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Mar 4, 2014

The High Cost of Rare Disease Drugs

Six-figure treatment prices continue to climb for orphan therapeutics.

The High Cost of Rare Disease Drugs

Why are rare disease drug prices high and climbing higher? [© Sergey Baybara - Fotolia.com]

  • High drug prices are like this year’s winter in much of the U.S.: Everyone complains, but nobody does anything about it.

    The perennial pet peeve about pricing resurfaced earlier this month, when BioMarin Pharmaceutical disclosed the $380,000 cost of a year’s treatment with its new drug Vimizim™ (elosulfase alfa). The first enzyme replacement therapy for Morquio A syndrome, Vimizim targets a deficiency in the enzyme N-acetylgalactosamine-6 sulfatase (GALNS)—the cause of a rare metabolic rare disease estimated to occur in one of every 200,000 births. The FDA approved Vimizim on February 14.

    BioMarin has publicly defended its Vimizim price as being consistent with other enzyme replacement therapies (ERTs). The company is right to a point, since the cost of Genzyme’s ERT Aldurazyme (Laronidase) for mucopolysaccharidosis I can range from $200,000 in children to $500,000 in adults, according to the firm. ERTs averaged $200,000 to $300,000 in a 2006 study.

    Vimizin is not the costliest rare disease drug: Alexion Pharmaceuticals’ Soliris (eculizumab) is a $440,000-a-year treatment for paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS), while Viropharma’s Cinryze (C1 esterase inhibitor [human]) treats hereditary angioedema (HAE) for $417,000 a year.

    Why are rare disease drug prices high and climbing higher?

    Steven A. Grossman, president of HPS Group—a health policy and public affairs company whose clients include drug developers, patient advocates and professional groups—told GEN biopharmas with new orphan drugs might set prices case-by-case, based on results from any or all of three pricing models:

    • “Value-added” pricing is based on replacement or enhancement of current treatments in the same category.
    • “Cost plus” pricing based on its development costs and return on investment before newer products or generics cut deeply into sales.
    • “Comparable value” pricing that compares the characteristics or benefits of drugs in different clinical categories.
  • Recouping Investment

    Joshua P. Cohen, Ph.D., senior research fellow with the Tufts Center for the Study of Drug Development (CSSD), told GEN there’s no causal link between cost of development and pricing, though biopharmas will generally set higher prices for orphan products. Instead, rare-disease drug prices reflect supply and demand: Few treatment alternatives allow companies to charge what they can, knowing that payers will often ultimately foot the bill.

    “The rarity of the disease means that few people are affected. Generally, the fewer disease sufferers there are, the higher the price of the drug. Companies that invest the same amount of money or more in orphan drugs as they would nonorphan drugs want to recoup their investment,” Dr. Cohen said.

    While U.S. healthcare reform has caused insurers to restructure or even cancel policies for millions, citing rising costs, Grossman said payers are unlikely to scale back wholesale on paying for rare disease drugs, even as prices continue to rise. One reason, he said, is because health insurance is guided by the principle of medical necessity: “In most instances with orphan drugs, the medical necessity is not only indisputable, but very obvious. There is nothing subtle about Morquio A syndrome.”

    Insurers are already paying six-figure expenses for medical care and palliative medicine for orphan drug patients. Also, the number of rare diseases cases for which any given insurance company will be “at risk” is very small, Grossman said, since millions of Americans are now covered by employers who are self-insured and government programs that include Medicaid, Medicare, and the federal health benefits program.

    “They can get better returns, sleep better at night, and get less adverse publicity if they try to save money by converting all Lipitor patients to generics or providing better oversight of back pain cases or negotiating lower reimbursements for cardiac bypass surgery,” Grossman added.

