OBJECTIVES: Health technology assessment (HTA) bodies use uniform WTP thresholds for severe, rare diseases and common conditions. Independent HTAs for orphan drugs reveal ICERs exceeding standard WTP limits, limiting access to innovation for high unmet medical needs. This study proposes an algorithm to determine prevalence-adjusted WTP thresholds in generalized cost-effectiveness analysis (GCEA) to address equity barriers in rare disease drug development.

METHODS: Starting with the U.S. societal WTP established by a medically necessary health technology for nearly all individuals paid for by U.S. government funding (i.e. the 2021 COVID-19 vaccine), we examined the incremental cost-effectiveness ratio of this technology relative to its list price and budget impact. The prevalence of medical diagnosis of a nationally representative cohort from the 2021 Medical Expenditure Panel Survey (MEPS) Medical Conditions file was standardized, in consonance with the distributionally appropriate Box-Cox transformation. Then, a weight was attributed to each ICD-10 code, according to their prevalence. The proposed formula adjusted the WTP thresholds by the prevalence weight and established upper and lower thresholds. For illustrative purposes, the example includes the WTP thresholds commonly considered in the United States of America [$50,000/QALY; $150,000/QALY].

RESULTS: A total of 289 ICD-10 codes were identified in the 2021 Medical Conditions file with prevalence ranging from 20.61% to 0.0075%. The formula proposed in this study yielded patient population-adjusted thresholds ranging from $6,982/QALY for common conditions to $990,049/QALY for rare diseases, ceteris paribus.

CONCLUSIONS: The algorithm presented in this study is a new tool to evaluate the appropriateness of the opportunity cost of health technology. Moreover, this methodological approach is universal and can be implemented regardless of a societal WTP thresholds. Instead of following a blind approach to value for rare conditions, HTA bodies and decision-makers can use this approach to determine the equity-based resource allocation under budget constraints.