Cost of Exempting Sole Orphan Drugs From Medicare Negotiation T

By 2020, nearly half of drugs approved by the FDA,4 Question What are the costs of the exemption from Medicare and most of the highest-spending drugs in Medicare, had at price negotiation under the Inflation Reduction Act for drugs least 1 Orphan Drug Act designation. [...] qualify for the IRA exemption from price negotiation, the ef- Meaning The results of this study suggest that exempting sole fect of this exemption on Medicare spending, and the rev- orphan drugs from Medicare price negotiation will cost taxpayers enue potential of these drugs. [...] The first groupconsisted of sole orphan drugs that, except for the sole or- We used US Centers for Medicare and Medicaid Services (CMS) phan exemption, would have been eligible for Medicare price Medicare Part B and Part D Drug Dashboard data to identify drugs negotiation had the IRA been in effect from 2012 to 2021. [...] the sole orphan exemption could disincentive firms from Existing incentives in the Orphan Drug Act of 1983 seek repurposing sole orphan drugs for the treatment of other to promote the development of drugs that may otherwise not conditions.29,30 Before the IRA, drug developers might pur- be brought to market because of financial concerns.21 Several sue additional indications if incremental revenues. [...] At the same time, the Biden administration has proposed loos- ening the selection criteria to increase the number of drugs for Conclusions which the cost to Medicare can be negotiated.36 Whether any This cross-sectional study found that the sole orphan exemp- of these efforts will result in changes to the implementation tion will exclude billions of dollars of Medicare drug spend- of the IRA is un.