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Squeezing Orphan costs

Before Makena blowup, payers already were looking to control Orphan Drug costs

The firestorm over KV Pharmaceutical Co.'s pregnancy drug Makena is just the tip of the iceberg when it comes to pricing Orphan Drugs.

Until recently, payers have routinely reimbursed these drugs, even those costing hundreds of thousands of dollars, because the limited number of patients would have a small impact on their budgets. But that was beginning to change even before KV thrust Orphan pricing back into the spotlight by introducing Makena hydroxyprogesterone caproate at a price that was 100 times higher than the same drug purchased through compounding pharmacies (see BioCentury, April 4).

While payers do not treat Orphan Drugs differently than other drugs per se, they are increasingly applying policies that have been used for so-called specialty drugs, loosely defined as high-cost injectable biologics. These policies include placing Orphan Drugs on higher tiers in payer formularies and restricting coverage of off-label uses.

As these tactics push more of the cost burden onto patients, manufacturers are responding by creating more generous patient financial support programs, and the National Organization for Rare Disorders is trying to stimulate the creation and expansion of public policies designed to ensure access.

But a jury-rigged system isn't sustainable, and NORD says payers, manufacturers and regulators will have to find ways to take cost out of the system.

No one quite knows

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