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Thanks to a whole set of powerful incentives, starting with the Orphan Drug Act, biotech’s pipeline is full of drugs for rare diseases. This phenomenon hasn’t gone unnoticed by insurers, who are complaining ever more loudly about the costs and the relatively, but understandably, skimpy evidence for approval.

Now researchers from the Institute for Clinical and Economic Review (ICER) and the National Opinion Research Center (NORC) at the University of Chicago have released a new paper with proposals to roll back some of the incentives, increase others, create a rational approach to pricing, and create the basis for a long-term evidence-generator.

It’s not all bad.

The researchers’ recommendations fall into four areas:

1. Encouraging ultra-rare drug development
2. Limiting incentives for “partial orphans”, orphan drugs that are also approved to treat non-orphan indications
3. Strengthening evidence generation
4. Reducing prices

As we wrote in December 2021, the lack of evidence associated with many rare disease drugs has been a bugaboo for payers for some time. Many of these drugs are approved on accelerated pathways, characterized by smaller populations, shorter trials, and surrogate endpoints. And payers argue these products therefore disproportionately risk adverse events and inappropriate use.

ICER’s call for federal funding to sponsor rare condition registries, which can routinize real world evidence generation, is a reform the industry should rally behind.  If set up with an eye to capturing diagnosis codes, these registries could become a mechanism to identify and recruit patients for ongoing clinical trials, for instance. Such registries could also help accelerate the use of outcomes-based contracts, which ICER believes should be the status quo for orphan drugs. We agree.

Historically, one of the biggest challenges associated with outcomes-based contracts relates to their implementation across multiple payers. Especially for so-called one and done therapies, which call for a single curative treatment regimen, insurers are concerned that they will pay a high, upfront cost for the therapy but lose out on future economic benefits if the patient transfers to a new plan.

National patient registries would mitigate issues linked to such patient mobility, encouraging the use of  outcomes-based contracts on a national scale. They could also provide an additional payoff for payers, especially smaller, regional outfits. The truth is, even sophisticated payers struggle with the administration burden that comes with managing the data associated with outcomes-based contracts.

National patient registries would mitigate issues linked to such patient mobility, encouraging the use of outcomes-based contracts on a national scale.

Depending on the design, registries could be responsible for the data collection and adjudication of outcomes-based contracts, eliminating a big cost (in time and money) for payers, as well as solving that niggling trust problem that continues to dog any biopharma – payer interaction.

The notion of registries is one we are eager to explore in the Real Endpoints Marketplace,  which represents a group of small- and mid-sized regional payers with nearly 14 million covered lives. This group, which continues to expand,  is interested in implementing innovative contracts for orphan diseases.

We’re less keen on ICER’s advocacy of value-based price regulations. It’s not that value-based pricing is a complete non-starter. The danger is if this value-based pricing approach mandates the use of a particular methodology that doesn’t reflect how stakeholders across the ecosystem – payers, providers, manufacturers, and patients – define product value. Among the potential concerns: would it exclude or underweight value measures linked to quality of life and activities of daily living in preference for clinical and cost-effectiveness outcomes?

We think a better solution to defining value would be to start with a logically and transparently defined value-based best price – and then customize it using an outcomes-based agreement. The real world data produced as part of the outcomes based agreement would kickstart a virtuous circle of evidence generation that would help inform – and justify – a product’s price over time.

We think a better solution to defining value would be to start with a logically and transparently defined value-based best price – and then customize it using an outcomes-based agreement.

Such an approach would be powerful, providing sufficient incentives for investment in risky new science while addressing legitimate affordability concerns and still enabling market access. Indeed, this route to market access – outcomes-based agreements administered via an efficient system of registries – could unlock generations of innovation.

And isn’t that what we all want for patients?