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Should health insurance pay for 'orphan drugs'?

As a growing number of “orphan drugs” are used to treat people with rare diseases, the authors of a new report wonder whether health insurance companies should continue to cover the costs of these expensive medications – some costing up to $300,000 a year for one patient.

The authors of the report, released by The Hastings Center, question whether this money could provide greater overall health benefits if spread out among many patients. The Hastings Center is a nonprofit bioethics and public policy institute.

“Tomorrow’s medical care will feature a growing number of expensive therapies that offer benefits only to small populations,” wrote the authors, Emily Largent, a doctoral candidate in health policy at Harvard University, and Steven Pearson, president of the Institute for Clinical and Economic Review at Massachusetts General Hospital.

orphan_drugsThe decisions by health insurance companies to cover orphan drugs – medications for rare conditions that usually are chronic and life-threatening – reflect the “rule of rescue,” the value that society places on saving lives in immediate danger at any expense.

But Largent and Pearson argue that the broad application of this rule will be increasingly difficult to support as pharmaceutical companies make drugs that are genetically targeted to relatively small groups of patients. For example, rather than a new blockbuster drug that treats millions of people with high blood pressure (hypertension), new targeted therapies will treat only a few thousand people who have a particular genetic makeup.

“Increasing numbers of expensive orphan drugs are expected to come to market,” Largent and Pearson wrote. “In addition, advances in pharmacogenetics will soon be able to separate many common diseases, such as hypertension, arthritis, cancer and diabetes, into numerous small and distinct subpopulations of patients with specific genetic profiles.”

Federal law governs orphan drugs

Since passage of the federal Orphan Drug Act of 1983, the number of orphan drugs has risen significantly. In the decade before passage of the law, only 10 new drugs for rare diseases were developed. Today, more than one-third of all newly approved medications are orphan drugs.

Federal law defines an orphan disease as one that affects fewer than 200,000 people. Currently, 6,000 to 7,000 rare diseases have been pinpointed as "orphan" disorders, and about five new rare diseases are described in medical literature each week. About 80 percent of rare diseases affect fewer than 6,000 patients in the United States.

Rare diseases affect an estimated 25 million to 30 million Americans. The most familiar include Huntington's disease, Lou Gehrig's disease and cystic fibrosis. The drugs used to treat these conditions can be quite expensive. As a result, the insurance co-pays for orphan drugs tend to be a much higher percentage of medical costs than services provided by doctors and hospitals.

'Ethics conversation' needed

Peter Saltonstall, CEO of the nonprofit National Organization for Rare Disorders, says says he agrees with Largent and Pearson that an “ethics conversation” should take place so that, as a society, "we can determine how to assure that seriously ill people will receive needed medical care, whether their diseases are common or rare."

“I think the Hastings report raises a lot of issues,” Saltonstall says. “As a society, we need to address those issues.We need to have the conversation.How much are we willing to spend? And are we willing to let someone die if we feel we can't afford the treatment?Those are important issues we need to discuss.”

Before society can answer this question, Saltonstall says, attention needs to be paid to bringing down the costs of orphan drugs and other prescription medications.

“There are a lot of issues we need to look at,” Saltonstall says. “Why does a drug cost so much to develop? The process to bring a major drug to market takes an average of 14 years and $1 billion. Should we be looking at the process? Are we just accepting these high costs because that’s the way it is?”

Matthew Bennett, senior vice president at the Pharmaceutical Research and Manufacturers of America, an industry trade group, says rare-disease research and development can be costly and time-consuming -- requiring an average investment of $1 billion for a new medicine and 10 to 15 years to bring it to market.

“Once they overcome research and regulatory challenges, companies must face market pressures that are common to all products, but perhaps escalated by smaller patient populations,” Bennett says. “Too often, medicines are viewed as a cost and not as a savings, even though medicines often reduce unnecessary hospitalizations, help avoid costly medical procedures and increase productivity through better prevention and management of disease.”

Congressmen seek faster drug approval

U.S. Reps. Cliff Stearns, R-Fla., and Ed Towns, D-N.Y., have introduced the Unlocking Lifesaving Treatments for Rare Diseases Act (ULTRA). The bill is designed to speed up the approval of orphan drugs by opening the federal government's fast-track approval path to medications that treat life-threatening, extremely rare genetic diseases.

“The use of accelerated approval has been limited by the FDA to HIV/AIDS, cancers and bioterrorism drugs,” Stearns says. “Accelerated approval should be used more often and especially for the rare disease drugs where many patients have limited options, if any. My legislation sends a message to the FDA that they need to re-examine how they use accelerated approval.”

Beyond reducing the costs of orphan drugs, Charles Shasky, head of pharmacoeconomic comparative effectiveness research at health insurance giant Aetna, says the ultimate question is more complicated than just whether the money spent on orphan drugs for small numbers of patients could be redirected to larger numbers of sick people.

“If you have a drug that can prolong the productive life of a multiple sclerosis patient, then how do you quantify that person’s contribution in terms of their personal productivity, wealth, income, family and paying into the tax rolls? Shasky asks. “Those are difficult questions to quantify. But it’s something that has to be considered. All parties have to agree to some metric to quantify that if you are going to get down and have a serious discussion about this.”

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