The specialty pharmacy marketplace has quickly become the primary dispenser of most therapies for orphan conditions.
THE ORPHAN DRUG MARKET IS BECOMING a significant focus of discussion in health care, as an array of medications for rare and devastating conditions is entering the US marketplace. While these agents are transforming patients’ lives by providing unique treatments to a segment of the population in desperate need of medical advances, they are also being heavily scrutinized due to their costs.
The specialty pharmacy marketplace has evolved over the past 25 years, quickly becoming the primary dispenser of most therapies for orphan conditions since the launch of imiglucerase (Cerezyme) for Gaucher’s Disease.1,2 At its inception, specialty pharmacy focused on the catastrophic illnesses of the time, including HIV/AIDS, organ failures requiring transplant, and cancer. Many of these disease states utilized some of the first approved orphan drugs.
Specialty pharmacy management focused on improving patient care and managing therapy costs for patients and managed care providers by providing high-touch services, assisting patients with complicated medication regimens, improving adherence, preventing drug-related problems, optimizing prescribing, and assisting with financial and psychosocial issues.2 Patients needed help accessing care and an advocate to ensure appropriate therapy and resource utilization.
Over the years, the focus of specialty pharmacy has expanded to other, sometimes larger, chronic disease states. Although the goals of specialty pharmacy have remained the same, market consolidation and service commoditization have altered the composition and focus of specialty pharmacies. Now, with the strong flow of new and complex rare disease therapies achieving FDA approval, specialty pharmacy can play a renewed pivotal role in assisting patients and removing treatment barriers.
An orphan or rare disease is defined as one that affects fewer than 200,000 people in the United States.3,4 According to the National Organization for Rare Disorders (NORD), approximately 10% of Americans have a rare disease, of whom more than half are children.5,6 Unfortunately, of the more than 7000 rare diseases, only 5% have FDA-approved treatments.6 Orphan drugs tend to be significantly more expensive than other therapies, with the median cost per patient being 5.5 times higher than traditional agents.7 As such, expense is often at the center of discussions related to orphan drugs.
The rare disease market has grown at an incredible rate over the past few decades, especially in the past few years. This influx of drugs was spurred by the passage of the Orphan Drug Act in 1983. This legislation amended the Food, Drug and Cosmetic Act to encourage rare disease drug development3,4 and provided incentives for manufacturers to devote resources to the development of medications for conditions with limited patient populations. These incentives include grants for clinical research support, tax credits for research costs, and 7 years of market exclusivity for an approved drug.4,8 In the 10 years prior to the act, only 10 medications with the rare disease designation were approved.3,8 Since its enactment, however, more than 600 agents have been developed and marketed.3 The past 5 years have been especially productive, with 220 approvals.1
The Pediatric Rare Disease Voucher Program, developed as a part of the 2012 FDA Safety and Innovation Act, further spurred orphan drug development. This program catalyzed the development of new therapies for orphan and rare pediatric diseases by awarding both priority FDA review to applications that meet the criteria, as well as a voucher for a future priority review upon successful approval.9 These vouchers can be applied to any future drug application of the manufacturer’s choice, potentially resulting in hundreds of millions of dollars in expedited sales. Vouchers can also be sold or transferred. A voucher sold by United Therapeutics to AbbVie in 2015 sold for $350 million.10 To date, 10 pediatric priority review vouchers have been awarded, with 9 granted between 2015 and 2017.11 The voucher program expiration deadline was extended to September 30, 2020, as a result of the 21st Century Cures Act.12 These pieces of legislation provide additional economic motivation for manufacturers to make large investments in treatments for diseases affecting small patient populations. This resulted in the development of treatments for orphan conditions such as spinal muscular atrophy, Duchenne muscular dystrophy, and Batten disease.11
Requests for orphan drug designation have more than doubled since 2012 (568 in 2016). The FDA recently introduced an initiative to help combat a backlog of orphan drug approvals within the Office of Orphan Products Development. The Orphan Drug Modernization Plan was announced on June 29, 2017, to address the over 200 open orphan designation requests and ensures a timely response of 90 days within receipt of any new requests.
