Why Your Kid with a Rare Disease May Need a Paper Route and a Lemonade Stand

The U.S. healthcare system is filled with absurdities and a new study from researchers at University of Michigan and Boston University documents one of these.

In the study, published in Health Affairs, Kao-Ping Chua, assistant professor in the department of pediatrics at the University of Michigan Medical School in Ann Arbor and Rena Conti, associate professor in the department of markets, public policy and law at the Questrom School of Business at Boston University, found that for privately insured children, orphan drugs accounted for 6.6 percent of inflation-adjusted total healthcare spending in 2018, up from 4 percent in 2013.

Though insurance companies pay much of the cost of orphan drugs that treat rare childhood diseases, families’ share of the cost has risen rapidly. The researchers found that mean out-of-pocket spending on orphan drugs for kids rose to $866 in 2018, up from $486 in 2013. The out-of-pocket costs for these families were higher than those faced by adults who take orphan drugs.

About 1 in 8 families paid more than $2,000 out-of-pocket on orphan drugs in 2018, twice the percentage of those who spent that much in 2013.

The sharp increase was largely due to the approval of new drugs and the overall price growth of these drugs, the authors said. Small-molecule drugs drove much of the increase in orphan drug spending, with a 162 percent rise in five years, compared with a 16 percent rise for biologic drugs, which are derived from living organisms.

Ten orphan drugs accounted for 52.9 percent of pediatric orphan drug spending in 2018. During each year of the study period, orphan drugs approved to treat short stature represented at least two of the five top- selling biologics. The researchers note that other research has shown that many children who don’t have a rare condition receive these two drugs through off-label prescribing aimed at boosting their height.

In 2018, the SMA drug Spinraza and the cystic fibrosis drugs Kalydeco and Orkambi accounted for the three highest spending totals among small-molecule orphan drugs.

“Findings demonstrate that pediatric orphan drug spending is increasingly burdening payers and families and suggest that payers should better protect families against the prices of orphan drugs by improving benefit designs,” the authors wrote.

It seems apparent we are heading toward a new public policy discussion on the future of healthcare in the United States as the Affordable Care Act moves once again to the U.S. Supreme Court.

In the realm of rare diseases, the question should be, what purpose do co-payments serve? There’s a case to make for the use of co-payments to minimize waste, improve compliance, and curb unnecessary utilization. However, in the realm of rare disease, these medications are generally not optional, and patients have more incentive to comply than any co-payment would provide.  

For patients with rare diseases, particularly children, co-payments serve no purpose other than to shift the cost from payer to patient. It’s also worth noting that these are people who have not incurred an illness because of their own reckless lifestyles. In the case of rare disease, co-payments do nothing but erect a barrier to access. Let’s hope that as we likely consider healthcare reform in the next year, we address this.