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ORPHAN DRUG SALES CAP ENDORSED BY NATIONAL AIDS COMMISSION

Executive Summary

ORPHAN DRUG SALES CAP ENDORSED BY NATIONAL AIDS COMMISSION in its final report, "America Living With AIDS," issued Sept. 25. The 15-member commission's recommendation to deny orphan status to a drug once a specific dollar amount of sales is reached is included among several "immediate short-term steps to address the urgent problem of inadequate coverage for people with HIV disease." The commission had suggested eliminating orphan drug status for high- profit drugs in an interim report issued in July. The sales cap "proposal could result in considerable savings for all payers of drugs for treatment of HIV-disease," the commission stated. "Savings on pentamidine [Lyphomed's NebuPent] alone could amount to $ 900 per patient per year; administrative costs would be minimal," the report asserts. Noting that the National Organization for Rare Disorders has proposed a sales cap of $ 150 mil., the commission stated that the sales cap idea "would deny orphan status to a drug once it had proved very profitable, while retaining orphan status for small market or unprofitable drugs. Thus, one result would be to return the application of the law to its original intent." In addition, the sales cap approach would allow manufacturers still to "recover the cost of research and development phases of a new drug for a rare disease; thus, research incentives would not be lost." Two other recommended "interim" steps for improving access to "expensive drugs" are to consolidate purchases of drugs through the federal government and to explore alternative approaches to ensuring adequate payment for HIV-related therapies. A federally-sponsored consolidated purchasing program could be operated through Medicaid or could be modeled on the Centers for Disease Control's vaccine program, the report suggests. The CDC bulk purchase program allows states to purchase vaccines at lower negotiated prices. Regarding the second proposal, the report notes that many HIV- infected individuals lack private health care insurance, while others who are insured may lack drug coverage or may have reached their lifetime reimbursement cap. As an example of a product that may be unaffordable for some, the commission noted that "advances in technology have made clotting factor for people with hemophilia free from HIV but at a tremendous economic cost. Virally attenuated clotting factor now costs $ 60,000 to $ 100,000 per year simply to meet the basic needs of one person with severe classical hemophilia." Three years ago, the report notes, "the Presidential Commission on the HIV Epidemic recommended that the Health Care Financing Administration and Health Resources and Services Administration 'develop alternative mechanisms to make clotting factor treatment affordable for patients.' Notwithstanding this recommendation, nothing has been done." The panel also urged that: * * HHS study insurance policies regarding payment for non-drug health care services that are provided to a patient participating in clinicial trials; * * the National Institutes of Health develop a "formal mechanism for disseminating state-of-the-art treatment information in an expeditious and far-reaching manner"; * * FDA should "aggressively pursue all options for permitting the early use of promising new therapies for conditions for which there is no standard therapy or for patients who have failed or are intolerant of standard therapy"; and, * * HHS and its component agencies should develop recommendations to address obstacles "that keep many people from participating in HIV-related clinical trials, as well as the variables that force some people to seek participation in trials because they have no other health care options."
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