How does prevalence affect pricing of rare disease drugs?

December 18, 2019

High clinical development costs and small target patient populations have often been presented as justifications for high prices of drugs to treat rare diseases. Historically, payers have accepted these factors for reasons including the fact that treatment of rare diseases represents a significant area of unmet need in healthcare and many regulatory agencies have encouraged investment in research in orphan drug development.

In addition, the fact that very few patients would use a product typically means that the cost burden on healthcare systems can be relatively limited. But with many more rare disease drugs entering the market, their financial impact is expanding and payers are increasingly taking a tougher stance on drug pricing, scrutinizing clinical data, negotiating rebates and setting budget impact thresholds. They are carefully considering a range of factors including the robustness of clinical data, assessment of clinical and mortality benefit, disease burden and the level of unmet medical need.

To determine the range of factors payers focus on and the level of consideration they give to each during pricing negotiations for rare disease treatments, the authors reviewed 15 rare and ultra-rare disease therapies recently approved in Japan, France, Germany, Italy, Spain and the UK. In this effort, they collected information on the average annual treatment cost (AATC) of each drug, assessments of unmet need, payer authority evaluations, and disease prevalence rates.