Thinking About One of the IRA's Biggest Misses: Orphan Drugs

These are supposedly the longest days of the year, but it feels like there still aren’t enough hours. Appreciate the patience today.

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This is a good all-around look from Bloomberg Law at the orphan drug problem with the IRA: orphan medicines are exempt from IRA price controls unless the medicine has more than one orphan designation, in which case it’s game on for “negotiations.”

The issue here is pretty clear. Taking away the exemption if a second use can be found for a rare disease drug ends up being a huge disincentive to look for second uses. And that’s dangerous because those kinds of secondary indications have driven a lot of success in our battle against rare diseases. 

John O’Brien from NPC made this point well: “The rare disease development pipeline and R&D progress over the last 40 years has relied on identifying new applications for approved drugs to address unmet needs for patients living with rare diseases.”

So the Bloomberg piece does a good job of capturing what’s going on here, along with the obvious -- but still longshot -- legislative fix. There’s no particular reason for optimism about IRA fixes in general, but if that door gets cracked open, it feels like this is the issue that will do it, given that the harms are clear … and that vulnerable patients are so plainly affected. 

The other element of the story worth noting is a link to Incubate’s new tracker of all of the companies that have pointed out ways that the IRA is having a harmful effect (canceled programs, etc.)

It’s a resource that I think everyone has kind of been waiting for, and I’m grateful to Incubate for putting in the work.

Yesterday, I noted a JAMA Forum piece with a provocative title: “It Is Time to Consider More Price Regulation in Health Care.” It was even more provocative because the authors -- Harvard’s Amitabh Chandra and NYU’s Sherry Glied -- are not really the-government-can-solve-all-our-problems kind of people. 

The article is worth a few additional words, in part because government intervention in health care has a checkered record of adding complexity without actually changing underlying problems. These kinds of analyses are worth pushing back on. 

The publication commits a couple of sins. The first is conflating the issues driving hospital prices up with the issues around drug pricing. Yes, hospitals and pharmaceuticals are both part of the health care system. And, yes, there are concerns about price in both areas. But the idea that the same toolbox should apply is pretty simplistic. 

The issue with hospitals is, in large part, about consolidation. (David Wainer made this point well in the WSJ earlier in the month.) That’s not really where the issue is with drugs, but Chandra and Glied clearly think there is benefit in conflating the two. 

The second sin is the idea that the short-term benefits of government price fixing are greater than the long-term harms of decreased innovation. It’s not that this is an illegitimate argument. Indeed, there is an entire industry and literature dedicated to this exact question. 

But the authors just sweep aside the idea that this could even be a debate: “In brand-name pharmaceutical markets and noncompetitive hospital markets, the short-term losses from high prices are substantial and they clearly outweigh the likely gains from future investments and innovation.”

I don’t know of anyone who thinks that any of these policy discussoins are “clearly” anything. 

So while there is a meaningful conversation to be had here, the JAMA Forum piece is weirdly uninterested in it.

• The Harvard PORTAL folks are at it again, flagging a “loophole” in the IRA that exempts from price controls medicines that have a generic competitor. The logic here is pretty clear, but the researchers -- writing in the Annals of Internal Medicine -- note that some drugs have a generic for certain formulations even as other versions remain patent-protected. Because it’s technically the same chemical compound, all versions are protected from “negotiations.” In the case of medicines such as Invega, that means that the most popular forms of the drug get the exemption. 

• Health plans are still playing game with birth control pills, foisting costs on women even though the Affordable Care Act is supposed to make birth control available without cost. But Bernie Sanders is on the case, and this is a better use Bernie’s time than some of his other recent crusades.

Header image via Flickr user Gloria.