Amgen’s Position on Orphan Drugs and ICER’s Orphan Drug Assessment

Executive Summary

Amgen would like to take the opportunity to comment on ICER’s plans to develop an Orphan Drug Value Assessment Framework and pricing methodology for orphan drugs.   This paper is in response to the Technical Briefing paper and Orphan Drug Pricing Summit that occurred on May 31^st, 2017. In the US, the FDA regulatory framework has special provisions for orphan diseases, which provide incentives to address the significant societal burden and high-unmet need of patients with rare, disabling, burdensome, and almost uniformly fatal conditions, if left untreated. The US government recognized the need for orphan drugs to have special provisions by establishing the Orphan Drug Act (ODA) in 1983, which provides incentives for development of drugs to treat orphan diseases, which it defined shortly after passage as those that affect 200,000 or fewer individuals.¹  Orphan diseases affect 25-30 million Americans today, and are often characterized by a “diagnostic odyssey” of delayed and incorrect diagnoses before an accurate diagnosis can be made, paired with significant psychological and economic stress for the patient and their family.² Orphan diseases are devastating due to their rapid progression, reduced life expectancy, and significant disability, often manifesting in infants and young children.³  These diseases also have a large impact on caregivers’ quality of life and economic productivity.⁴

Despite progress resulting from the 1983 Orphan Drug Act, orphan drug development innovation needs to be fostered and accelerated.

• Today there are approximately 7,000 orphan diseases of which there are only 625 FDA designated/approved orphan drug treatments.^5,6 
• Even by conservative standards, at a rate of 17 drugs approved on average per year, it would take 375 years for researchers to find treatments for the millions of remaining patients.⁷ 
• This is a pace that is unacceptable to those without treatment and speaks to the crucial imperative to accelerate discovery, development, and FDA approval for new orphan disease treatments. 

ICER’s goal to set prices based on willingness to pay (WTP) thresholds will almost assuredly have unintended negative consequences on the pace of crucial scientific research and patient treatment access. 

• Relying on price thresholds similar to those seen in other countries is not only inappropriate to the US system, but also well studied.
• Researchers including those at Stanford, observe that price thresholds would slow drug innovation by 23-32 percent with as much as a 60 percent reduction in Research and Development (R&D) early stage projects.^8,9 
• Even holding constant the success rate of orphan drug approvals at lower levels of investment, this could add a further century to the current pace of orphan drug development.
• This is at a time where half of those with orphan diseases are children, an estimated 30 percent of children who have an orphan disease will pass away before their fifth birthday, and only one in 10 orphan disease patients has a viable treatment for their condition.¹⁰
• Today, 95 percent of orphan diseases lack FDA-approved treatments and for the remaining five percent who are fortunate to have treatments, the small number of patients and their caregivers must fight and/or struggle for access to these treatments in an insurance system designed for more common illnesses. 
• It is worth noting that willingness to pay thresholds have a measured effect not only on R&D but also on patient access.  In countries that have orphan and ultra-orphan thresholds such as Scotland, there has been an observed 1/3 fewer orphan drugs approved for reimbursement.¹¹ 

Although orphan drugs make up $68.7 billion in spend per year in the US, their ability to alleviate the grave tangible and intangible effects of orphan disease is staggering.¹²

• Taking the average annual costs in published data from a systematic review of 77 studies, total annual costs for orphan diseases could be conservatively estimated at $2 trillion dollars per year with orphan drugs making up only 4% of this cost.¹³  
• Moreover, orphan diseases drain approximately $324 billion in lost productivity costs to patients and caregivers and these are silent costs that are not reflected in ICER’s Value Framework, nor have they been considered in ICER’s past assessments of orphan drugs.^14,15
• For the 1 in 10 patients who have access to a treatment, orphan drugs can considerably offset total costs that would have been incurred without treatment, as measured in healthier Americans living more productive lives. 
• Moreover, orphan drugs contribute $149 billion to the economy and for every dollar spent in the development of an orphan drug, there is a return of 2.4 dollars to the economy every year.¹⁶ 

Not only do orphan drugs have a net positive effect on costs and economic return to the economy, ICER’s claim that orphan drugs are putting drug budgets in peril is categorically untrue. 

