Study questions whether orphan drug exemptions in new Medicare law are justified
A new analysis challenges the recent expansion of orphan-drug exemptions from Medicare price negotiations, suggesting the incentives may be unnecessary.
An analysis published in Health Affairs questions the recent widening of orphan-drug exemptions from Medicare price negotiations under the One Big Beautiful Bill Act. The authors compared clinical-trial expenses, global revenues, and cost-recovery timelines for 167 orphan drugs expected to surpass $200 million in annual Medicare spending. While drugs exempted under the original Inflation Reduction Act recovered costs faster, those exempted or delayed by the newer Orphan Cures Act showed no significant advantage over non-exempt drugs.
The study suggests that the assumption that orphan drugs lack a viable market is inaccurate for high-spending products, and that revisiting the exemption policy could save money for beneficiaries and taxpayers. The analysis arrives as the Congressional Budget Office projects the bill could cost up to $8.8 billion over ten years, prompting criticism from patient groups and some lawmakers. Comments were sought from the EveryLife Foundation for Rare Diseases and the National Organization for Rare Disorders.
Why it matters
The report could influence future Medicare pricing rules and affect billions in taxpayer spending on rare-disease drugs.
In this story