide valuable insight into key successes and missteps by developers during clinical development. They also can provide an array of cost-effectiveness metrics which developers can use to frame the value of their asset in the best possible light from a payer’s perspective.

Although payers in the U.S. are free to differ in their value assessment, they are increasingly adopting these pharmacoeconomic analyses to evaluate value-based pricing of novel therapies. In particular, pharmacoeconomic analyses can be useful when comparative analysis can be problematic due to the absence of approved therapies or for which emerging therapies offer substantial improvements over the standard-of-care. However, as highlighted in an Institute for Clinical and Economic Review (ICER) briefing on this topic, QALY analyses of orphan/rare diseases can be problematic, given the limited data available from clinical trials recruiting small patient groups. As such, marketers should consider performing supplemental studies that provide payers with metrics they can use for their own pharmacoeconomic studies. For example, the addition of patient-reported outcome measures as clinical trial secondary endpoints can aid in the assessment of quality-of-life improvements. Further, particularly for rare diseases that impact pediatric populations, assessment of impact on caregivers can also help payers assess the total economic valuation of a therapy.

Concluding Thoughts

It is clear that patients, taxpayers, and policyholders will be increasingly strained by the high costs of ODs at the current pace of approvals. It is likely one short-term approach of payers to curbing total drug spend will be more rigorous cost-effectiveness analyses, the ultimate beneficiaries of which will be developers committed to bringing effective agents to market that are deemed by stakeholders as being reasonably priced for the clinical value they provide. Discussions regarding the “fairest” means to assess cost-effectiveness of OD have not kept pace with the innovation in the space, and the repercussions are bubbling to the surface. It is imperative that developers recognize the opportunity to both maximize access to their medications and influence evolving policy in this arena through early outreach to key stakeholders.

About The Author:

Ian Love, Ph.D., is a senior business insights analyst in the Infectious, Niche, and Rare Diseases department at Decision Resources Group. He specializes in atopic dermatitis and a diverse group of rare diseases. He received his doctorate in biomedical sciences from the University of Massachusetts Medical School and his B.S. in cell and molecular biology from Worcester Polytechnic Institute. Prior to joining DRG, Love was an instructor in the Department of Internal Medicine at Virginia Commonwealth University, where his work focused on understanding the regulation of programmed cell death by the tumor suppressor p53.

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