Policy/Position Papers

NORD Policy Position:
Insurance Reimbursement for Orphan Drugs

Background
In 1983 Congress enacted the Orphan Drug Act, which was designed to offer incentives to drug manufacturers to promote development of new treatments (drugs, biologics, and medical foods) for people with rare diseases. Before 1983, pharmaceutical manufacturers did not develop orphan drugs because the cost of research and development outweighed the potential for profit from sales to small populations of patients. A rare disease is one that afflicts fewer than 200,000 Americans. There are an estimated 6,000 rare diseases that cumulatively affect over 25 million U.S. citizens.

Problem
Americans who need FDA-approved orphan drugs are sometimes temporarily or permanently denied access to them because their Managed Care Organizations (“MCOs”) tend to exclude certain medications from drug “formularies” due to low demand and/or high cost of orphan products. Access to orphan drugs can be substantially delayed when patients must obtain pre-authorization for a drug not included on their insurers drug formulary. When insurers refuse to pay for an orphan drug, patients who cannot afford to pay are denied treatment.

Policy Position

• Orphan drugs must be given special consideration by health insurers because of the small populations they are designed to help, and their unique therapeutic value.
  
  
• Some orphan drugs may be priced higher than other drugs because manufacturers must recoup their costs of research and development from a smaller number of people within seven years. Even though some orphan drugs may be priced higher than commonly used drugs, insurers must recognize that the small number of people using the product in any MCO will usually represent a small overall expense to a health insurance company.
  
  
• Patient co-payments under any insurance policy should be reasonable and competitive to assure that rare disease patients will have timely access to their medications. This in turn will lead to lower long-term medical costs for patients and their insurers.
  
  
• Newly introduced orphan drugs that demonstrate improvement in safety, efficacy and/or quality of life should receive immediate approval by MCOs for payment – with evaluation occurring at 12 months – to avoid delays in treatment.
  
  
• Data requirements for formulary consideration should be adjusted for drugs with orphan status because many orphan drugs represent the first or only effective treatment for a disease, and because comparative trial data may be difficult to obtain due to the small patient population.

Whom We Represent
NORD is a federation of approximately 140 not-for-profit health organizations and thousands of individuals and medical professionals serving people with rare diseases. As a voluntary health agency dedicated to helping people with rare disorders, NORD is committed to achieving a fair and balanced approach to orphan drug reimbursement by health insurers in order to ensure timely access to treatment.

For more information, contact: Diane E. Dorman, Senoir Director for Public Policy at (301) 421-0018 or via e-mail at ddorman@rarediseases.org.

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