‘Orphan Drugs’ Orphaned by Budget Cuts

Bill in House Seeks To Restore Medicines to Those Marooned by Medicare Move

By Ethan Porter

Published August 15, 2003, issue of August 15, 2003.
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Advocates for sufferers of rare diseases are working to ensure passage of newly introduced legislation that would counteract a recent administrative action they say deprives those with such maladies of vital medicines.

The Medicare Patient Access to Drugs for Rare Diseases Act of 2003, introduced in the House of Representatives July 10, is intended to counteract recent reductions in Medicare reimbursements for many treatments for rare maladies initiated this year.

The Centers for Medicare and Medicaid Services, or CMS, implemented new rules in January lowering the rate at which Medicare reimburses hospitals for many drugs used to treat so-called “orphan diseases,” a category that includes almost all Jewish genetic diseases. Critics of the move warn that it undermines patients’ access to such treatments.

“Without this bill, beneficiaries who suffer from rare diseases may be denied treatment because healthcare providers refuse to administer orphan drugs,” the bill’s sponsor, California Republican Rep. Christopher Cox, wrote in an e-mail to the Forward. “Congress cannot allow that to happen.”

The Food and Drug Administration defines orphan diseases as those that afflict fewer than 200,000 people, or for which manufacturers of the appropriate treatment have “no reasonable expectation of recovering development costs through U.S. sales.”

Orphan drugs had previously been reimbursed by Medicare at a higher rate than other drugs. This was believed to be necessary because since such medicines are developed for a relatively small group of patients, drug companies have to charge more than for other drugs in order to recoup their development costs.

Now, however, as a result of CMS rule changes, only 11 of the approximately 90 orphan drugs administered by hospital outpatient departments are given the special reimbursement rates, according to the National Organization for Rare Disorders, or NORD.

CMS has justified the rule change by claiming that many of the drugs originally designed to combat orphan diseases have become multi-use medications, meaning they are no longer used primarily by orphan disease patients. CMS spokesmen have suggested that for such drugs that now have wider markets available to them, the special payment rate is no longer necessary.

Under new CMS rules, only orphan drugs that “are used solely” for orphan diseases would be eligible for special reimbursement rates. For instance, Botox, which was originally developed to fight dystonia, is now widely used to combat wrinkles.

But NORD’s vice president for public policy, Diane Dorman, said that many of the drugs that have lost their eligibility for the special reimbursement rates are not actually multi-use drugs. She suggested that CMS has done a poor job of properly identifying which drugs should remain eligible for the higher reimbursement rates, noting that CMS had at first identified only four drugs as being eligible, and has since added seven more. “They keep changing their mind,” she said.

Patient advocacy groups have been joined by the pharmaceutical industry in criticizing the new rules.

This month, CMS proposed to continue using the new criteria for determining which orphan drugs are eligible for special reimbursement rates, an announcement that was panned by NORD in an August 12 statement.

“We are starting to see serious access problems for rare disease patients based on last year’s rule,” NORD’s president, Abbey Meyers, said in the statement. “Unless CMS revises the new proposal, or Congress overrides it, the problem will be far worse six months from now.”

The statement called on CMS to follow the FDA’s designations of orphan drugs.

CMS’s administrator, Tom Scully, declined several requests for an interview through aides. One representative of the agency’s public affairs department referred the Forward to the FDA.

Dr. Marlene Haffner, director of the FDA’s Office of Orphan Products Development, had harsh words for CMS. She said that by preventing patients from receiving reimbursement for multi-purpose drugs such as Botox, when such drugs are clearly being used to combat orphan diseases, CMS has done a “disservice” to patients.

“I want patients to get their necessary drugs,” Haffner said. “If they don’t have access because of payment problems, that’s a problem.” She declined to comment on the act introduced by Cox, saying the FDA does not comment on pending legislation.

Dorman said she met this past spring with Scully to discuss the rule changes. “I told him, ‘I fully understand your concerns with the high cost of these products, but my concern lies with the patients,” she said. “He looked at me, and said, ‘Why don’t you pick your top 10 [orphan drugs]?’”

“That was the end of the conversation,” she said.

Dorman said she cannot “pick and choose” what drugs will be available to people who are already suffering.

An independent accounting firm hired by NORD estimated that the cost of restoring the special reimbursements would amount to under $100 million over the next three years, Dorman said.

Advocates for sufferers of orphan diseases say that the recent CMS rule changes contradict the spirit and undercut the goals of a 20-year-old piece of legislation, the Orphan Drug Act, which has enabled biotechnology companies to bring to market treatments for a variety of rare illnesses. Under the Orphan Drug Act, biotechnology companies received tax credits for developing orphan drugs and, if the drugs are approved, companies were granted seven-year monopolies on their product. A boon to patients and the companies that tried to alleviate their suffering, the act was embraced by the medical community, as well as both political parties.

Orphan drug advocates say the full scope of the act’s benefits was just coming to light when the recent CMS rule changes were adopted. According to Jayne Gershkowitz, executive director of the National Tay-Sachs and Allied Diseases Association, products for several rare diseases were in the pipeline, and could eventually have become approved treatments.

Dorman said she feared that the lower reimbursement rates made it less likely that pharmaceutical companies would invest in new medicines for rare diseases.

“For people with rare diseases, it’s hard to find anyone to do the research to begin with,” Dorman said. “For about 15% of the rare disease population, it can take about seven years just to get a diagnosis. Then they discover that they have a disease, and they’re told there is a therapy, but it’s going to cost thousands of dollars, or that there is no therapy and no research is being done.”

The bill introduced by Cox currently has 12 other co-sponsors in the House.

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