High development costs and low patient numbers have often been presented as justifications for high treatment prices in rare diseases. Payers have traditionally accepted this narrative for two reasons. First, because the individual budget impact of each product remains low relative to high budget impact categories. And second, because of high unmet need and a regulatory environment that supports investment in orphan indications – often driven by broader societal support built on the back of emotional stories of patient hardship. However, the environment is changing as the collective budget impact of treatments for rare diseases is rising.
Despite the provision of alternative funding mechanisms for orphan drugs, payers are taking a tougher line on prices, negotiating rebates, and setting budget impact thresholds. Rather than accepting the labelled indication de facto, payers are increasingly scrutinising the patient population as a means of reducing economic uncertainties. In the past, payers always recognised rarity in their pricing decisions. Is this still true or, with the rise of treatments for rare diseases, are other factors contributing more to the price-setting process?