FUNDING OF AND ACCESS TO ODs

(i) “Patients suffering from rare conditions should be entitled to the same opportunity of receiving treatments as other patients with more frequently occurring disorders.”

Two characteristics of this statement deserve reflection.

(1[a]) It poses the question of what is meant by “treatment”? The implicit and common assumption is that treatment is pharmaceutical (or biopharmaceutical) intervention.

The absence of a biologically active treatment is equated with the absence of a treatment. Culyer and Claxton have referred to this as the fetishization of technology (4). This fetishization is not attributable to Drummond et al. alone and is a common theme across much debate on the topic (9;11;12) .

If the objective of the healthcare system is to produce improvements in health, or alternatively to produce health gains that we value, then it is not obvious that health produced through best supportive care, for instance, will necessary always be of less value than health produced through biological processes. The relative value of health from such treatment is a question of the purposes of provision of health care and the empirical questions that follow. The fetishism that health gain from biological intervention is to be valued more highly than health gain by other means can also be highly misleading if it promotes the view that patients who suffer from a condition for which there is only one biopharmaceutical treatment are in effect left with no other treatment if this were to be unavailable.

(1[b]) The second important characteristic has to do with “the same opportunity.”

The authors appear to believe in equity of treatment by disease. They take variation in access and funding of these therapies as evidence that the objective of equal opportunity has not been met. However, the aim of equity of treatment by disease has never been stated as an objective of healthcare provision generally or OD policy in particular. Indeed, the OD regulations, as the authors themselves note, were developed without reference to the reimbursement processes. Variations in access and funding arrangements for all treatments, both within and between healthcare systems and the associated equality of opportunity, were taken as a given by the regulations. The U.S. Government did not enact legislation to ensure that ODs were covered by Medicare and/or Medicaid at the same time as they enacted the Orphan Drug Act. Similarly, the European countries did not enact any supranational drug funding arrangements for ODs when they approved the Orphan Drug Regulation. The unavoidable implication of this is that the equality of opportunity intended was that it should be equally likely that a treatment be marketed for a rare disease as for a more common disease. Each healthcare system is left to make arrangements for access and reimbursement of treatments for both common and rare diseases that reflect the values of the society that it serves and the budget constraint it faces.

Against this background, the variation in access and funding for ODs is not evidence that the OD regulations have failed. Drummond et al. provide ample evidence that they have been very successful in increasing the number of drugs marketed for the treatment of rare diseases. The observed variation may reflect real differences in the values of the different societies that the healthcare systems serve. It may also reflect a recognition of the contribution of best supportive care to the health of people with rare disorders, and/or many other considerations. To what degree the access to and funding of ODs by different health systems is consistent with the values of societies they serve is an empirical question that would benefit from carefully designed research.

HEALTH TECHNOLOGY ASSESSMENT AND ODs

In this section, Drummond and colleagues repeat oft stated but generally unsubstantiated statements about the difficulty and/or inappropriateness of applying the standard methods of health technology assessment (HTA) to ODs.

(ii) “Because of rarity, the development costs have to be recouped from sales to a limited number of patients worldwide, with consequently high acquisition costs per patient.”

To support this statement, the authors cite a finding that the cost of ODs was related to prevalence (Figure 1, Drummond et al.). Extraordinarily, Figure 1 includes data on only 10 drugs, not the 282 that we are told were developed as a result of OD regulation. The private sector will set price at the level they think the market can bear. Where individuals do not pay for their drugs, but rather a third-party payer does, the budgetary impact may be an important consideration in determining how much can be charged. Thus, the observed relationship may well be mere correlation.

The relationship between price and costs of development and production in ODs has yet to be established beyond reasonable doubt (7;15). However, the costs of development and production are irrelevant to the price that society ought to be willing to pay. The question, as we have made clear elsewhere (10), is “Should healthcare systems pay more for a treatment than they value the health gain it produces?” It would be desirable to factor in issues such as the value of rarity, and where relevant, the value of severity; even the value of receiving a biologically active therapy rather than best supportive care. However, once the full value has been established, it is still necessary to answer the question; is this less or more than the value of what we must forgo to pay for it. There is no set of preferences that will set aside opportunity cost in a resource-limited environment and lead society to pay more than the value of the benefits. The cost of development and production is entirely a matter for the private sector in making its investment decisions.

(iii) “Because of the small number of persons suffering from rare diseases, it is often difficult to enroll sufficient patients in to a standard randomized controlled trial.”

