Medicare Part D Bills Could Harm Rare Disease Drug Development

FEBRUARY 29, 2020
Kevin Kunzmann
Michael Eging

Michael Eging

Current structure of the Medicare prescription drug benefit plan (Part D) could be significantly affecting out-of-pocket costs for novel rare disease therapies.

But considered resolutions to that issue may harbor setbacks to rare disease orphan drug development; one organization projected that 3 proposed US House and Senate bills could increase rare disease manufacturer obligations by at least 400%.

A new report from the Rare Access Action Project (RAAP) showed a playout projection of 3 currently proposed changes to Medicare Part D: the bipartisan Prescription Drug Pricing Reduction Act (PDPRA) of 2019 (S.2543); the House Democrat-driven Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3); and the House Republican-driven Lower Costs, More Cures Act of 2019 (H.R. 19).

Using modeling of the proposed changes and their effect on obligation for a few rare disease therapies and their manufacturers, RAAP executive director Michael Eging noted such companies could face anywhere from a 400% to 2000% increased burden in due government pay to comply with the altered plans.

The total increase projections, which take into consideration both low-income subsidy (LIS) and non-LIS patients to total manufacturer costs, would be most greatly burdened by H.R. 3. Eging and colleague’s projections show branded-drug Orphan Designation cost for primary biliary cholangitis manufacturers increasing by 986% under that bill; Orphan Designation cost for Oncology manufacturers would increase 1023%; and Orphan Designation cost for pulmonary hypertension manufacturers would increase 1862%.

Compare those rates to the projected 29% cost increase for branded-drug type 2 diabetes insulin manufacturers.

The greatest impact, Eging told HCPLive®, would likely lie on emerging rare disease developers.

“When you talk with investors and those in the community that really are interested in rare disease—when they look at potential products, the pitch has to be very, very powerful to overcome some of the marketplace challenges,” Eging said. “So this directionally raises the bar, and makes it more challenging.”

RAAP estimates approximately 5% of the currently identified 7000 rare diseases have an available treatment—making the orphan drug market what Eging calls as much a labor of love as it is a leap of faith.

“Unfortunately, these rather sweeping one-size-fits all plans could actually devastate the orphan drug market that serves patients who already have few options—if any—and that don't operate as large-scale markets because of the number of patients impacted,” he said.

A dramatic increase in manufacturer costs—brought on by legislative response to concern surrounding significantly increased beneficiary true out-of-pocket costs in coming years—could result in the cutting of patient services, clinical trials, or patient populations altogether. Much moreso than drug research for common conditions, rare disease manufacturers rely on an “all hands on deck” approach to compensate for reduced funding and overall potential sales.

“When you’re looking at about 6500 diseases that still need investment and therapeutic alternatives, you can see that the unmet medical need is substantial,” Eging said.

Though Eging and RAAP concur all 3 proposals would bolster patient healthcare affordability relative to the current Part D benefit program, they could alos have a less-visible impact on the development of establishing “winners and losers” in disease therapy investments.

RAAP’s report concludes with a call for lawmakers to consider the value of incentivization in drug production and research, and to exercise caution when considering means to better patient healthcare access. Fragile markets like that of rare disease drug development may be at stake, they argue.

“This analysis shows that policymakers need to be rational and understand basic economic principles about impacting rare disease companies that will affect the lives of millions of people,” they conclude.

The report, "Changes in Medicare Part D Benefit Design Can Impact Availability of Future Treatments," was published on the RAAP website.

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