By Heidi Ross and Karin Hoelzer
What needs to be done to better support rare disease patients, and what is the value of the prescription drugs that treat rare diseases?
As the House Energy and Commerce’s Subcommittee on Health gathers this week to discuss “Legislative Proposals to Support Patients with Rare Diseases,” we are almost certain to hear a variety of diametrically opposed viewpoints on these topics. One policy question in particular is sure to be hotly debated: the extent to which orphan drugs should be subject to price negotiation under the Inflation Reduction Act (IRA). Under current law, the IRA excludes certain orphan drugs that are approved to treat exactly one rare disease – and that are not currently (specifically FDA-designated) for additional rare diseases. The six witnesses at this week’s hearing are likely to disagree with one another about if, and how, this exemption should be modified – and NORD has its own recommendations for how to move forward.
One policy question, many conflicting expert perspectives
For too many Americans living with rare diseases, out-of-pocket prescription drug costs create significant financial barriers to access. At the same time, the hope of millions of rare disease patients and families with dire unmet medical needs rests in continued research and development into new and better therapies. What does effective policy look like in this complicated reality?
One of the witnesses, Dr. Alice Chen, has previously written about the IRA potentially, and perhaps paradoxically, resulting in higher list prices at launch and other unintended consequences. Concrete data to substantiate – or refute – these concerns have largely remained elusive given that this is the first year of program implementation. Alternatively, Dr. Aaron Kesselheim, one of the other witnesses, argued in a recent JAMA Internal Medicine article that the IRA does not go far enough and that the current orphan drug exclusion should be repealed because it would prevent Medicare from negotiating prices on 25 drugs with an estimated combined $1.1 to $3.0 billion in Medicare spending each year. However, $3 billion in annual spending is a tiny fraction of the $216 billion and $33 billion spent by the Medicare Part D and Part B programs, respectively, on prescription drugs in 2021. In fact, the 25 orphan drugs at issue account for less than 9% of the 282 ‘high-spend’ prescription drugs, defined as more than $200 million in annual Medicare drug spending between 2012-2021.
As another witness, Dr. Jeromie Ballreich, points out in his own JAMA article adjusting other criteria drug price negotiation eligibility under the IRA would have the biggest impact on Medicare spending – in excess of $9.5 billion in the first program year alone, with substantially bigger savings projected in future years – but does not argue for eliminating the IRA’s current orphan drug exclusion.
Of course, each of these changes would come with intended and unintended consequences. Medicare prescription drug spending is an important policy issue that requires sound policy solutions. But, as the evidence clearly shows, repealing the orphan drug exclusion in the IRA would only generate modest potential savings—yet have devastating impacts on the hope for new or better therapies for the more than 30 million people living in the United States with a rare disease.
The other three witnesses at Thursday’s hearing are likely to have their own strong views on this issue as well: Dr. Terence Flotte and Dr. Alexander Bassuk are pediatricians that have treated their share of rare disease patients, and Ms. Krystal Davis is a caregiver that has experienced the toll of rare diseases on her family and become a tremendous advocate the needs of rare disease patients. From each of their perspectives, they know that, despite decades of scientific and clinical advances, approximately 95% of the more than 10,000 known rare diseases still have no FDA approved therapies.
Recognizing the dire need for additional rare disease therapies, and the unique challenges that complicate rare disease drug development, Congress enacted the Orphan Drug Act of 1983 (ODA). A succession of Administrations and Congresses, led by both Republicans and Democrats, over the last 40 years have maintained the ODA’s incentives and policies to encourage more rare disease research and drug development. This is also why Congress included the orphan drug exclusion in the IRA in the first place. The reality is that the 25 orphan drugs at issue that may qualify for the IRA orphan drug exclusion are not representative of the economic success for most orphan drugs. As Kathleen L. Miller and Michael Lanthier found in Health Affairs last month, of 319 drugs approved in the U.S. for a single orphan disease, only 20 were among the top 200 branded drugs by global revenue. Despite the well-documented challenges in rare disease drug development, the prospect of such occasional economic success drives investment.
So, where does that debate leave the rare disease community?
The past forty years have taught us a couple of important lessons about rare disease policy:
1. Rare disease research is critical and must be protected – Congress shouldn’t repeal the IRA’s orphan drug exclusion but should make technical corrections to improve it.
The ODA created orphan drug designations to incentivize rare disease research through policies including access to dedicated research funding and the promise of market exclusivity. These incentives were expanded by Congress to include an exemption from FDA user fees. Receiving an orphan drug designation is a long way developmentally and chronologically from the drug’s approval and marketing. Since 1983, the Food and Drug Administration (FDA) has granted almost 6800 orphan designations, but only approved approximately 1200 orphan indications. The discrepancy between the number of designations and approved indications underscores a key point in recent testimony by Dr. Patrizia Cavazzoni, director of FDA’s Center for Drug Evaluation and Research, that “the track record for new drugs shows us that for every successful treatment, about 40 drugs failed — many of which were touted as highly promising.” Currently, more than 75% of orphan drugs are only approved for a single rare disease and discouraging research into additional uses for these drugs is a step in the wrong direction.
