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Panelists Give Payer, Patient, and Economist Perspectives on High-Cost Drugs for Rare Diseases

Kelly Davio
Advances in medicine have produced breakthroughs in the treatment of a number of rare diseases, but these advances often come at a high cost. A multi-stakeholder panel at the International Society for Pharmacoeconomics and Outcomes Research 23rd Annual International Meeting, in Baltimore, Maryland, addressed the question of how to define value in the always evolving and ever more expensive treatment landscape.
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Advances in medicine have produced breakthroughs in the treatment of a number of rare diseases, but these advances often come at a high cost. A multi-stakeholder panel at the International Society for Pharmacoeconomics and Outcomes Research 23rd Annual International Meeting, in Baltimore, Maryland, addressed the question of how to define value in the always evolving and ever more expensive treatment landscape.

Presenting the payer’s perspective was Clifford Goodman, PhD, senior vice president and director of the Center for Comparative Effectiveness Research at The Lewin Group. According to Goodman, the upcoming advent of rare disease therapies that carry million-dollar price tags has driven the United States to a tipping point in its thinking about value.

Challenges in conducting health technology assessments (HTAs) for these drugs involving rare diseases include evidence limitations—given the difficulty of enrolling enough patients in clinical trials—as well as value assessments. Prices for these drugs tend to be high, and even when cost and effectiveness do not achieve traditionally acceptable thresholds, there exists public inclination to provide much-needed therapies to patient populations that are underserved.

Compounding the issue, the sheer number of effective rare disease therapies has led to a significant budget impact; in the past, when the number of effective therapies for rare diseases was limited, budget impacts for even very high-cost drugs were limited. Now, the success and proliferation of these drugs is making it harder to pay for them. At the same time, patient advocates are better organized and more sophisticated than ever before, and are placing greater scrutiny on HTAs.

As a result, said Goodman, HTA groups are increasingly considering flexible evidence requirements and cost-effectiveness thresholds depending on unmet need, disease severity, improving equity across population groups, potential social and economic impact, and other factors.

Goodman pointed to the United Kingdom’s National Institute for Health and Care Excellence (NICE)'s recently developed Highly Specialized Technologies Guidance, which introduced weighting of quality-adjusted life years (QALYs), a method that gives more emphasis to QALYs for technologies that provide more than 10 QALYs over a patient’s lifetime.

Premera Blue Cross took a similar approach with its value-based formulary, which allows for modifications for ultra-rare diseases. “You can’t say the payers are failing to respond to these challenges…I credit them for saying ‘we need another set of ways for thinking about it,’” he said.

But, according to Goodman, rethinking value also means rethinking financing. Strategies could include per-patient cost capitation, milestone-based contracts, reinsurance, manufacturer-managed financing, and other approaches.

Representing the patient perspective was Paul Melmeyer, MPP, director of federal policy at the National Organization for Rare Disorders (NORD). According to Melmeyer, discussions of value need to consider what value means to patients. Clinical outcomes are important insofar as they translate into tangible patient experiences, but nontraditional patient and societal values must be considered, too.

Some of these harder-to-measure values include the value of hope; for patients who have had no approved treatment available to date, a new therapy means “they finally have the potential to improve their health or at least maintaining the health that they have.” Also of importance is the value a treatment gives to a family, caregivers, and the community, and another important factor is societal inclusion—“I’m not just talking about productivity,” said Melmeyer, “I’m talking about the ability to have a social life.”

At a broader social level, said Melmeyer, there is a greater willingness to pay for rare disease therapies, particularly to address unmet needs. However, society can also achieve value by investing in addressing rare diseases; understanding a disease like progeria, for example, could help us to understand the aging process in general, generating broad benefits.

Finally, speaking from the economist’s perspective was Louis P. Garrison, PhD, professor emeritus of the Comparative Health Outcomes, Policy and Economics Institute at the University of Washington.

Garrison explained that, from the economist’s standpoint, value has a clear-cut definition: the amount that someone is willing to pay to obtain something. However, value varies among individuals, and across indications, even for the same medicine, and can be especially hard to measure in healthcare because of the influence of insurance.

He explained that there are 2 approaches to setting cost-effectiveness thresholds that we can observe. One approach is modeled on the United Kingdom’s system, which maximizes QALYs from a fixed budget and implies a constant marginal threshold. However, in practice, the threshold may be adjusted due to factors like the rarity of a disease. “They didn’t really solve a mathematical problem in the UK,” said Garrison of NICE’s weighted QALY system, but it did find a way to be flexible.

The second approach, which we see in the US market, emphasizes individual utility maximization, under which each citizen has a unique threshold.

Garrison said that, in his view, in the US context, a higher willingness to pay threshold is possible based on the benefits conferred by insurance value for a rare and health-catastrophic disease. The questions, however, would be how much higher this threshold could rise, how much of an increase is justified by insurance value, and how to handle a proliferation of high-cost drugs. Reinsurance, he said, may be the key.

However, he warned, given the fact that drug development is expensive—with 8 of 10 proposed drugs failing to reach approval—and that returns for drug makers are insubstantial in some cases, the potential for drug prices to climb even higher remains.

“In the back of your mind,” he said, “you have to be conscious that the business model’s broken.”

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