A controversial provision in the One Big Beautiful Bill Act, which exempts more so-called orphan drugs from Medicare pricing negotiations in order to encourage further development, may not warrant that protection, according to a new analysis.
At issue is a portion of the Inflation Reduction Act that went into effect three years ago and allows Medicare to negotiate prices for certain drugs. Under that law, orphan drugs, which are used to treat rare diseases, were exempt in the case of drugs granted just one orphan designation and approved by the Food and Drug Administration.
However, the Orphan Cures Act, which was part of the Big Beautiful Bill Act that became law last year, broadened the exception by allowing medicines with multiple orphan indications to remain exempt. The law also delayed the timelines for which an otherwise eligible orphan drug may be considered for price negotiations.
As a result, drugs with indications that expand from one rare disease to multiple rare diseases will not have their negotiation countdown triggered until the drug reaches into broader markets. The pharmaceutical industry lobbied for the changes, arguing they were needed to encourage innovation.
The new analysis, however, which was published Monday in Health Affairs, suggests that establishing these incentives for drugmakers to invest more money to develop orphan drugs may have been misplaced. As a result, Medicare beneficiaries and taxpayers are coming up short, according to the lead study author.
