Calculating the Costs of Rare Diseases

Last year, the Everylife Foundation for Rare Diseases issued a study on the economic burden of rare disease that found the direct and indirect cost of these conditions in the United States totaled nearly $1 trillion a year. Now, a new study from Chiesi Global Rare Diseases, with support from the health information technology company IQVIA, suggest that the cost could be as high at $8.6 trillion.

The study found that the per patient, per year costs of rare diseases are more than 10 times higher than for more common diseases. The study found that the direct, indirect, and mortality costs associated with rare diseases are all higher in cases where a patient is without a treatment than in cases where a treatment exists.

“These results highlight the need for policymakers to nurture and sustain innovation based on the positive economic return from rare disease therapies and justify an increased governmental investment in diagnosis and newborn screening to ensure wider patient access to therapies,” the authors wrote. “Incentives for drug development, particularly restoring the Orphan Drug Tax Credit to 50 percent and maintaining its current applicability to multi-indications, encourage investment and have led to progress in rare disease drug approvals.”

The Chiesi study differed in a number of ways from the Everylife study, but most notably in its inclusion of mortality costs—the value of lost years of life—in its calculations. It used the U.S. Department of Transportation’s value of a year of life at $130,000 and a life expectancy of 79 years to determine mortality costs.

For its analysis, the Chiesi study began with a database of 373 rare diseases covering 8.4 million patients in the United States. Through consultations with rare disease experts and patient advocates, it selected 24 diseases across a range of therapeutic areas and evaluated costs in three categories: direct costs (medication, hospitalization, home healthcare, and more), indirect costs (productivity cost for patient and caregiver, work loss, home changes, and more), and mortality costs (value of statistical life 79-year average at $130,000 a year). The availability of detailed data was also a factor in the selection of diseases for the study

The study found for the 8.4 million patients affected with the 373 rare diseases used in the analysis, the cost is an estimated $2.2 trillion. Extrapolating its findings to include all rare disease patients in the United States, the cost is estimated to be between $7.2 trillion and $8.6 trillion.

It also found that a lack of treatment was associated with a 21.2 percent increase in total costs per patient, per year cost, although that varied widely by indication with just a 2.2 percent increase for congenital diseases and a 51.8 percent increase for metabolic diseases.

Overall, direct cost for a rare disease without treatment totaled $118,000 per patient per year compared to $63,000 for conditions with a treatment. Indirect costs totaled $73,000 for rare diseases without a treatment per patient per year compared to $40,000 for diseases with treatment. And mortality costs totaled $49,000 per patient per year for rare diseases without a treatment compared to $36,000 for rare diseases with treatments.

“There is a need to prioritize rare diseases as a public health crisis. We all look at this as a societal issue. There’s this notion of just science. What does data bring? What sense of justice does it bring?” said Gina Cioffi, senior manager of public affairs for Global Rare Diseases at Chiesi Group and a study co-author. “I think that here, it shows that there is a really high burden, it’s higher perhaps than common diseases and it doesn’t get the attention, it doesn’t have the voice that somebody with cancer or Alzheimer’s has right now.”

Giacomo Chiesi, head of Chiesi Global Rare Diseases and a co-author of the study, said much of the economic burden is left for patients and their families to contend with. He noted that while the study showed that the development of therapies reduces the burden of rare diseases overall, it also has the additional benefit of shifting part of the burden off of patients and their families and onto payers.

“Insurance companies tend to have a lot more money than patients and families. They can differentiate and diversify the risk of the rare diseases. They can differentiate them over a portfolio of a large number of patients,” he said. “Statistically, they reduce their own risks while at the same time they can actually finance themselves with the premiums of healthy individuals. That’s a very effective way of diversifying away the financial risk of rare diseases from one single family onto society at large.”