Is an Orphan Drug's Cost-Effectiveness Associated with US Health Plan Coverage Restrictiveness?

Orphan drugs' high prices raise questions about whether their costs are worth their benefits. We examined the association between an orphan drug's cost-effectiveness and health plan coverage restrictiveness.

We analyzed a dataset of US commercial health plan coverage decisions (information current as of 2019) for orphan drugs (n = 3298). We used multi-level random-effect logistic regression to examine the association between orphan drug cost-effectiveness and coverage restrictiveness. We identified cost-effectiveness estimates from the Tufts Medical Center Cost-Effectiveness Analysis Registry, and from the Institute for Clinical and Economic Review's value assessments. We included only cost-effectiveness studies not funded by product manufacturers. We included the following independent variables: cancer indication, availability of alternatives, pediatric population, number of years since US Food and Drug Administration (FDA) approval, disease prevalence, annual cost, additional non-orphan indication, safety, and inclusion in a FDA expedited review program.

Plans restricted drug coverage in 29.7% (n = 981) of decisions. Plans were more likely to restrict drugs with incremental cost-effectiveness ratios of $50,000-$175,000 per quality-adjusted life-year [QALY] (odds ratio = 1.855, p < 0.05), $175,000-$500,000 per QALY (odds ratio = 1.859, p < 0.05), and >$500,000 per QALY/dominated (odds ratio = 2.032, p < 0.01), compared to drugs with incremental cost-effectiveness ratios <$50,000 per QALY. Plans more often restricted drugs with non-cancer indications, having available alternatives, with more recent approval, in an FDA expedited review program, and for which the FDA additionally issued approval for a non-orphan disease. Plans more often restricted drugs with higher annual costs, and drugs indicated for higher prevalence diseases. All findings p < 0.05.

Among other factors, an orphan drug's cost-effectiveness was associated with health plan drug coverage restrictiveness.