ICER Seeks Policy Debate on Balancing Innovation and Affordability of Orphan Drugs

While the growing number of orphan drug approvals are encouraging for the rare disease community, the independent nonprofit Institute for Clinical and Economic Review said the broader health system is struggling with the cumulative effect a growing number of orphan drugs with large price tags.

A new white paper, The Next Generation of Rare Disease Drug Policy: Ensuring Both Innovation and Affordability, considers several policy reforms intended to address the rising spending on orphan drugs. The paper, released earlier this month by ICER in collaboration with researchers at NORC at the University of Chicago, doesn’t make specific policy recommendations. Instead, it weighs the potential risks and benefits of a set of potential policy reforms that could improve evidence of the effectiveness of these therapies, increase ultra-rare disease drug development, and reduce prices for drugs that don’t clearly demonstrate clinical benefits. 

“Since its passage, the Orphan Drug Act and accompanying scientific advancements have successfully increased the number of treatments available for patients with rare diseases, but tremendous unmet need remains,” said Steven Pearson, president of ICER. “As a society, we must prioritize ongoing innovation and drug development for rare diseases—particularly those conditions with no available treatments today.”  

Pearson said there are widespread concerns about the perceived weakening of evidence requirements for orphan drugs, and questions are being raised about whether the health system can sustain access to orphan drugs if current pricing trends continue as the cumulative number of orphan drugs increases. At the same time, he notes, treatments for ultra-rare conditions remain particularly elusive, as current market dynamics often make it challenging for manufacturers to bring these products to market.

“To secure a future in which innovation and affordability are both ensured,” he said, “policymakers are going to have to consider potential reforms.”

As part of the process of producing the white paper, ICER said it went through several iterations following its Policy Summit in December 2021. During that meeting, policy leaders from rare disease patient groups joined with ICER’s Policy Leadership Forum, which is made up of senior policy leaders from 30 payer and life science companies. The paper was discussed and reforms debated. ICER said none of the participants or their organizations should be assumed to support any part of this report, which is solely the work of the ICER team and its affiliated researchers.

The policy proposals fell into four broad categories: encouraging ultra-rare drug development (establishing a definition of ultra-rare, increasing incentives, using value-based pricing); limiting incentives for orphan drugs approved for non-orphan indications; strengthening evidence generation; and reducing price for rare disease products through mechanisms such as outcomes-based contracts, using indication-based pricing, pursuing value-based pricing, or volume-based contracts.

“Policymakers and stakeholders will need to consider carefully whether these policy reforms would be able to retain the special incentives needed to ensure continued investment in orphan drugs while creating a better balance between the joint goals of broad innovation and affordability,” the authors write. “Views will differ, however, one thing is certain: continued innovation will only prove sustainable and helpful to patients if the costs of the overall effort of innovation can be better managed, both for individual patients and for health systems and society.”