Orphan drug approvals have increased exponentially over the past 5 years and are expected to double between 2016 and 2022.1,7 In 2016, orphan drugs represented 41% of all novel drug approvals.13 Cancer therapies have seen the highest number of approvals, accounting for one-third of orphan designations.14 As many as 30 therapies are projected to be approved in 2017.15 Orphan expenditures are expected to remain stable in proportion to overall drug expenditures.15 Although many of these therapies are lifesaving or life-transforming, they often become a significant expense to patients and payers. Four orphan therapies cost more than $70,000 each per month. Another 33 orphan treatments cost more than $28,000 each per month.16 Compared with nonorphan medications, the average annual cost per patient in 2016 for an orphan drug was $140,443 compared with $27,756 for a nonorphan drug.7 By 2020, orphan drugs are expected to account for 19.1% of the global prescription sales compared with 6.3% in 2000.8 Worldwide sales are estimated to approach $209 billion and account for 21.4% of available branded prescription drugs by 2022.7
Lenalidomide (Revlimid) is expected to be the top-selling orphan drug in the world in 2022, with projected sales of $13.6 billion for all indications.7 This medication was first approved for myelodysplastic syndrome and received orphan status, but has since been approved for a multitude of indications.
With the price points for many of these medications, they have caught the attention of both government and private insurance providers, who bear a large portion of the burden for those price tags. An Xcenda survey of payers reported that 97% of orphan drugs will require prior authorization, 55% will be placed on a specialty tier, and 27% will require the imposition of step edits. Additionally, 25% of payers may require an increase in cost-sharing with patients.17
Although the prices of orphan drugs tend to be higher on a per-patient basis, there are relatively few patients with rare diseases. Orphan drug costs represent only 9% of the total health care spend annually. When combined with traditional specialty drug spend for non-rare diseases, this number approaches 30%.5 As such, the need for specialty pharmacy to ensure that patients are managed optimally is stronger than ever. Individualized management of these patients frequently can translate into » better patient outcomes; medications are only a component of the overall management costs for many of these catastrophic disease states.
There are currently 3 categories of orphan drugs: pure, partial, or repurposed. Pure orphan medications are only for an orphan indication. However, many medications entering the market fall under the other 2 categories. Partial orphan drugs are approved for both orphan and nonorphan indications. In 2016, 7 of the 10 top-selling orphan drugs were partial orphans and included medications such as adalimumab (Humira), rituximab (Rituxan), and glatiramer acetate (Copaxone).7 Repurposed drugs are a new and growing area of drug development. These are medications already on the market that are granted a new approval for an orphan indication via a supplemental new drug application. In 2014, oxytocin, which has historically been used for induction of labor, was approved for use in Prader-Willi Syndrome.1
Contemporary Distribution Channels and Rare Diseases
There are 3 pharmacy channel strategies utilized for the distribution of orphan drugs: open, limited, and exclusive distribution. Each has its own advantages and challenges.
Open networks are typically used for larger patient population disease states and drugs that have minimal safety concerns. This distribution method is ideal for medications that require little ongoing patient support and have limited hurdles to patient access. However, open distribution does have its limitations. Because patients can acquire medications from more than 1 location, there are inherent inconsistencies in their experiences. Aggregation and consistency of data collection are also challenging in this distribution format, as can be disruption in referral management and potential overuse of co-pay and quick start programs because of the multitude of players involved.
Limited distribution provides a more consistent patient experience, since there are fewer providers with whom patients can interact. Additionally, data access is more consistent and integration with hubs and data aggregators is easier. This channel also reduces distribution costs and simplifies inventory management because fewer locations are involved. The drawbacks to this model include reduced channel diversification, pharmacy capacity concerns, and potential limits to select network and payer coverage.
Exclusive distribution networks, where manufacturers partner with a single specialty pharmacy, are enticing because they allow for a consistent patient experience that is ideal for a strategic focus on a small patient population. These networks are critical for medications that require high-touch monitoring and unique or customized therapy support. These medications are not suited to a high-volume, standardized, one-size-fits-all patient management approach. Exclusive distribution networks allow patient management to be tailored to specific patient types and associated health care providers. In addition, these partnerships can provide strict control of shipping and storage requirements and can handle complicated logistics scenarios, such as cold chain management. These networks also allow for greater supply chain control and increased data visibility, as they are maintained in 1 system. The limitations of the exclusive distribution model are consistent with those for limited distribution.