We have described elsewhere how the standard HTA framework, which is focused upon decisions, will have a lower definition of “sufficient patients” for rare diseases than more common diseases (10). Other things equal, decisions can be based on a more uncertain estimate of cost-effectiveness. However, we have also observed how the existence of large patient registries created once a drug has been licensed indicate that it may be possible to identify sufficient patients to randomize into trials for some orphan diseases (11). The feasibility of providing high-quality evidence should be addressed on a case by case basis. A presumption that it is not feasible cannot be defended. But even if this presumption were upheld, a decision must still be made based on uncertain estimates of costs and effects using standard HTA methods. It is the cost-effectiveness of ODs not the uncertainty of such estimates that is at the heart of the decision.

(iv) “If standard HTA procedures were to be applied to ODs, virtually none of them would be ‘cost-effective’.”

If this is true, it is not because ODs fail to meet some arbitrary standard of evidence, but because the societal valuation of the benefits they provide do not exceed the costs at current prices.

But then, “Why have incentives to develop such drugs if they will later be judged by criteria on which they are doomed to fail?”

Why indeed? The issue of whether any drug is cost-effective depends on its effect and its price, not what incentives were used to encourage its development. Drummond et al. are perhaps a little too despondent in their belief that ODs cannot ever be cost-effective. [See, for example, NICE October 2004 (13)) However, if they are correct, then their question is an important one and highlights the problem of regulatory frameworks that do not provide incentives to undertake research and development in areas that are likely to lead to cost-effective technologies. An excellent exposition of these issues was provided in the recent UK Office of Fair Trading report (14). The price paid for a drug is a signal to the market about developing future treatments and the scale of benefit required to justify a given cost. However, the price paid for a drug should not be driven by previously provided incentives. These incentives are a sunk cost in relation to the decision to reimburse or not reimburse a therapy that has been developed.

(v) “When considering the opportunity cost of orphan drugs it is important to consider also the magnitude of the budget impact they present.”

The opportunity cost of funding a specific OD (or indeed any intervention) is the value of the next best intervention foregone by consuming the resources in funding the OD. This depends upon the productivity of existing activities and the budget for health care. All other things equal, a small budget impact will displace less population health than a larger one. However, the appropriate comparison is between the smallness of the population health forgone and the smallness of the population health gained. Of course, in a rational healthcare system, it will be the least productive activities that are displaced first. However, the magnitude of the budget impact itself provides no insight into opportunity cost relative to the benefits. The notion that, because the share of the total health budget accounted for by treatment of an orphan disease may be small, it should be disregarded cannot be sustained, suggesting as it does that many small cuts to healthcare budgets would have no or little impact on health and less impact than a single large cut of comparable value.

(vi) “The legitimacy for the availability of orphan drugs, therefore, rests on whether the standard methods of HTA adequately reflect societal preferences.”

It is not the methods of HTA but the societal preferences embedded in the measurement and valuation of health outcomes for rare and common diseases on which the debate turns. The difficulty, for those who wish to argue for special status at reimbursement, is that the most commonly cited reasons for additional value are not specific to rarity, so cannot legitimize special status (10).

(vii) ODs “are almost always for serious conditions, they represent the only therapeutic options.”

This statement suggests that not all ODs are for serious conditions or conditions for which there is no alternative treatment. If indeed the concern is about the seriousness of the condition, which we agree may well be a legitimate concern, and the absence of alternative therapeutic options, which we have reservations about due to its fetishization of certain technologies (see above), then the debate should be about the seriousness and the absence of alternatives, and not about the prevalence of the condition. To single out ODs from all other drugs that treat serious conditions or conditions for which there are no other alternative treatments, there needs to be a justification of rarity as a relevant characteristic. Otherwise, the implication would be that an OD that treats a nonserious condition should be given higher priority than another drug that treats a common condition that is comparable in all other respects. Alternatively, why should an OD for a severe condition be given any more priority than another drug that treats an equally severe but common condition?

(viii) “Of twenty-seven Council members [of the NICE Citizen's Council], overall twenty took a decision that there should be a different way to assess value.”

The Nice Citizen's Council (NCC) was not asked whether the value of ODs should be assessed in a different manner to treatments for more common disorders. The NCC identified certain criteria that might lead the National Health Service (NHS) to value the benefits of an orphan treatment more highly, the top three criteria were the degree of severity of the condition, whether the treatment did more than just stabilize the condition, and whether the condition was life-threatening.

The NCC was asked whether the NHS should be willing to pay a premium for drugs to treat extremely rare conditions. Eighty percent said that rarity alone was not a reason to pay a premium. Over 80 percent of the council believed that severity might be a reason to pay a premium. More members of the council believed that ODs should not be given a special status (7 of 27) than believed that rarity alone was an argument for special status (4 of 27) (12).

The findings of Ubel and Lowenstein (16) and Ubel and colleagues (17) referred to by Drummond et al. are consistent with a premium value in the presence of severity. However, they do not speak to the issue of a premium value for treatments for rare disorders.

