Shanlian Hu, MD, MSc, Professor of Health Economics, School of Public Health, Fudan University, Shanghai, China
Pricing and compensation for rare disease drugs (orphan drugs) is a thorny issue. With limited medical insurance funds, optimizing orphan drug reimbursement is a global challenge. There is consensus that an orphan drug policy tailored to a country's circumstances is necessary to help increase transparency, consistency, and accessibility in orphan drug selection. At the same time, it is conducive to promoting cooperation among medical insurance, medical, and pharmaceutical industry. This paper analyzes the value judgment of orphan drugs in different countries and the use of value-price analysis to support orphan drug pricing decisions.
Difficulty of Pricing Orphan Drugs
According to the UK-based Global Pricing Innovation Ltd estimation, orphan drugs will rank fifth in all categories of prescription drug sales in 2026, accounting for one-third of the global drug pipeline. 1,220 clinical trials of innovative technologies and drugs have been conducted globally. Among them, the most expensive one-time gene therapy, Hemgenix (etranacogene dezaparvovec), is used to treat hemophilia B patients aged 18 and above, with a single injection costing up to $3.5 million USD.
The challenge in evaluating orphan drugs lies in the difficulty of conducting conventional, clinical randomized controlled double-blind trials. Firstly, there is no standard reference treatment method or lack of suitable comparators. Secondly, there is only a small number of clinical cases of evidence. Thirdly, due to the uncertainty of the evidence, it is difficult to evaluate their additional benefits, especially their long-term effect. Lastly, it is difficult to predict the price of new orphan drugs. Thus, it is very difficult for pricing orphan drugs.
Value Judgments - Similarity and Difference
The current trend is to adopt evaluation methods based on multiple criteria decision analysis. In general, the value judgment of orphan drugs can be considered from the following five aspects: 1. the burden of disease, including the epidemiological burden of rare disease, incidence, prevalence, mortality, and the economic burden of patients and their families; 2. Characteristics of orphan drugs; 3. Design of clinical trials; 4. Benefits after clinical treatment; 5. Other aspects.
The above five aspects can be regarded as different attributes which are used in multiple criteria decision analysis methods to determine the value score of orphan drugs. Under the framework of the above value analysis, different payers and health service providers in Germany, France and the United Kingdom have different views on influencing the value of orphan drugs (see Table 1). The results show that Germany tends to focus on disease burden and clinical treatment benefits, and France places special emphasis on orphan drug characteristics and clinical trial design in addition to clinical benefits. The UK also pays more attention to trial design and clinical benefits, which may be related to the job function of the National Institute for Clinical Excellence (NICE).
| Table 1: Value Framework Ratios of Healthcare Payers and Providers in Germany, France and the UK |
|---|
| Value framework | Germany (%) | France (%) | UK (%) |
| Disease burden | 31 | 15 | 13 |
| Drug characteristics | 0 | 26 | 8 |
| Clinical trial design | 22 | 28 | 32 |
| Clinical benefits | 47 | 22 | 23 |
| Others | 0 | 9 | 25 |
The UK has evaluated 20 innovative technologies between 2015-2022 including orphan drugs. The main factors considered are unmet need, burden of disease, long-term treatment effect, patient characteristics, indirect comparison, using the model method on the probability of transfer. Research methods include natural history of disease studies, observational studies, retrospective history review studies, and case registry studies.
Overall, the fastest country for orphan drug to go from approval to market is the United States (about 8 weeks). Among European countries, Germany is the fastest, taking about 24~28 weeks. France, Italy, and Spain take a longer time, especially orphan drug reviews, such as Spain, which takes 83 weeks.
Limitations of Existing Methods
Global Pricing Innovation Ltd reported on comparisons of medical reimbursement prices for eight orphan drug analogues among the UK, Germany, and France. Despite price differences in the three countries, price trends are relatively consistent between different drugs (see Table 2).
