Orphan drugs may be pricey, but payers are barely balking

Some orphan drugs to treat rare diseases can cost as much as $400,000 a year. Those hefty price tags have sparked a lively debate in recent years about whether the American health care system can shoulder the burden of treating rare diseases over the long term.

A new report from analysts at Leerink suggests that the debate is overshadowing the reality of the situation: Most insurers are willing to pay high prices for orphan disease treatments.

A Leerink survey of 34 insurance companies, which together cover more than 90 million American patients, revealed that policies allowing access to orphan drugs are unlikely to change much over the next five years, according to The Wall Street Journal blog Pharmalot. The analysts determined that the probability of policies becoming more restrictive starts at 17% by 2016 and rises to just 35% by 2020.

By contrast, the same survey a year ago found a 30% probability that orphan drug coverage would tighten in the short term and a 43% chance of that happening over the long term.

What changed? According to the survey, insurers cited strong clinical trial results, availability of alternative treatments, and safety as more important than price in making coverage decisions. Only three of the 34 companies expected to review orphan drugs more comprehensively going forward, with many saying they would merely "tweak" their policies, by placing greater scrutiny on orphan cancer drugs, for example.

Leerink's analysts suggest that insurance companies may have become numb to pricey orphan drugs because of high prices on some non-orphan drugs--most notably Gilead's ($GILD) $84,000 hepatitis C treatment Sovaldi and Biogen Idec's ($BIIB) $55,000-per-year Tecfidera for multiple sclerosis.

The trend toward high pricing of both orphan and non-orphan drugs shows no signs of slowing. A recent report from EvaluatePharma revealed that the median revenue per patient of the top 100 drugs jumped from $1,260 in 2010 to $9,400 this year. Yet the sizes of the patient groups served by best-selling drugs are shrinking: This year, the 41 of the top 100 drugs served patient groups of 100,000 or less. That number was just 23 in 2010.

Other surveys have shown that approvals for orphan drugs are skyrocketing along with prices. In July, the Tufts University Center for the Study of Drug Development reported there were 86 new approvals of orphan drugs between 2000 and 2013, up from just 65 over the previous 18 years. Tufts researchers detected that payers were boosting patient copays to help shoulder the added cost burden.

The Leerink analysts seem to be indicating that the price issue is a bit more nuanced than previously assumed, however. Their conclusion: "[W]e continue to believe that a distinction should be drawn between the sticker shock and budget impact of orphan drugs."

- here's the WSJ story (sub. req.)

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