Optimizing Managed Care Strategies Amidst a Growing Orphan Drug Pipeline

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Mattias Cheung, PhD, FCSHP, FASHP, discusses the ongoing progress of orphan drugs for rare diseases in today's health care environment, and explores their challenges and opportunities in the current managed care landscape.

Friday morning at AMCP's 25th Annual Meeting & Expo began with the educational seminar, "Current Status, Reimbursement and Management Strategies for Orphan Drugs, Rare and Ultra Rare Diseases," presented by Matthias Cheung, PhD, FCSHP, FASHP, a principal at Advanced Rx Consulting and an adjunct professor of pharmacy practice at the University of the Pacific, Thomas J. Long School of Pharmacy and Health Services.

The objectives of this session were to discuss the qualifications of rare diseases (RDs) and orphan drugs (ODs), the driving forces behind and current status of research and development (R&D), reimbursement and management strategies, the roles of managed care organizations (MCOs) and pharmacists, as well as available resources.

Major drivers for RD and OD R&D, he noted, include increasing public awareness, medical and technological advancements, financial incentives driven by the Orphan Drug Act (ODA) of 1983, regulatory changes, and recent market successes. Cheung emphasized that although a multi-stakeholder R&D model may improve discovery processes and decrease costs, special considerations must be undertaken when devising reimbursement and utilization management (UM) strategies, with early participation by MCOs and greater involvement of pharmacists.


Cheung explained that rare diseases can affect anyone at anytime, but are predominantly of genetic origin, manifesting during childhood, and often fatal. “Unfortunately,†he said, “only 5% of these disorders have any sort of treatment available, and the causes of RDs are highly diverse, of which, many remain unknown.†According to the ODA, which was pushed by many RD advocacy groups, an RD is one that affects less than 200,000 individuals, whereas an ultra-rare disease (UD), according to United Kingdom constraints, affects 1 or fewer persons out of every 50,000 individuals. With an estimated 7000 RDs that have been defined, 1 out of every 10 Americans will have a RD. However, the ODA established the FDA Office of Orphan Product Development (OOPD) which reviews and approves the designation of “orphan drug status.†Financial incentives for OD development include: a 7-year marketing exclusivity, a tax credit (50%) for clinical investigation expenses, exemption of PDUFA fees ($1.8 million), the possibility of an accelerated approval process, and the possibility to apply for the FDA's Orphan Products Grants Program.

According to Cheung, the principle criterion of an OD designation includes its specificity for a rare disease, condition, or plausible subset. In addition, if the condition's prevalence exceeds 200,000, sales of the product are not expected to recover development costs. There must also be a medical plausibility for benefit, as well as superiority to an existing drug product.

The OD market has seen growth, and through 2012, there were 421 OD approvals and 2730 designations, with oncology drugs constituting 36%. However, despite the progress, there are still major hurdles to clear, as there has been little change in government funding, with the FDA OOPD grants totaling an estimated $30 million in 2012 while the R&D costs of bringing a drug product to market ranges from $500 million to $2 billion. In addition to the uncertainties in approval processes and potential delays that could increase costs, only 16% of RDs have a dedicated foundation. However, the RD community is "extremely motivated and collaborative" and as such, public awareness is rapidly growing, with increasing social and public exposure, and more advocacy groups and awareness campaigns.

Moving forward, Cheung discussed how the FDA Safety and Innovation Act of 2012 included programs, such as "Advancing Development of Drugs for Rare Diseases,†which pushed to increase RD staffing, develop guidance for non-traditional clinical trial designs and analyses, increase outreach initiatives for RDs, enhance the training and integration of RD staff in reviews, and develop tools to assess the impact of changes. Such changes will help to address the "tremendous unmet needs" that are associated with RDs and UDs.

Reimbursement and UM strategies for high cost and specialty drugs, such as those for RDs and UDs, have resulted in tactics such as specialty pharmacy benefit designs and formularies, increases in premiums and/or deductibles for plan members, stringent prior authorization criteria to reduce off-label use, intense utilization monitoring, quantity and dose limitations, and value-based insurance designs.

Another solution that has been explored to decrease the cost of specialty pharmaceuticals without decreasing access to the necessary care is the implementation of a multi-stakeholder model for OD development, which coordinates efforts between various constituents, organizations, and services to launch a successful OD product. Other methods for cost containment include the repurposing of existing drugs for multiple indications, generating academic evidence with no commercial sponsor that results in off-label use, implementing a patient-driven R&D model, and calling the community to action to drive advocacy, awareness, and education.

Concluding his presentation, Cheung suggested that to improve the current health care environment, MCOs should become more educated on RDs and ODs, increase staffing for disease management programs catered to RDs, engage multi-stakeholders earlier, and explore partnerships with other MCOs. Pharmacists may also benefit from additional education on RDs and ODs, such as unique patient characteristics and off-label use of approved drug products. Cheung emphasized that pharmacists should provide patient and caregiver education and comprehensive therapy monitoring and interventions, and encourage participation in clinical trials.