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  • 1. Leeds Institute of Health Sciences Orphan Drugs & Cost Effectiveness Dr Claire Hulme Deputy Director Academic Unit of Health Economics c.t.hulme@leeds.ac.uk
  • 2. Introduction : setting out the problem • Drugs for rare disease often deemed expensive to produce • These drugs will, by definition, only benefit small numbers of patients • Under standard methods of health technology assessment (HTA) incorporating economic evaluation few get close to meeting cost effectiveness criteria • This means that funding and patient access may be limited
  • 3. Introduction: setting out the problem • This has led to measures being put in place to safeguard R&D; to encourage development of orphan drugs (e.g. public funding for basic science, tax incentives, extended patent protection, market exclusivity) • But should a premium be paid for orphan drugs? Should a special case be made for orphan and ultra orphan drugs that don’t meet cost effectiveness criteria? • We begin with the UK context
  • 4. HTA process in England and Wales • In England and Wales the National Institute of Health and Clinical Effectiveness (NICE) issue guidelines based on technology appraisals • Technology appraisals are contracted out typically to academic institutions • Within the appraisal process we compare cost and effectiveness of new therapy over existing therapy (standard care) to produce incremental cost effectiveness ratios (ICERs) • The ICER gives a cost per quality adjusted life year (QALY). NICE threshold for recommending a new technology is £20/30K per QALY gain
  • 5. UK context • 2005 UK survey of orphan disease associations and support groups – Of 62 orphan conditions, some form of treatment was available for 38 (69.1%) – Where treatments were available 34.2% of them were provided unconditionally by NHS – A further 31.6% selectively available – 34.2% no treatment was provided (Reported in Drummond et al, 2007)
  • 6. UK context • In 2005 the Citizen’s Council of the National Institute for Health and Clinical Effectiveness (NICE) were asked to consider whether the NHS pay a premium for orphan drugs • They recommended the NHS consider paying a premium based on: – Severity of disease – Evidence of health gain – Whether the disease is life threatening • Following this consultation process, in 2006 NICE submitted a proposal to the Department of Health for the appraisal of orphan and ultra-orphan drugs
  • 7. UK context • NICE concluded that their existing methodology already supports appraisal of these drugs and that no changes to its processes were needed for orphan drugs with a prevalence of 1 in 50,000 or more • However, for ultra-orphan drugs (those with a prevalence of less than 1 in 50,000), subject to a request from government ministers, NICE would develop a process for appraising cost effectiveness. To date NICE have not been asked to implement this proposal
  • 8. Should a premium be paid? • Aim: To explore the justification for special status for rare diseases and whether, within the cost effectiveness framework, they should be treated differently from other interventions • Highlight some of the main reasons put forward for special status and examine each within the cost effectiveness framework: costs of R&D, feasibility of conventional evidence; differential value of health care (for people with rare diseases)
  • 9. Development of drugs relative to small market; high costs of treatment for each patient • The relationship between price and costs of production and development has yet to be established beyond reasonable doubt (Goozner, 2004; Relamn and Angell, 2002) • The private sector will set price at the level they think the market can bear; the budgetary impact may be an important consideration in deciding how much to charge (correlation?) • Some orphan drugs have proved to be highly profitable under orphan drug legislation • There is still the question of what will be forgone to pay for it (costs and benefits)?
  • 10. Orphan drugs will only have a small budget impact • Similarly within a decision making framework this doesn’t provide insight into what it is displacing – what has been foregone not just in terms of the costs but also the benefits • This argument implies that lots of small cuts would have less impact than one cut in the health care budget
  • 11. It’s not possible to recruit adequate sample sizes • This comes down to uncertainty and level of evidence • When considering resource allocation decision, evidence is used from a range of sources; decisions should reflect the quality of evidence taking account of uncertainty in estimates of cost effectiveness • The level of evidence required to support a decision should depend on consequences of uncertainty – how much society will lose in terms of resources and health outcomes foregone
  • 12. It’s not possible to recruit adequate sample sizes • The expected cost of uncertainty is largely determined by the number of patients affected • Existing frameworks for evaluation and appraisal will accept lower levels of evidence for orphan drugs because the cost of uncertainty is lower • But is it necessarily true in all cases that it is not possible to recruit adequate sample sizes? • McCabe et al (2006, 2007) cite existence of large patient registries created after drugs have been licensed e.g. Gaucher’s disease
  • 13. Ensuring access where no other treatment exists • This is not a defining characteristic of an orphan disease (remember, the definition is based on rarity) • In reality patients are not simply left with no medical treatment at all; the comparison is best supportive care vs. disease modifying care • Best supportive care may have a greater impact on QoL; for example McCabe et al (2006) suggest that formal ‘home help’ might increase QoL to a greater extent than beta interferon in multiple sclerosis patients • Associated with this reasoning is ‘option value’ – that disease modifying therapies offer the option of future knowledge which can in turn lead to a ‘cure’
  • 14. There is a societal value of orphan drugs • Value depends on the objective of the healthcare system • Maximising health gains – clinical need as the capacity to benefit and all individual’s health gain valued equally • Implicitly embedded in cost effectiveness • Cost effectiveness of drugs for rare diseases should be treated in the same way as others • Otherwise we imply that orphan diseases have a right that supersedes the rights of other, more common diseases
  • 15. There is a societal value of orphan drugs • But what about equality of access; equality of resource use or allocation of resources in proportion to severity of individual’s health, equality of health outcomes? • Use of these different objectives would have profound implications for allocation of resources – not just for the treatment of rare diseases
  • 16. QALYs don’t necessarily include all relevant health gains • Measuring health gain to incorporate all effects is challenging - QALYs do not necessarily capture all that is valued • These arguments are also relevant to common diseases – shouldn’t we just look to improve measurement and valuation of outcome across both common and rare disease?
  • 17. Some final thoughts…… • There are now over 6000 orphan diseases • Orphan status is likely to become more common • Orphan status is likely to produce added incentives to pharmaceutical companies • Many of the arguments put forward for giving orphan drugs special status apply more generally in health care; to common as well as rare diseases
  • 18. Some final thoughts…… • If society does have a preference for rarity – and is willing to pay a premium this should be incorporated in to cost effectiveness analysis provided there is robust evidence that it is a preference for rarity alone • Should we value health gain to two individuals differently because one has a common disorder and one has a rare disorder? • The real choice posed by orphan status where treatment cost is higher is between whether we treat one person with the rare disease or several people with the common disease – if the former then we are placing a higher value on the health gain for the person with the rare disease