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

Pharmacoeconomics. 2022 Feb;40(2):225-232. doi: 10.1007/s40273-021-01096-5. Epub 2021 Oct 26.


Background and objectives: 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.

Methods: 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.

Results: 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.

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

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Child
  • Cost-Benefit Analysis
  • Humans
  • Insurance Coverage*
  • Orphan Drug Production*
  • Quality-Adjusted Life Years