With orphan drugs under the microscope, it’s important to review the special circumstances and challenges of this group.
Many years ago, my first pharmaceutical product launch was with an orphan drug. It was a product indicated for a hereditary childhood disease that left these children dying before the age of 3 years. For years no one could understand why these children would get sick and eventually die so early. The clinical trial included fewer than 150 children, and my role within the pharmaceutical company was to transition these clinical trial patients (the children and their families) to commercial product where they could gain reimbursement coverage or apply to a patient assistance program provided by the pharmaceutical manufacturer.
I saw firsthand the many challenges of launching an orphan drug, and I became involved with the families, advocacy groups, and payer organizations who all worked together to make sure not another child given this disease prognosis would die. It was this first experience that had me continue to launch 10 more orphan drugs in my career.
Each launch was unique, but the piece that remains consistent in each is the passion, perseverance, and “can do” attitude, from the scientists who discovered the molecule, to the clinical trial physicians, the patients, and their families, and ultimately to the commercial teams that would be responsible for selling the drug and providing access. There was a common goal—make the patient better or at least allow him or her to have a better quality of life.
ORPHAN DRUG MEETS GOVERNMENT PROGRAMS
That very first orphan drug launch also occurred during the second year of the Medicaid drug rebate program in 1992. I often say that I innocently came to work one day and was handed a stack of state Medicaid invoices with a post-it note stating, “This looked like a reimbursement function.” From that point on, it would be up to me to figure out and process these quarterly invoices. Similar to a scientist discovering a cure, I set out to understand how the pharmacy delivery industry worked and how high-priced products sold in a specialty pharmacy arena were different and problematic to the Medicaid drug rebate program.
Interestingly enough, my first task was not understanding the external pharmacy delivery system, but pulling together the internal pharmaceutical manufacturer and building a product master for the company I worked for. The fragmented pieces of all departments was evident; no one knew what an NDC number was and who assigned these numbers, what NDC numbers were placed on the outside carton, how customer service came up with a product number, what contracts were out there, how the fee-for-service worked with the specialty pharmacy, and how the price was determined.
Once I got this internal part in order, I discovered the world of pharmacy, in large part due to a great friend, Ed Edelstein, who was with First Data Bank at the time. Ed took me under his wing, turned me onto the National Council of Prescription Drug Programs (NCPDP), and together Ed, myself, and a team of other devoted pharmacists, who had their fill with trying to understand a dispensed unit and what represents “one,” came together. We started down the path of developing the “Billing Unit Standard,” which exists today. I like to think of this as the industry’s own little “orphan” project.
It is clear that when CMS started the Medicaid drug rebate program there was very little knowledge about how the pharmacy delivery industry functioned. To place a program in the industry and expect to pay rebates on a dispensed unit of measurement—which was a very new thing to pharmaceutical manufacturers who to this day are more concerned about the sale package price versus taking it down to the pill and milliliter level—was difficult to understand at best. Errors and confusion plagued the program and quick fixes were made by state Medicaid programs that tried to avoid disputes and wanted to pay pharmacies correctly.
I entered the fray with my orphan drug that was packaged as a 0.5-mL dose per vial. All of a sudden, the state Medicaid programs come forward to say they could not bill less than a full milliliter. It seemed impossible that the pharmacy systems are unable to bill for less than a full milliliter! The answer that CMS, state Medicaid, and the NCPDP provided was to just “round up” to a full milliliter and pay for 1. Perhaps this works for a “regular” product priced under $10. However, I had an orphan product with a $300.00+ price tag for 0.5 mL. Rounding up was not an option. The one benefit of an orphan drug is that it usually has a small patient population and the distribution is specialized, so we did have the opportunity to work with the specialty pharmacies and directly with the state Medicaid agencies. It became a close community among all these players as we struggled with claims quarter-to-quarter and shared stories of our day-to-day lives, kids, graduations, marriages, grandkids, and pets.
PRICING UNDER SCRUTINY
I must confess that we have come a long way since those early days, but the concept of the Medicaid drug rebate program has not changed. It is still very retail pharmacy–centered and orphan drugs, depending on the dispensed form they assume, are still a challenge. The focus, which was once based on the rebate invoice, has really changed over the past 8 years to concentrate more on the pricing being reported by pharmaceutical manufacturers to CMS. The implementation of ASP in 2005 on physician-administered products and the incorporation of the monthly AMP to represent a “reimbursement” number have further supported the focus on the calculated price being reported to CMS. It goes without saying that orphan drugs continue to have higher price tags, which makes them highly visible when pricing is reported and especially if a recalculation needs to occur.
During a recent CIS webinar, we asked our audience “What keeps you up at night when launching an orphan drug?” The answers with the most responses were “pricing” and “complying with government requirements.” In fact, the pricing of an orphan drug is under more scrutiny today than ever before. As government programs grow, a significant financial burden is placed on both federal and state programs, with health care expenditures representing a significant percentage of the budgets. Federal and state governments will continue to put a high level of scrutiny on the “government price,” meaning the price the government pays for products that will go to the individuals who receive benefits under the program. This has also resulted in a general focus on “program integrity” by oversight agencies such as the Health and Human Services Office of Inspector General to ensure that all stakeholders are in compliance with program requirements, including manufacturers who submit data that establishes the government price under various programs.
EFFECTIVELY LAUNCHING AN ORPHAN DRUG
By their nature, orphan drugs face a number of unique challenges and circumstances. To ease the burden, it is strongly encouraged that a pharmaceutical manufacturer prepare internally by having a compliance program and appropriate controls and procedures in place to ensure the accuracy of government calculations before the commercial launch of a product. In addition, understanding external factors, such as how the product will be dispensed and making sure the drug delivery industry understands the disease or disorder, the “face” of the patient, drug cost, reimbursement and distribution, will also be a key factor in a successful commercial launch.
Other obstacles will always come up when launching any pharmaceutical drug today, but with orphan drugs being under a microscope, it is imperative that surprises be limited so that the focus can be on making sure the patients are receiving a product that can change their lives and make a difference.
Compliance Implementation Services (CIS) is a consulting firm focused on helping life sciences clients proactively manage complex compliance requirements. The company offers a broad portfolio of services and solutions that expand deep into the clinical, manufacturing, and commercial disciplines and align with clients’ strategic priorities and business operations. CIS continually provides leadership, global regulatory knowledge, industry experience, and a problem-solving culture that responds to today’s compliance and commercial challenges. The objective of the “Compliance Corner” series is to raise awareness about compliance challenges across the industry and the unique operational challenges of manufacturers.
About the Author
Linda L. Schock is director of government programs at Compliance Implementation Services (CIS). She has more than 20 years of industry experience that includes distribution, pricing, managed care and government contracting, reimbursement, and patient support programs. She consults with a variety of CIS clients regarding the impact of health care reform which includes conducting compliance, methodology, systems, and processes reviews. Linda also oversees CIS’ management of government statutory pricing calculations through client use of CIS’ CalcPartner™ solution and ensures client compliance in the development of pricing calculations and strategy for all government contracts, including but not limited to AMP, Best Price, Medicaid Rebate Per Unit, and 340B Public Health Service ceiling prices. Linda received her undergraduate degree from San Jose State University. She is based out of CIS’ west coast office.