    Insurer willingness is one of two reasons why Grossman says containing orphan drug costs is unlikely to major factor in holding the line on overall healthcare costs; the other is because the treatments are a small percentage of drugs sold—about 13% in 2012, set to rise to 15.9% in 2018 at twice the annual growth rate of the overall drug market, according to an Evaluate Pharma analysis released last year.

  • Offering Assistance

    Companies often address the cost issue by allowing at least some patients access to orphan drugs at no or low cost, if they meet assistance criteria. Last year, Genzyme provided free drugs to between 3% and 8% of patients worldwide across four rare diseases: “This amounts to $103 million in fair market value of these products in 2013,” a company spokeswoman, Ingrid Mitchell, told GEN.

    Incyte, for example, offers its myelofibrosis treatment Jakafi® free to patients without insurance, and at up to $50 a month for patients with private insurance based on conditions that include income limits.

    Otherwise, patients can expect to pay as much as $84,000 for Jakafi. Zhenya Senyak, whose MPNforum Monthly website serves the community of people with myeloproliferative neoplasms, last year publicly criticized Incyte for not lowering the price of the MF drug. Incyte responded by citing its assistance program, called IncyteCARES: “Incyte is committed to patient health and ensuring they have access to Jakafi (ruxolitinib) despite any financial hardship.”

    The National Organization for Rare Disorders (NORD), a nonprofit federation of voluntary healthcare organizations dedicated to helping rare-disease patients and groups serving them, has teamed up with rare-disease drug developers to maintain between 30 and 40 patient assistance programs at a given time, each tailored to the needs of the sponsoring company.

    Since NORD began running the first such program in 1987, the programs have served about 3,000 patients annually, and more than 1.3 million patients overall, spokeswoman Mary Dunkle told GEN.

    NORD and Genzyme, a Sanofi Company, launched a fund in December to address another need of people with rare diseases. The Genzyme/NORD NIH Undiagnosed Diseases Fund will pay for baseline medical testing of patients applying to NIH’s Undiagnosed Diseases Program (UDP) who need financial assistance. The cost can range from $2,000 to $5,000 per patient. But if their insurer won’t pay for testing, and a patient cannot, he or she cannot apply for UDP.

  • Running for Patients

    The new fund arose from a team of Genzyme employees who run the Boston Marathon annually to raise funds for NORD services on behalf of all patients and families affected by rare diseases. Since 2008, members of the Genzyme Running Team have partnered with rare disease patients, devoting months before the marathon to training, awareness-raising, and fundraising.

    “In 2013, the team decided they would like to support a specific initiative. We discussed options and came to the conclusion that one of the most urgent needs for patients is to reduce the time required to get an accurate diagnosis,” Dunkle said.

    NORD contacted William Gahl, M.D., Ph.D., director of NIH UDP and clinical director of NIH’s National Human Genome Research Institute. Dr. Gahl cited the need for baseline medical testing since the program only admits people it believes it has a reasonable expectation of helping.

    As helpful as assistance programs are, across-the-board price relief would help the most patients. The challenge, as GEN noted last year for cancer drug prices, is advancing drug affordability not through government and industry, but a market that lowers prices through competition.

    In a healthy market, providers can check escalating prices—as doctors at Memorial Sloan-Kettering Cancer Center did in 2012, when they refused to prescribe Zaltrap (ziv-aflibercept) for metastatic colorectal cancer until Sanofi began offering 50% discounts on the drug’s initial $11,000-per-month cost—after the physicians raised the issue in The New York Times.

    Dr. Cohen of Tufts CSDD says competition is coming to rare disease drugs, citing chronic myeloid leukemia as one category that has seen multiple orphan entrants over the past decade. Generic competition is not far away, he said, and eventually biosimilars will create pricing pressure.

    That could offer significant relief since a growing number of rare disease drugs are costly-to-make biologics. But Europe has been slow to approve biosimilars, and the FDA has yet to finalize an approval pathway. Until a market emerges with generic, biosimilar, and branded drug choices, the price for rare disease drugs will be anything but right.



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