Rare disease reimbursement needs a reasonable process, not a blunt rule

More orphan drugs are coming to market but can come with a high price: Leela Barham looks at the ways that decisions are made to explore the value that they bring, and to decide which orphan drugs health care systems should pay for.


Drugs that treat less than five in 10,000 people as one of the main criteria, using the European Union definition, are classified as orphans. It should have come as no surprise that there would be more and more orphan drugs coming to market following concerted efforts to encourage the pharmaceutical industry to develop them. In Europe this was via the Orphan Regulation which encouraged research and development through providing discounted advice from the regulator and 10 years market exclusivity.

That legislation was passed in 2000: with drugs generally taking some 12 years to bring to market about now is when we’d expect to see that investment come to fruition. And it seems to be so: there were 66 orphan drugs approved for use across Europe as at October 2013, and according to the Pharmaceutical Research and Manufacturers of America (PhRMA) America’s biomedical research companies had 452 in development as at October 2013. Orphan drugs can bring substantial revenue; an orphan drug (Genentech’s Rituximab) takes the second spot in the top 10 of revenue generating drugs. Only Pfizer’s Lipitor beats it.

“Now that we have many more orphan drugs it is tough to decide whether they offer value for money”

The challenges in assessing the value for money of orphan drugs

Now that we have many more orphan drugs (and that’s got to be good news for the millions who collectively have rare diseases across the globe) it is tough to decide whether they offer value for money. That is not just a vexing issue for orphan drugs, it’s a general issue for all drugs, but because orphan drugs treat rare diseases they are materially different to drugs for common diseases. And different in quite a few ways too:

A limited knowledge base: from knowing the numbers of patients that a rare disease affects to how a rare disease might progress

A disperse patient base: patients are spread across the globe and it can be hard to recruit enough patients to explore safety let alone extrapolate to cost effectiveness so it’s simply hard, and expensive, to run trials. They may also fail to give the certainty that regulators, and agencies who pay for medicines, about their benefits. And expertise in rare diseases is often similarly spread out: finding a clinical peer can mean reaching out to colleagues across Europe when dealing with the very rare diseases

A high cost base leading to higher costs per unit: obvious but vitally important for the economics is that it can cost a lot to bring a product to market (I’ve never found a discrete estimate for orphan drugs but it’s got to be in the region of the estimates for common drugs at between US$80 million to US$5 billion depending upon whose estimates you believe). And the size of the market is, by definition, small. Whilst some products will go on to have more than one indication, it’s still not likely to reach the market sizes of drugs to treat more common diseases. That means that the per unit costs will tend to be higher than for drugs for common diseases

A new NICE approach to highly specialised technologies: A multi-criteria approach

Becoming more topical is not trying to shoe horn orphan drugs into the ‘standard’ approach to health technology assessment (if such a thing really exists) but instead setting out the multiple criteria that should be taken into account when deciding whether to reimburse or not. And arguably it’s actually just expanding on the number of criteria since most systems will have considered clinical and cost effectiveness and ‘other’ factors even if these are woolly and hard to define (such as degree of innovation).

“Becoming more topical is not trying to shoe horn orphan drugs into the ‘standard’ approach to health technology assessment”

The National Institute for Health and Care Excellence (NICE) approach is a case a point. Whilst it begs and borrows much from others (such as the now disbanded Advisory Group for National Specialised Services decision making framework) NICE has set out a number of criteria that need to be considered when assessing highly specialised technologies in interim guidance:

Nature of the condition: to cover both the impact on the patient (in terms of morbidity and clinical disability) but also the impact on the carers’ quality of life and the range of current treatment options

Impact of the new technology: to cover clinical effectiveness, health benefits to patients and carers, heterogeneity of health benefits within the population, robustness of the evidence and treatment continuation rules

Cost to the NHS and personal social services: to cover budget impact and robustness of the costing and budget impact estimates, and patient access agreements (discounts)

Value for money: to cover incremental benefit vs current treatment, other resources needed (e.g. tests etc) and the impact on the budget available for specialised commissioning (NHS spend on treating rare conditions)

Impact of the technology beyond direct health benefits: to cover a wider benefit such as whether costs or savings might fall outside of the health system and the potential for long-term benefits to the NHS of research and innovation

Impact of the technology of the delivery of the service: to cover staffing and infrastructure requirements

But as ever, it’ll be tricky to identify, measure and value all these components and then decide how and whether they all ‘add up’ to a good use of NHS limited funds. That job will fall to the Highly Specialised Technologies Committee. They’ll have to come to a view and make a recommendation. They will also need to bear in mind the Patient Charter that’s under development to support the NICE process for HSTs. We’ll know more as they implement the approach over 2014 including their decision on one particular drug, eculizumab (Soliris) for atypical haemolytic uraemic syndrome (aHUS). Eculizumab comes at a high cost: about £250,000 per year.

“We probably need to do more to figure out just how much society is willing to pay for treating small numbers of patients”

And we probably need to do more to figure out just how much society is willing to pay for treating small numbers of patients to help guide these decisions: is it more than what we want to pay for treating more common diseases? If so, just how much more? And their views on the different trade offs within this: I’d be willing to pay much more even if the patient numbers were small (so offering a small absolute gain in health) even if the price relatively high, if we can be pretty certain of the success of treatment: enzyme replacement therapies, for example, can offer just that.

Making decisions that balance patient, carer, and society viewpoints – avoiding a decision rule, embracing a reasonable process

The new approach from NICE has yet to be tested; but the hope is that it will avoid adopting a blunt decision rule (if we value treating rare diseases we will need a much larger range for the Incremental Cost Effectiveness Ratio (ICER)) and instead embrace a process that all stakeholders can accept. That won’t avoid the need to come to a view on an acceptable ICER, but it does mean that there can be flexibility so that some of the less easily quantified elements of value can be accounted for. We’re still likely to find some orphan drugs are considered too expensive, and others that offer value for money, but if the process is considered reasonable we may be able to avoid the Daily Mail headlines and instead focus on the patient.

Leel’s next article ‘First test case of NICE approach to Highly Specialised Technologies – Soliris® (eculizumab)’ can be viewed here.



About the author:

Leela Barham is an independent health economist and policy expert who has worked with all stakeholders across the health care system both in the UK and internationally. Leela works on a variety of issues: from the health and wellbeing of NHS staff to pricing and reimbursement of medicines and policies such as the Cancer Drugs Fund and Patient Access Schemes. Find out more here and you can contact Leela on leels@btinternet.com

Closing thought: How should the value of orphan drugs be assessed?