A RESEARCH AGENDA

Drummond and colleagues describe a wide-ranging research agenda around the social value of ODs, the determinants of their cost-effectiveness and alternative strategies for their assessment. The adequacy of the standard methods of HTA to assess ODs has been demonstrated (2;3;13;14;16;17). The state of the knowledge on the HTA of ODs supports a much more focussed research agenda.

If ODs are to treat rare and severe diseases, then a special status in reimbursement of ODs can only be justified if society values health gain to individuals with rare severe diseases more than health gain to people with more common but equally severe diseases. If this premium preference for rarity exists, decision makers need to know the magnitude of the premium to establish how much more they should be willing to pay for ODs and still consider them cost-effective.

FUNDING THE DEVELOPMENT AND USE OF ODs

(ix) “It does not make much sense (in terms of efficiency) for the public system to fund or subsidize R&D on orphan drugs and later not reimburse the resulting innovations.”

We agree but draw different conclusions. The incentives offered and the price signals given by reimbursement authorities should logically follow from what is of social value—not the other way around. Unless it can be demonstrated that the social benefits of such investment are likely to exceed the costs, then a case can be made to remove the subsidies and other incentives of special status. This tension between the incentives put in place by the licensing authorities and the decisions of the reimbursement authorities derives from the fact that licensing authorities do not consider the budgetary implications of their actions or the social value of the benefits.

(x) “Research is required into whether the traditional way of financing clinical research into medicine for rare diseases is sustainable in the long run.”

This of course presupposes that the research into societies' preferences report a premium on health gain for severe rare conditions compared with severe but more common conditions. If research does not support the existence of this social preference, then it is not clear that it would be appropriate to consume resources in special financing arrangements for clinical research into ODs.

(xi) “What level in the healthcare system should budgets be set?”

Similarly to the above, the value of special financing arrangements for provision of ODs at the local, national, or supranational level is completely conditional upon research to establish whether society attaches a premium value on health gain for people with severe rare conditions compared with people with severe but more common conditions and whether this premium is sufficient to justify the price premia of specific ODs.

(xii) “How can funding schemes developed [sic.] so as to allow access to orphan drugs, yet provide assurances to payers that funds are not being wasted.”

Finally, assuming that an “orphan” premium exists and it is of sufficient magnitude to make a specific OD cost-effective, then it is not clear why special measures will be required to ensure that funds are not being wasted. Patient registries may provide data on disease progression in both treated and untreated patients, but they cannot provide unbiased estimates of the magnitude of effect due to the problem of unknown confounders. The correct approach to address continued uncertainty about effectiveness is to undertake the necessary randomized controlled trials or reduce the price of the treatment so that the value of the uncertainty is less than the expected health benefit from making the drug available (8).

One extraordinary omission by Drummond et al. is price. A naïve reader might not know that ODs have been priced at extraordinarily high levels. Although ODs were never expected to be profitable, some achieved “orphan blockbuster” status due partly to high prices (1;6). Prices range from beta interferon at £10k per patient per year to enzyme replacement therapies at over £200k per patient year. Drummond et al. assume that these prices are justified by the high costs of development and the small numbers of patients. However, the pricing of any one drug is made at company level, based not only on costs and customers but on what the market will bear. The pricing of many ODs has been queried, with suggestions that companies have seized opportunities to maximize revenue. Instances include Glivec, which had been discarded by Novartis but championed by an independent doctor (15). Genzyme, the company that sponsored the roundtable reported by Drummond et al., was built around Ceredase, a drug for Gaucher's disease. The pricing of this drug shocked America (7). The cost of developing the drug was put at $30 million, and the profits of Genzyme, largely from that drug, at $200 million. The same approach was extended to the recombinant version of Ceredase and later to other enzyme replacement therapies. Many other companies have followed the same high pricing strategy for ODs, with the attendant challenges for reimbursement authorities.

Research into the existence and magnitude of an orphan premium would allow reimbursement authorities to identify the appropriate price to pay for an orphan treatment with a specific effectiveness. This in turn might promote research into potentially more efficient production technologies, such as disposable biotech incubation production techniques.

A second potentially important omission from Drummond et al. is discussion of the possibility that, due to advances in genetics, many more diseases will classify as “orphan” or rare. “Salami-slicing” of diseases to achieve orphan status has always been possible, but genetic advances make it far easier. The definition of a rare disease is arbitrary, varies by jurisdiction, and is not monitored. If ODs were to be granted special status at reimbursement, there would be very strong incentives to establish finer distinctions within diseases to claim special status. Also there is no discussion of ODs that have multiple indications and a total market considerably in excess of the OD prevalence thresholds. Consideration of whether the special status should be maintained as additional indications are claimed would have represented a substantial contribution to the literature on the economic challenges posed by ODs.