Strategy and Specialty Pharmacy Choice
There are several key components that manufacturers must consider when evaluating specialty pharmacies and their capabilities. A specialty pharmacy possesses clinical expertise, robust disease state management programs, mechanisms to optimize compliance, adverse drug effect counseling and reporting capabilities, prior authorization and co-pay support, and focused educational capabilities for patient, physicians, and payers. Data management, customization, and sharing capabilities are also critical, as many orphan medications are approved based on the results of 1 clinical trial in a small patient population and require ongoing data analysis.
It is fundamental for a specialty pharmacy to provide patients with a truly “special” experience, as they are dealing with the burden of a devastating disease state. Ongoing, personalized communication is crucial. Interactions with the patient, such as discussions regarding medications or help with financial barriers through coordinated co-pay assistance, can make the days more manageable. In some cases, these therapeutic agents will not cure their disease, but will still provide patients with a priceless improvement in quality of life. Social media advances have assisted by creating networks for patients and families, who would have otherwise never been connected to discuss their disease, prescribers, diagnosis, treatments, and services they receive from specialty pharmacies.
In addition to many of the specialty pharmacy programs detailed, there are other important collaborations in place to assist patients with rare diseases. Nonprofit organizations often act as advocates for these individuals. Their goal is to advance the development of new treatments and cures through education and collaboration with researchers, patients, and regulatory bodies. Many of these organizations and foundations also manage patient registries to enhance the ability for patient identification when studies are being conducted. Some advocate examples include the Rare Action Network, NORD, the Patient Access Network Foundation, and the Chronic Disease Fund. Additionally, manufacturer co-pay cards and 501(c)(3) programs help offset the cost of therapy and ensure that treatment is within reach.
Selecting an Optimal Rare/Orphan Specialty Pharmacy Network
It is exceedingly important that specialty pharmacy continues to grow and adapt to the changing health care environment. These medications and patients, particularly those in the rare and orphan category, bring unique challenges to pharmacies for which the industry must prepare. Specialty pharmacies need to differentiate their services by enabling empathetic, patient-centered coordinated care. Whether through managing financial costs, providing focused medication counseling, assisting with adverse event management, or intervening with other health care providers, the focus of the industry needs to be optimizing patient care through the entirety of the health care journey. Specialty pharmacies are the voice of the patient in many situations. Manufacturers should consider a multitude of factors when selecting a rare disease and orphan drug pharmacy (Table 1).
These services are enhanced by improved pharmacy technology and analytical capabilities. Specialty pharmacies and manufacturers can leverage technology to enhance the lives of these patients with rare diseases. In this current electronic age, when cutting-edge technology can be found on a patient’s wrist or in their pocket, there is almost an expectation that a similar level of technology should be a component of their care.
Building Future Leaders
Specialty pharmacies should consider investing in the future leaders of this emerging sub-specialty of the pharmacy profession. They need to advocate to schools of pharmacy and their accreditors to include this practice area in core curriculum. Advanced specialty education and training programs, including residencies, fellowships, and graduate degree programs, must continue to evolve. Specialty pharmacies that invest in the development of a fellowship or residency will capitalize on both direct and indirect benefits. They can tailor the experiences to be specialty-specific, including a business rotation, to prepare pharmacists to meet the needs of contemporary specialty pharmacy. Additionally, university-based advanced degree programs, such as the Masters of Science in Pharmacy Business Administration at the University of Pittsburgh, are emerging to further develop the knowledge of practitioners in the area of specialty pharmacy. Finally, continuing education within specialty pharmacies will foster innovation, support continuous improvement, and provide an internal pipeline for talent. Specialty pharmacy is here to stay and will continue to grow as a career option.
The orphan drug market has seen significant growth and received considerable attention in the media as a result. The approval of more orphan drugs is just one step in the process of advancing care for patients with rare diseases. These patients still face considerable obstacles to care, inclusive of management of their complex medication therapy, drug access, and the ability to afford treatment. Specialty pharmacies, particularly through limited and exclusive distribution channels, have an incredible opportunity to provide a high-touch and focused approach that can make a difference in the lives of these patients and their caregivers. Furthermore, research findings must be provided to payers to convey that appropriate utilization and management can lead to significant societal value, justifying the investment of the drugs themselves.