Comparative effectiveness research and the rise of orphan indications

Purpose – The purpose of this paper is to show the link between the comparative effectiveness research (CER) and the interest in developing drugs for rare disease by the pharmaceutical industry. Total healthcare spending is on the rise without having a corresponding better health outcome. As such, with the growing role of government in healthcare, measuring and demonstrating value is beginning to expand beyond the private sector to metrics applied in the public sector. A modern approach to comparative effective research began its rapid rise in the USA when the American Recovery and Reinvestment Act of 2009 allocated $1.1 billion for CER. This paper analyzes the implication and impact on the pharmaceutical industry. Design/methodology/approach – The paper reviews the basic definitions of CER and its areas of strength and weakness. It used real examples of drugs to show the impact of the Reinvestment Act of 2009 on the rise of orphan drugs. Findings – The study shows that the act encouraged the development of orphan drugs, mainly because of the low budget impact due to a smaller patient base. Provisions of the Affordable Care Act provide incentives for such rare disease indications, as no one can be denied coverage with pre-existing conditions. Research limitations/implications – The study is limited by the number of available rare drugs and the ongoing process of implementation of the Affordable Care Act. Practical implications – The study shows the cost-effective method of treating medical conditions. Social implications – Development of orphan drugs opens up access to care for many patients at a cost-effective price. Originality/value – This paper shows the link between the CER and the interest in developing drugs for rare disease by the pharmaceutical industry. It also brings out the possible implication of the Affordable Care Act on the pharmaceutical industry with respect to its strategies for drug development and drug portfolio.