Interest, investment, and innovation in the rare disease space has accelerated in recent years and continues to grow—nearly half of all agents approved by the FDA last year had previously received orphan designation (FDA, 2016 Novel Drugs Summary). Indeed, the acceleration of drug development for rare diseases is outpacing the regulatory resources necessary to comply with the Orphan Drug Act; last week, new FDA commissioner Scott Gottlieb outlined a plan to rapidly clear the backlog of applications for orphan drug (OD) designation, and to be more efficient in processing applications moving forward. Furthermore, as ODs comprise a growing fraction of drug spend, payers and other stakeholders have yet to establish a mutually agreeable value assessment framework for ODs that captures the unique dynamics in the rare disease space, although the conversation is ongoing (e.g., ICER’s Orphan Drug Summit).



Owing to the rapid growth of the OD space, stakeholders from patients to prescribers and payers to developers are faced with a host of challenges. Developers seek to bring innovative new therapies to market and maximize revenue while faced with patient populations that are, by definition, very limited in size, and whose afflictions are sometimes not easily recognized by treated physicians, creating unique developmental (e.g., trial design) and commercial hurdles. Payers must manage costs as premium-priced ODs reach market and increasingly strain budgets, especially in smaller plans in which a small handful of policyholders receiving high-cost ODs can disproportionately consume limited resources. As a result, patients may face high cost-sharing burdens, and physicians must navigate prior authorizations, step therapy requirements, and, in some cases, outright exclusion of high-cost drugs from payer commercial plans.

Despite these headwinds, OD developers should recognize and capitalize on the opportunity to influence evolving policy in this arena. In our 2017 U.S. Orphan Drugs and Rare Diseases Access & Reimbursement content, DRG surveys physicians and managed care organization (MCO) pharmacy and medical directors to gauge the impact of payer policy on physician prescribing and the outlook for the future. Our research uncovered successes and stumbles in cystic fibrosis (CF), Duchenne muscular dystrophy (DMD), spinal muscular atrophy (SMA), sickle cell disease (SCD), and β-thalassemia, identifying actionable recommendations for OD developers to ease the path of novel ODs to commercial success.


Pharmacoeconomic data aid in formulary placement. Data from surveyed payers suggest that formulary coverage and tiering for Biogen’s Spinraza, the first approved treatment for SMA, is relatively favorable despite a list price approaching $400,000 per patient per year. Surveyed payers who reported receiving pharmacoeconomic data from Biogen overwhelmingly considered the data to be of high quality, and reported that these data had a positive influence on their formulary decisions for Spinraza. Notably, however, payers’ preferred pharmacoeconomic outcomes data differed between queried rare diseases. For example, most payers were compelled by the cost of a novel DMT versus standard of care when assessing CF therapies, while in DMD the ability of a new DMT to reduce total drug use was preferred by the majority of surveyed payers.


Engage early with MCOs. Surveyed payers were fragmented with respect to the preferred clinical efficacy end points and ideal comparators to employ in clinical trials of emerging ODs, highlighting the need for developers to converse with payers early in the development of an asset in order to facilitate favorable formulary placement upon FDA approval. Many surveyed payers reported that ODs approved by the FDA that have not undergone complete formulary review are either not covered, or are relegated to non-preferred tiers, further supporting the need for early outreach. Most importantly, discussions among key stakeholders regarding preferred methods of OD value assessment are in their infancy, and early payer outreach can facilitate the process of mutually acceptable value assessment and, thus, contracting terms favorable to all parties.


Developers can help to shape a favorable regulatory and payer environment. Although OD developers face headwinds including strained payer budgets and increasing competition, commercial opportunity for novel ODs remains. Developers with a keen eye for the goals driving various stakeholders in the rare disease space will be poised to tap the full potential of the demand for novel ODs. In parallel, engagement with payers early in development can provide value by facilitating rapid market access and providing sufficient time to negotiate terms beneficial to all parties. Furthermore, the ongoing efforts of the FDA to streamline the ODD process will lessen at least one regulatory barrier encountered by developers.  Ultimately, the future is bright for an OD that demonstrates meaningful clinical impact in a serious rare disease, the majority of which lack an approved treatment.


For key actionable recommendations and supporting data for developers in the OD space, please consult DRG’s 2017 U.S. Orphan Drugs and Rare Diseases | Access & Reimbursement.


For further discussion of how developers can successfully navigate OD commercialization, please consult this recent Life Science Connect article, written by DRG’s Ian Love, PhD.


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