• Drug budgets as a percent of US total National Health Expenditure have not changed since 1960 and orphan drugs as a percentage of this currently represent 2% of all national health expenditure
• This is projected to rise 0.5% by 2022 and for this small increase, patients who otherwise would have no other treatment have a chance to live a healthy and productive life.^17,18,19,20  
• We strongly support ICER’s goal of helping healthcare become more sustainable but recommend that ICER look to macroeconomic healthcare expenditure drivers whereby National Health Expenditure, by the estimates of CMS is affected by prices of medical services (supply-side drivers) and use and intensity of medical goods and services (demand side drivers) with the prices of medical services projected to drive expenditure over the next 8 years.²¹ 
• Concentrating on orphan drug expenditure will have no impact on overall healthcare expenditure, nor will it help public or private insurers materially contain even short-term healthcare expenditures. 
• Instead this will result in a deleterious effect of loss of life and welfare for very vulnerable individuals, half of which are children, who have had the unfortunate consequence of being afflicted with an orphan disease. 

At 25-30 million, the number of patients suffering from orphan disease is a third of the total population with cardiovascular disease,²² about the same size as the population in the US who are currently living with diabetes,²³ and two times more than those living beyond a cancer diagnosis (many of which are orphan diseases themselves).²⁴  Yet despite these large numbers, the drug development constellation is infinitely more complex due to lack of data and information in a field where most of what we have learned about orphan disease in the last five years completely eclipses everything we have learned over the last five centuries.  ICER’s paternalistic, one size fits all, inflexible approach could negatively affect one in every 10 Americans who are affected by an orphan disease.²⁵  At this time, these patients most need hope, dignity, and respect enhanced by access to valuable treatments for an equal chance at achieving a healthy life as everyone who does not suffer from an orphan disease.  What these patients do not need is to be marginalized down to a “budget impact” or defined by willingness to pay thresholds and acronyms that encompass quality of life such as the QALY (quality adjusted life year), but that only health economists can explain.   Willingness to pay and the evaluation of orphan drugs is an area of research that is incredibly underdeveloped both in the body of existing research and in stakeholder engagement.  It is imperative that ICER have the appropriate discussions about the willingness to pay for orphan drugs in the US with patients, providers and policy-makers as well as ensuring that not only stakeholder consensus exists but also far more scientific and policy research from which to draw upon. 

In effect, ICER’s current trajectory of assessing orphan drugs with an adapted version of their Value Framework has the associated risk of having a significant negative welfare impact on current and future generations of orphan disease sufferers.  Moreover, ICER’s claim that orphan drugs are putting drug budgets in peril is not grounded in real world evidence nor will ICER’s assessment of orphan drugs have any impact on the growth of National Health Expenditure. We urge ICER to consider and incorporate the below recommendations to help align its role and work with its publically stated mission.

1) Standard value assessments are inappropriate for orphan conditions

Orphan drug value assessment methodology is in nascent stages and current approaches cannot capture the comparative clinical effectiveness or net health benefit of new treatments.   Orphan drugs have highly variable and unique circumstances specific to each disease and face methodological data constraints,²⁶ including varying levels of available evidence, small study populations, quantification of quality of life benefit, rarely measured spillover effects in families, variation in cost-offsets that determine cost-effectiveness, high burden of illness, lack of appropriate comparator treatments, etc. ICER should recognize that heterogeneity in treatment options and characteristics of orphan disease patients cannot be addressed by a ‘one-size-fits-all’ assessment approach, and attempting to do so undermines the full value of these treatments.²⁷

Orphan drugs provide significant benefits and advantages that often go unmeasured and are easily minimized in a traditional value assessment; hence, a flexible approach with added safeguards is needed. Contextual factors receive no quantifiable consideration in cost-effectiveness ratios employed in ICER’s traditional value framework, which is a shortfall in its application for common drugs that would be even more challenging for orphan drugs. The economic and social costs from orphan diseases, including current healthcare ex­penditures, loss of wages, and loss of productivity are an estimated 2 trillion per year.²⁸ Orphan drugs can help reduce these costs—especially the economic costs—by increasing the ability of the medical profession to efficiently manage these orphan diseases.²⁹  Many costs and benefits that patients experience cannot be measured but must be considered including the benefit of ‘buying time’ as new treatments allow patients to survive until the development of those treatments that will cure them. The significant impact of orphan diseases also extends to the family and caregivers’ quality of life and earnings.³⁰ Patient and caregiver out-of-pocket costs and lost productivity from inability to work constitute a significant amount of total costs in orphan indications, but these have not been considered in ICER’s Frameworks.³¹ This hard-wires an inherent bias towards health insurers and is blind to both measurable and immeasurable costs that orphan disease sufferers and their families/caregivers incur.

