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Variation in US Private Health Plans’ Coverage of Orphan Drugs
James D. Chambers, PhD; Ari D. Panzer, BS; David D. Kim, PhD; Nikoletta M. Margaretos, BA; and Peter J. Neumann, ScD
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Variation in US Private Health Plans’ Coverage of Orphan Drugs

James D. Chambers, PhD; Ari D. Panzer, BS; David D. Kim, PhD; Nikoletta M. Margaretos, BA; and Peter J. Neumann, ScD
Health plans restrict orphan drug coverage less often than nonorphan drug coverage. However, the frequency of restrictions varies considerably across plans.
ABSTRACT

Objectives: To compare coverage of orphan and nonorphan drugs, to examine variation in orphan drug coverage across the largest US private plans, and to evaluate factors influencing coverage decisions.

Study Design: Database and regression analyses.

Methods: We analyzed a data set of private health plan coverage decisions for specialty drugs (N = 5000) in 3 ways. First, we compared the frequency with which plans applied restrictions in their decisions for orphan and nonorphan drugs. Second, we examined variation in the frequency with which 17 of the largest 20 private plans applied coverage restrictions for orphan drugs. Third, we used multivariate regression to examine factors associated with restricted orphan drug coverage.

Results: Health plans are less likely to restrict orphan drugs compared with nonorphan drugs. Of orphan drug decisions (n = 2168), plans did not apply coverage restrictions in 70% of cases, applied restrictions in 29%, and did not cover in 1%. In contrast, of nonorphan drug decisions (n = 2832), plans did not apply coverage restrictions in 53% of cases, applied restrictions in 41%, and did not cover in 6%. The frequency of restrictions for orphan drugs varied from 11% to 65% across plans. The attributes of orphan drugs that were more likely to be associated with restrictions than others included drugs for noncancer diseases, drugs with alternatives, self-administered drugs, drugs indicated for diseases with a higher prevalence, and drugs with higher annual costs (all P <.05).

Conclusions: Health plans restrict access to orphan drugs approximately one-third of the time, and restrictions vary considerably across plans. Plans more often add restrictions for orphan drugs that are indicated for diseases with a higher prevalence and that have higher annual costs.

Am J Manag Care. 2019;25(10):508-512
Takeaway Points
  • Private US health plans less often apply restrictions in their coverage decisions for orphan drugs than in their coverage decisions for nonorphan drugs (30% vs 47% of the time, respectively).
  • Health plans vary in the frequency with which they apply restrictions in their orphan drug coverage decisions.
  • Private US health plans more often add orphan drug coverage restrictions (eg, patient subgroup restrictions, step therapy protocols) for drugs for diseases other than cancer, drugs with alternatives, self-administered drugs, drugs indicated for diseases with a higher prevalence, and drugs with higher annual costs.
Orphan drugs (ie, drugs indicated for rare diseases) pose a singular challenge for health plans. Although they target small patient populations, their high costs, rising numbers, and strong backing by patient groups force plans to confront ever-more-delicate decisions about how to provide access, even in the face of sometimes highly uncertain evidence.1,2 The challenge is intensifying: From 1997 to 2017, spending on orphan drugs grew from 4% to 10% of total prescription drug spending, with spending on orphan drugs totaling $43 billion in 2017.3 An estimated 25 million to 30 million Americans live with an orphan disease.4

Eighty-seven percent of orphan drug spending is made up of specialty drugs, which are typically complex large-molecule drugs that require special administration, monitoring, and handling, although high-priced small-molecule drugs are also often considered specialty drugs.3 Specialty drugs are also used to treat a range of nonorphan conditions, including rheumatoid arthritis, hepatitis C, Crohn disease, and multiple sclerosis.

Research has demonstrated that health plans sometimes restrict patient access to orphan drugs. Results of one study found that private plans apply restrictions in roughly a quarter of orphan drug coverage decisions.5 Another study reported that Medicare and private plans often place orphan drugs on the highest co-payment tier of their formularies.6

However, the circumstances under which plans restrict access to orphan drugs have not been reported. It is unclear, for example, whether plans are more likely to restrict orphan drugs with larger budget impacts. Knowledge of these circumstances would help patients, providers, and policy makers better understand the coverage decisions affecting access. We analyzed a database of private health plan coverage decisions to (1) compare coverage of orphan and nonorphan drugs, (2) examine variation in orphan drug coverage across the largest US private plans, and (3) evaluate factors influencing orphan drug coverage decision making.

METHODS

Data

We identified orphan drug coverage decisions using the Tufts Medical Center Specialty Drug Evidence and Coverage (SPEC) database. SPEC includes publicly available specialty drug coverage decisions issued by 17 of the 20 largest US private health plans. SPEC includes coverage decisions relevant to the included plans’ commercial lines of business. Of the 3 largest plans excluded from SPEC, 1 does not make its coverage decisions publicly available and 2 focus exclusively on Medicare or Medicaid populations.

SPEC includes information on health plans’ specialty drug coverage decisions and the supporting evidence that they cite. SPEC details drug-level information, including the number of years since a drug’s FDA approval and whether a drug is indicated for a pediatric population. Roughly half (51%) of drugs in SPEC are physician-administered and covered through the plans’ medical benefit. The remaining drugs are self-administered drugs, which plans cover through their pharmacy benefit.

We define a coverage restriction as a health plan decision to reduce the size of the eligible patient population compared with the population described in the FDA label. We further classify restrictions into categories: (1) patient subgroup (requirement for patients to meet certain clinical criteria, such as disease severity), (2) step therapy protocol (requirement for patients to first fail an alternative treatment before gaining access to a drug), (3) prescriber restriction (requirement for a certain type of physician—for example, a rheumatologist—to prescribe the drug), (4) combination therapy (requirement for a drug to be used concomitantly with another medication), and (5) other.


 
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