Orphan Drug Prices To Face Fiscal Cliff Scrutiny, NORD Expects

From The Pink Sheet:   If the debate does include a focus on entitlement spending, NORD does not plan on taking sides.

The fight to avert the next fiscal cliff may affect orphan drugs and their escalating prices, according to the National Organization for Rare Disorders.

Concerns among rare disease patients about increases in orphan drug costs have been percolating for a few years. But Peter Saltonstall, NORD president and CEO, said he expects the issue to gain even more attention as Capitol Hill continues to fight over spending and budgets.

“We know with … getting past the fiscal cliff that everybody’s going to be looking at costs and trying to understand how they can ratchet things down,” he said Jan. 7. “My expectation is that we’ll have Congress speaking to us about the cost of drugs and it’s going to be an issue that we’re going to have to start to deal with in one fashion or another.”

Ironically, Saltonstall made the prediction during a celebration of the 30th anniversary of President Ronald Reagan’s signing of the Orphan Drug Act. The ground-breaking legislation, which provides tax and exclusivity incentives to sponsors of therapies approved for rare diseases, largely is credited with spurring growth of the space and increased big pharma interest.

NORD considered whether to suggest changes to the Orphan Drug Act be included in the 2012 user fee reauthorization legislation to improve the incentive, including whether to address pricing problems. Saltonstall said he wanted to figure out how to allow pharma companies to recoup the cost of development, while still allowing the drugs to be affordable (“Does The Orphan Drug Act Need A Facelift? Advocates Consider Changes” — “The Pink Sheet,” Mar. 21, 2011).

The group ultimately decided tinkering with the law could create more problems than benefits (“NORD Says Orphan Drug Act Is Fine As Is, Wants To Work For Improvements Within System” — “The Pink Sheet” DAILY, Jun. 29, 2011).

A Debate Waiting To Happen

Legislators were able to deal with the tax increases attached to the fiscal cliff, which would have gone into effect Jan. 1, but only delayed the related budget sequestration until March 1.

To reach a deal, it is possible drug costs could come into play as part of the debate, if members push to curtail spending on entitlement programs like Medicare.

The high cost of many orphan drugs may make them an easy target for changes.

The issue also could gain wide support from payers eager to rein in their own costs. An orphan gene therapy set to go on the market in Europe could cost more than $1 million per patient per year).

NORD is not expected to take sides in the orphan drug pricing debate. Saltonstall said after his presentation the issue may be too big for his group to handle – akin to “solving world hunger.”

In many ways, NORD must straddle a fine line on pricing. It wants to encourage industry to develop drugs to treat rare diseases, which likely would not occur without an ability to charge high prices. Yet, it also advocates for millions of rare disease patients, who need the drugs to be affordable in addition to life-saving.

“While it’s a large issue and NORD hasn’t addressed that issue in the past, it is an issue that I think is going to begin to impact each and every one of us as we move forward this year,” Saltonstall said during the event.

Quick Approval, High Price

Among FDA’s orphan drug approvals last year was Vertex Pharmaceuticals Inc.’s Kalydeco (ivacaftor), which the agency cleared in less than four months to treat a portion of cystic fibrosis patients.

Agency officials cited it repeatedly as an example of the speed with which it can get a worthy drug to market. However, the therapy’s wholesale acquisition price was set at $294,000 per year, although patient assistance and other programs are available

Kalydeco also received FDA’s first two breakthrough-therapy designations to expand its indication. The pre-term birth drug Makena (hydroxyprogesterone caproate), generated controversy after sponsor KV Pharmaceuticals took a drug that previously had been compounded and filed an NDA.

After approval, the company priced the orphan drug at $1,500 per injection, or up to $30,000 for a course of treatment, far more than the $300 per course of treatment that the compounded version cost. That prompted FDA to say in 2011 that it would not take enforcement action against compounders of the drug. KV sued to compel the agency to act, but was unsuccessful.