Making a drug negotiation-eligible as soon it is designated for a second rare disease, even if the approval for the second disease occurs many years later or not at all, is not sound policy. FDA’s own regulations make clear that “[a] drug that shows promise in multiple, different rare diseases or conditions may be eligible for multiple designations, one for each disease or condition.” But with the threat of negotiation under the IRA, many of the pending designations are likely to be withdrawn – as Dr. Kesselheim himself acknowledged in his recent JAMA article. That is why a coalition of 170 patient advocacy groups is advocating for two small, technical corrections to the IRA’s orphan drug exclusion that would protect this vital research incentive and continue to encourage manufacturers to pursue multiple designations.
2. Rare disease patients and families need – and deserve – robust research to trust in the safety and effectiveness of FDA-approved therapies.
Since Congress enacted the Kefauver-Harris Amendments more than 60 years ago in the wake of the thalidomide scandal, carefully controlled clinical investigations of a drug’s efficacy have become the hallmark of modern drug development. Every drug has off-target effects that must be carefully balanced against the expected therapeutic benefits, and in some cases, even potentially severe side effects are not detected until the drug is studied in larger and more heterogeneous patient populations during later-stage clinical research. That is why continued incentives for rare disease drug development are so important and why the Retaining Access and Restoring Exclusivity (RARE) Act, which is part of this week’s hearing, is supported by 78 patient organizations. The RARE Act will ensure critical incentives for continued orphan drug research and innovation are maintained while establishing much-needed certainty about the scope of orphan drug exclusivity, an important Orphan Drug Act incentive.
3. Additional incentives are needed to encourage drug development for children and other particularly hard to study parts of the rare disease community.
As many as half of all individuals living with a rare disease are children; yet, developing treatments for rare pediatric diseases, those rare diseases that primarily affect children and too often take their lives before the kids have a chance to reach adulthood, is particularly challenging. That is why NORD strongly supports a variety of incentives and programs that are part of this week’s hearing, including the Rare Pediatric Disease Priority Review Voucher program, which would be reauthorized by the Creating Hope Reauthorization Act of 2024, and the research funding authorized by the Best Pharmaceuticals for Children Act that would receive a significant funding bump through the Innovation in Pediatric Drugs Act.
4. Availability does not equal access. The best therapy is useless if our patients cannot access it. Two bills to be discussed at this week’s hearing would help improve access for our patients. The Accelerating Kids’ Access to Care Act (AKACA) would create a voluntary pathway for qualified providers to enroll in other states’ Medicaid or CHIP programs, enabling faster access to expert care for children on Medicaid or CHIP who may need to travel out of state for that essential care. Children account for about 50% of total Medicaid enrollment, and 1/3 of all children with special health needs are enrolled in Medicaid, including many with rare diseases. Often, the best treatment for these children requires travel out of state to get expert care, alongside substantial coordination with the child’s home provider. Particularly for patients with a rare disease, or those being treated by a novel gene therapy treatment, there may only be one or two centers in the entire country with requisite expertise to treat their condition. Unfortunately, significant access barriers exist to seeking out of state care, including an often time-consuming credentialing processes, which AKACA would help to address.
Another bill, the Providing Realistic Opportunity to Equal and Comparable Treatment (PROTECT) for Rare Act, would reduce coverage barriers for rare disease patients, making it easier to access the medication they need. Since a vast majority of rare diseases do not have an FDA approved treatment, many rare disease patients must rely on off-label uses of prescription drugs. However, insurance coverage of off-label prescriptions varies widely. While some payers may agree to cover the off-label use of a product if it is listed in a published compendium (a collection of data regarding the use of the product in patients), others may not. The PROTECT Rare Act is an important step towards ensuring rare disease patients have access to the drugs they need by requiring Medicare, Medicaid, and private insurers to utilize peer-reviewed medical literature, including clinical guidelines, when making treatment coverage determinations.
This week’s hearing will cover a number of priorities for the rare disease community. Witnesses will likely disagree on at least some of these policy positions, while others will be less controversial. Hopefully, the hearing will raise awareness about the challenges rare disease patients and families navigate every day, and encourage Congress to enact common-sense policy proposals that would help address at least some of these barriers. NORD will be closely listening for common threads and opportunities to come together as a community to see some of these bills signed into law. We have to; too much is at stake for our community.
Heidi Ross is the Vice President of Policy and Regulatory Affairs at NORD.
Karin Hoelzer is the Director of Policy and Regulatory Affairs at NORD.
