Rare disease patient advocates said Medicare’s final drug price implementation plan threatens to undo incentives to develop drugs for their patients, and they plan to increase pressure on Capitol Hill to maintain protections of a decades-old orphan drug law.
The Centers for Medicare & Medicaid Services released final guidance Friday on how the agency aims to lower drug costs, marking a critical step as historic drug price negotiations for more than 65 million Medicare beneficiaries are set to begin this fall.
The National Organization for Rare Disorders wanted the agency to clarify that an orphan drug wouldn’t be subject to drug price negotiation until it was FDA-approved to treat a second disease—so that testing an orphan drug to treat another disease or population wouldn’t make that therapy subject to price negotiations. But the final document says the opposite: “a drug that has designations from the U.S. Food and Drug Administration (FDA) for more than one rare disease or condition will not qualify for the Orphan Drug Exclusion, even if the drug has not been approved for any indications for the additional rare disease(s) or condition(s).
The Medicare agency further stated that it will only consider active designations and active approvals when evaluating a drug for the Orphan Drug Exclusion. “CMS will not consider withdrawn orphan designations or withdrawn approvals as disqualifying a drug from the Orphan Drug Exclusion.”
“If a manufacturer has told the FDA that they want to remove one of their designations and that designation is no longer active, this is something that we continue to collaborate with the FDA on as well, so that as we’re looking at the exclusion, we will be looking to make sure that we’re only looking at active designations,” Meena Seshamani, deputy CMS administrator, said during a media briefing Friday.
Many orphan drugs only have approvals for a single disease, but many of them potentially could treat more than one disease, Karin Hoelzer, NORD’s director of policy and regulatory affairs, said.
“Further developing them for additional diseases has been a real priority for our community, because it used to be one of the most promising ways to help address the unmet need in the rare disease community,” Hoelzer said. “But now with this new guidance, we’re just concerned that there are very few incentives left to study these orphan drugs for additional diseases, which is a huge concern.”
With the final guidance out, Hoelzer said “we are going to work with Congress to make sure that the Orphan Drug Act incentives are protected. And we’ll continue to work with the Biden administration on the implementation of the Inflation Reduction Act overall.”
Some of the costliest drugs on the market right now treat rare diseases, such as
Their high price tag puts them in the sights of officials, but manufacturers have argued that the costs of developing the drugs and small patient populations require money and that cutting reimbursement would stifle innovation.
Exemption for One Indication
“Rare diseases, almost by definition, are an unmet medical need. They have very few treatments. So you want to encourage people to launch those products to get them through the FDA process and onto market. We should not be having the system set up so that it’s better for a drug manufacturer to wait,” Nick Shipley, chief advocacy officer for the Biotechnology Innovation Organization, said.
The Inflation Reduction Act exempts orphan drugs from price negotiations if the FDA has only approved them to treat “only one rare disease or condition” and “for which the only approved indication (or indications) is for such disease or condition.”
“The minute you get a second indication, you lose your exemption. So that already discourages innovation on those products,” Shipley said.
The law creates incentives to delay treatments for new rare conditions to come onto the market, Shipley said, which he called “a real detriment.”
The CMS can’t expand the exemption to more than one disease since it’s written into the statute. But Hoelzer said the agency could have taken steps to minimize disincentives.
Since the FDA must issue the orphan drug designation before a company submits a marketing application, NORD wanted clarification that a drug wouldn’t be subject to negotiation because it was being tested to see if it could work on another rare disease.
The group also wanted clarification that treating different ages or treating different stages of the same disease wouldn’t remove the exemption, Hoelzer said. For example, it wanted clarification that if a drug had one indication for early-stage cancer patients and another indication for late-stage cancer patients, whether that would eliminate the exemption.
“We believe CMS has the statutory authority to interpret the IRA in this way,” Hoelzer said.
The first tranche of drugs under negotiation are unlikely to include orphan drugs, as Medicare will pick drugs based on total expenditures in 2023. But rare disease advocates expect some of these therapies to qualify down the line as the law calls on Medicare to increase gradually the number of drugs up for negotiation every year from 10 to 20—and as more drugs will have been on the market for nine or 13 years, making them potentially eligible for negotiation.
‘Move the Needle Forward’
There are more than 7,000 rare diseases impacting 25 million to 30 million Americans. More than 90% of these diseases have no treatment option. The 1983 Orphan Drug Act aimed to shift this by offering tax credits, longer market exclusivity, and other incentives for drugmakers to pursue rare disease therapies.
And it worked.
Prior to 1983 there were just 38 drugs to treat rare diseases and there are now more than 1,000 orphan indications for treatments that have obtained FDA approval. The number of drugs with multiple orphan indications is increasing. A 2021 paper in the Orphanet Journal of Rare Diseases called the increasing number of drugs a “seismic shift” in the rare disease space.
Tamar Thompson, vice president and head of corporate affairs for rare disease drugmaker
“What we would like to see is for that progress to not have been impeded,” she said. “We’d like to see the CMS, the Congress, and the FDA aligned to move the needle forward and not take us backward for rare disease and orphan drug policies.”
Over the past three decades, Alexion has been able to treat multiple patient indications on the same technology. “If IRA’s provisions were in place 30 years ago, we wouldn’t be where we are today as a company. We wouldn’t be able to serve as many patients as we do today.”
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