2) Orphan drugs should ethically never be subjected to fixed willingness to pay (WTP) thresholds due to contextual and ethical considerations

Subjecting orphan drugs to a value framework with fixed thresholds, such as ICER’s, could negatively affect patients with orphan diseases by decreasing access to therapies in the short-term and discouraging orphan disease therapeutic innovation in the long-term. Society’s goal is not limited to maximizing population health gains, but also ensuring fairness in giving all patients a meaningful chance for health gain.³²  Applying a cost-benefit ratio for an orphan disease treatment is contrary to an egalitarian/utilitarian approach (maximizing equity for individuals) ³³ and could be disastrous for those who suffer from an orphan disease: this approach would prioritize the least costly patients rather than the sickest of patients who lack a sufficient voice in the healthcare system.

Many HTAs globally have recognized the ethical, equity and social justice challenges of applying a willingness to pay threshold to orphan diseases. As such, many of these HTAs have special processes and special funding mechanisms for orphan diseases. For example, Sweden considers the ‘human dignity principle’, which essentially combines a recognition that all citizens should be treated equally, and the “needs-solidarity principle,” which strives to optimize clinical benefit based on individual patient need.³⁴  Perhaps more importantly in the US “[b]efore the Affordable Care Act (ACA) was enacted in 2010, rare disease patients could not access health care coverage due to discriminatory insurance practices, limited Medicaid eligibility, and debilitating cost-sharing.”³⁵ Imposing a willingness-to-pay (WTP) threshold for orphan drugs will not address the needs of the complex US Healthcare System and may once again jeopardize our societal desire for equity and justice in the insurance system³⁶ because it lacks scientific basis and is inconsistent with the principles of population insurance and risk pooling and will shift more cost to patients.  ICER’s Framework uses willingness to pay thresholds and panel voting to categorize treatments as low, medium or high value for money.³⁷  This is pejorative from the perspective of patients that have only one option for treatment and are uniquely positioned to judge if a treatment is of high value.  Moreover, ICER sets its goal in its Value Framework of “sustainable access to high-value care for all patients”.³⁸   Whilst ICER may be able to evaluate the evidence for a new product, it cannot take on a role that defines treatment value on behalf of the patient or US society.  This positions ICER in an unintended but nevertheless empirically discriminatory role against patients who suffer from orphan diseases.

There is no scientific foundation for the use of WTP thresholds in orphan disease.  An ICER willingness to pay threshold for orphan drugs in the US is irreconcilable with the need for a different evaluation process, requiring wider considerations of orphan disease and treatment experiences from a multi-stakeholder perspective, balanced with the societal desire for fairness and equity in the insurance system. No single cost-effectiveness threshold for any given assessed technology can be derived for the complex US healthcare system. Even if this were possible, it would need to be set by elected US government officials, following well-recognized and standard, reproducible methodologies with transparent public processes, rather than by ICER.

Use of willingness to pay thresholds based on the quality adjusted life year pose methodological challenges in orphan disease.  QALY’s suffer significant shortfalls if applied to orphan disease including (1) QALYs cannot address the heterogeneity in treatment options; (2) QALYs cannot be derived for very young or very old populations; (3) Caregiver QoL/QALYs usually are not considered; and (4) Patients with lower QALYs whose lives are extended will have overall higher/unfavorable incremental cost per QALYs than patients with mild disease.