| Table 2. Price Difference of 8 Orphan Drugs in the UK, Germany and France |
|---|
| Drugs | Indications | Value Score | Compensation of Annual Treatment from Insurance |
| Evrysdi | Spinal muscular atrophy, Children at 2-month-old and under | 60 | 280,692 | 231,625 | 270,136 |
| Cerdelga | Gaucher disease type1 | 122 | 212,795 | 225,000 | 205,130 |
Brineura
| Late onset Neurogenic ceroid lipofuscinosis of infancy(Batten disease | 300
| 612,356
| 531,456
| 1,032,830
|
| Spiroraza | Spinal muscular atrophy | 300 | 262,830 | 240,497 | 210,000 |
| Namusela | Congenital Myotonia | 60 | 37,307 | 16,792 | 16,780 |
| Onpattro | Hereditary Transthyretin Amyloidosis in Adult | 130 | 306,844 | 307,737 | 281,897 |
| Taklizyro | Hereditary Angioedema | 140 | 378,249 | 332,549 | 299,612 |
| Xospata | Relapsed Refractory Acute Leukemia | 122 | 108,023 | 102,252 | 101,027 |
A linear regression analysis and Kappa consistency test on the treatment cost and value scores of the above eight orphan drugs showed that the price and value of therapeutic drugs were highly correlated. This value-price analysis method can be used to predict the price of new drugs for rare diseases and support orphan drug pricing decisions.
In 2018, the US FDA approved brososumab (trade name Crysvita) for the treatment of X-linked hypophosphatemic rickets (XLH), to test the comparison of theoretical and real prices of linear regression across countries. The R2 value in the UK is 0.67, with a theoretical price of $264,027 and a real price of $274,167, a difference of 4 percentage points. Germany's R2 value is 0.63, with a 5% difference in forecasts ($208,574 vs $220,155). The French market has the strongest correlation between price and value, R2=0.94, and the difference between the predicted price and the real price is only 3% (227,066 USD vs 274,167 USD), with greater accuracy. Illustrating that in the absence of a comparator, the value-price analysis method can be used to predict the expected price of a new orphan drug for rare diseases with an accuracy of ±5%.
Some experts in the field believe that although the value-price analysis method can predict the price of new orphan drugs, the formula of this linear regression is based on the existing orphan drug price data, which can be used as a reference for pharmaceutical companies when pricing, and still cannot be used as a calculation requirement to meet reasonable price negotiations.
Focused: Advancement in Evaluation of Orphan Drug in Various Countries
Orphan drug research is mostly seen in the United States and European countries. The importance attached to orphan drug research in different countries is related to some factors, such as whether national legislation is in place, whether value assessment and decision-making require clinical evidence and additional benefits.
The definition of rare disease in the United States is that a disease that occurs in less than 200,000 patients and the European Medicines Agency (EMA) defines the prevalence of rare diseases as less than 5 per 10,000. In the evaluation of orphan drugs, special attention should be paid to the balance between the benefits and financial risks. Moreover, after entering the market, it is necessary to collect real-world evidence to further provide clinical evidence, and the cooperation of patients and clinicians is required.
Canada, for example, has a highly fragmented health system having different budgets and health priorities in different provinces. In 2010, Canada established the All-Canada Drug Alliance, which carries out provincial alliance drug procurement and increases the power of negotiation, so as to obtain more price reductions. In the period 2002 - 2022, Canada established a special fund for orphan drugs, successfully promoted cooperation and negotiated orphan drug prices within the country, and 155 orphan drugs have been approved for marketing to date. Some drugs are listed in the reimbursement list even if they do not meet the HTA recommendations for cost-effectiveness analysis evaluation.
In a 10-year period (2012 – 2022), Scotland has evaluated a total of 301 health technologies and 126 (41.9%) of them were orphan drugs, 73 (58%) orphan drugs were recommended for compensation, and 53 (42%) were not recommended.
Egypt is also facing the situation that orphan drug evaluations can’t meet traditional cost-effectiveness thresholds, which causes not being compensated by health insurance and reducing drug accessibility. Therefore, Egypt applied a methodology for evaluating orphan drugs with differentiated thresholds. That is, multiple criteria decision analysis is used to establish six indicators and weights: 1) Disease severity (weight 0.386), 2) Rarity (0.242), 3) Budget implications (0.161), 4) Robustness of data (0.102), 5) Patient age (0.064); 6. Social impact (0.046). The multiple criteria decision analysis tool created based on above attributes can obtain the score value of each orphan drug and use it as a multiplier of the cost-effective analysis threshold, thereby increasing the cost-effectiveness threshold and improving the accessibility of orphan drugs.
The original article can be access at
https://mp.weixin.qq.com/s/qisBG1FV8EVsaA99DFb1Yw