Predictors of orphan drug coverage restrictions in Medicare Part D

It is unclear on what basis Medicare drug plans impose coverage restrictions on orphan drugs. This study aims to investigate the factors associated with utilization controls in Medicare fee-for-service Part D formularies.

Cross-sectional analysis.

We used multivariate logistic regression to assess the association between orphan drug characteristics and use of formulary utilization controls in 2016. We controlled for number of beneficiaries per drug, exclusivity expiration, and the number of plans and beneficiaries per formulary. We conducted sensitivity analyses using fixed and random effects.

On average, 85% of orphan drugs on a formulary were placed on its highest cost-sharing tier and 76% were subject to prior authorization (PA). Orphan drugs with annual costs of $50,000 or more had twice the odds of having PA requirements compared with less expensive ones. Relative to orphan drugs with a single indication, drugs with multiple indications were more likely to have restrictions. Less effective drugs had 1.5 times the odds of highest tier placement relative to more effective drugs. The presence of black box warnings and patient assistance programs were associated with more restricted access. Orphan drugs with generics were less likely to undergo restrictions than those without generics (all P < .05).

Plans are making evidence-based decisions by rewarding more clinically effective and safer orphan drugs. They are penalizing drugs with multiple indications. Surprisingly, plans place fewer restrictions on orphan drugs that have a generic equivalent, which may further discourage generic entry into the orphan space, where competition is already sparse.