Introducing national willingness-to-pay or budget impact thresholds as price ceilings for orphan drugs is counter to the principle on which the US Orphan Drug Act is based, and will lead to counter-productive delays in innovation, slowing the supply of new, desperately needed treatments and potentially restricting patient access to available treatments.³⁹  Orphan drugs have highly variable and unique circumstances specific to each disease and extensive confounders (e.g., small study population, quantification of quality of life benefit, rarely measured spillover effects in families, variation in cost-offsets, burden of illness, accelerated approval, etc.).⁴⁰ When assessing the value of orphan drugs, the approach in the US, given its multi-payer and often fragmented system, needs to be flexible and without a fixed threshold, leaving the decision to the budget-holder in a manner that preserves physician decision-making and patient choice. ICER should not attempt to set national thresholds for the assessment of orphan drugs,  instead focus on serving as an advisor that facilitates robust dialogues around the evidence to inform decision-makers.

 ICER should carefully evaluate the possible impact of willingness-to-pay thresholds in the US through the lens of how it could delay access to innovative, lifesaving treatments in orphan disease. The unmet needs in orphan diseases remains high, yet, experts from the orphan disease community assert that financial incentives today are not great enough to catalyze the necessary drug development required to meet this unmet need.^41,42,43  Companies invest to the point where their anticipated marginal efficiency for R&D is equivalent to their marginal cost of capital and at lower prices, companies reduce their investments due to lower returns.⁴⁴  Price cuts and even the threat of a price cut materially reduces pharmaceutical R&D investment.^45,46  Artificially induced price setting by ICER will revive the worst aspects of orphan drug market failure, by diminishing the beneficial effects of extensive legislation designed to partially offset these failures.  Moreover, experiences from other countries suggest that health technology assessment approaches similar to ICER’s would have the net effect of dramatically limiting patient access to newly approved drugs during product launches.⁴⁷  Countries that use rigid willingness to pay criteria experience a correlation with both less and delayed access to cancer drugs with lower associated survival rates.⁴⁸

3) ICER’s attempt to synthesize a new orphan drug category, ‘ultra-orphan drugs’ and separate this from orphan drugs disregards the plight and unmet needs of all orphan drug disease patients

Currently there is no definition or rationale to define subsets of orphan disease.  ICER’s move in this direction essentially redefines the criteria set out in the Orphan Drug Act and will leave many patients with non-ultra orphan diseases disadvantaged.  Given a 38% total US population growth since 1984, the ODA definition of diseases ‘affecting fewer than 200,000 patients’ is over 30 years out of date, already reducing the eligible population by 75,000.^49,50  Further narrowing this would marginalize those who do not meet the criteria for so called ultra-orphan diseases and would likely result in the delay of a drug or complete absence of its development without positive R&D and appropriate pricing incentives.  Market factors determining demand, net present value and return on investment mean that drugs affecting fewer patients are priced higher than those for diseases with larger patient numbers.  Evaluate Pharma demonstrates a nearly linear effect such that those drugs for diseases with less than 10,000 patients are priced higher than those for diseases affecting 60,000 patients or more.⁵¹ It is important to note that the original ODA legislation did not include a prevalence number but was established for drugs that would not be economically viable to develop without added incentives.⁵²  These incentives include being able to command a price in the market that allows a given company to recoup its investment not only reflected in the direct R&D for the development of a product but the years of prior investment in a drug’s wider discovery platform. In fact, it is society that indirectly benefits from the advancements in scientific knowledge that often result from orphan disease research – an element that is not captured in standard cost-effectiveness analyses such as ICER’s.

4) Most cancers are orphan diseases and attempts to carve out oncology from orphan drugs would have a long-term impact on current and future generations of cancer patients

It is too early to classify the majority of orphan cancers by molecular characteristics.  Although there are some easily identifiable orphan subgroups within larger populations of more common cancers, e.g., triple negative cancer, for other cancers more research is required to classify some orphan cancers by molecular characteristics. Cancer is undergoing a renaissance resulting from the sequencing of the human genome applied within population medicine such that treatment decisions in cancer are increasingly determined by the dominant molecular characterization of a given patient’s tumor, predicting factors such as aggressiveness, likelihood of metastasis and treatment response.  This has led to an exciting number of targeted therapies for orphan indications resulting from a molecular understanding of cancer biology. The effect on a mutation or biomarker on a drug’s mechanism of action, biomarker level of expression and tumor heterogeneity often means that there may not always be a clean line in defining a cancer.  Unfortunately, this has not changed the fact that many cancers and cancer subsets still have very grim prognoses (e.g., pancreatic cancer, AML, Triple X breast cancer).

