and to generate profits because public and private health insurance plans and patients and families will pay that price, then a manufacturer may not be deterred by a small target market. Public and private health plans that cover orphan drugs generally lack leverage to negotiate prices in the absence of alternative brand-name or generic products. The most expensive orphan drugs cost more than $400,000 per year.

The committee’s analysis focused on Medicare, which covers many individuals with severe, disabling rare conditions. Based on its examination of drug coverage under Medicare Part B (which covers drugs administered by physicians and outpatient facilities) and Medicare Part D (which covers prescription drugs in private plans administered according to government rules), the committee concluded that nearly all orphan drugs are, within a relatively short period following approval, covered either under Part B or by a majority of Part D plans. Part D plans often place orphan drugs in a “specialty” category of coverage that requires much higher out-of-pocket costs, and they often require prior authorization before a drug will be covered. Little is known about how such requirements are implemented and whether they may restrict access.

In addition, little is known about the application of coverage restrictions when orphan or nonorphan drugs are used off-label to treat people with rare conditions that may have few or no FDA-approved treatments. Medicare requires coverage for off-label uses that are described in certain compendia (comprehensive listings of drugs with descriptions of their recommended uses). The creation of an evidence-based compendium focused specifically on off-label uses of drugs for rare diseases could inform clinicians, health plans, and potentially patients and families. It could also suggest areas for future research or literature reviews.