Efforts to classify cancer drugs for populations less than 200,000 as ‘not orphan drugs’ denies cancer patients of benefiting from the Orphan Drug Act. Unlike several decades ago, much of pharmaceutical research today is highly dispersed and networked. Biotechnology companies who lead in cancer innovation are in competition to secure angel and venture funding in the hundreds of millions of dollars to get to proof of concept for a given therapy.⁵³  In 2014 alone, 288 deals and $3.8 billion in investments were made in the biopharmaceutical industry.⁵⁴ The US dominates this area, accounting for nearly three-quarters of worldwide venture capital investments in biotech, with Europe far behind accounting for only 23% of overall venture capital investment.⁵⁵ A 10 percent reduction in cancer drug prices has been shown to decrease pharmaceutical innovation by 5-6 percent.⁵⁶  Price cut threats and price uncertainty affecting the decision to invest, such as those price ceilings that ICER recommends has the biggest and most unnoticed affect on biotech funding for new cancer drugs.  Orphan legislation is a critical aid to these small companies because it allows them to attract more investment and offset the cost of drug discovery, research and development. 

Summary

Orphan diseases present extraordinarily complex contextual, ethical and resource issues that cannot be answered by a ‘one-size-fits all’ value assessment framework.  As recommended by the recent ISPOR Special Task Force on Value Frameworks, ICER’s standard approach for the assessment of net health benefit, cost-effectiveness analysis, and potential budget impact needs to change for all disease, but most acutely for orphan disease.⁵⁷  These inflexible approaches will result in reduced access to currently approved orphan drugs and negative impacts to the development of future drugs, impacting the sickest and most vulnerable of patients. ICER’s statement “The opportunity cost of supporting the use of ultra-orphan drugs necessitates that patients with a more common disease, for which a cost-effective treatment is available, are denied treatment” is in direct contrast to the intent of the ODA legislation, articulated by President Reagan, “From an economic perspective, groups that small do not now justify the kind of research expenditures that companies must make. The bill that I am signing today helps to cure that problem and consequently, we hope, some of the diseases as well.”⁵⁸  One-dimensional, paternalistic approaches to the evaluation of drugs for orphan disease put patients in the position of being an ‘economic drain’ on society rather than inspiring their hope for the future.  Orphan drugs have a minimal impact on budgets and are not the huge cost-drivers that some claim, representing only 2% of US healthcare expenditures, even before consideration of the significant personal costs that patients and their families incur, and that many new drugs will offset such as the financial impact on families and caregivers related to both medical appointments and wider management costs including time.  

ICER suggests that the subtraction of orphan drug treatments from patients would allow for treatment for more common conditions.  At the core of this debate, we should not lose sight of the dire, intangible and silent costs of orphan diseases, which are responsible for 35% of all deaths in the first year of life.⁵⁹  We cannot consider these merely as insurance ‘price-per-members’ or cost drivers, but human beings who  deserve dignity, respect and society’s special consideration without which they will have no chance for a healthy life. 

APPENDIX

I am pleased to sign into law today the Orphan Drug Act.  Over the past century, the United States -- largely through innovative pioneering by private industry and medical researchers in universities -- has led the world in developing new drugs that have saved millions of lives. That is a gift to mankind we can be very proud of.  Yet the sad fact remains that many diseases still cripple or kill hundreds of thousands of Americans, as well as citizens of other countries, because no drugs have yet been developed. These diseases include cystic fibrosis, Wilson's disease, myoclonus, Tourette's syndrome, and certain neuromuscular disorders and cardiac arrhythmias. Statistically, they are rare; yet that is small comfort for those afflicted. The cost of discovering and developing a new drug is often staggering. By definition, an orphan drug is one that treats a disease that affects 200,000 or fewer individuals -- and, from an economic perspective, groups that small do not now justify the kind of research expenditures that companies must make.  The bill that I am signing today helps to cure that problem and consequently, we hope, some of the diseases as well. The bill provides incentives for the private sector to develop drugs to treat these rare diseases…I am gladly signing the orphan drug bill. I only wish with the stroke of this pen I could also decree that the pain and heartache of people who suffer from these diseases would cease.

-President Ronald Reagan, January 4^th, 1983¹

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