President Donald Trump’s newly passed “Big, Beautiful Bill” is more than 900 pages and incorporates so many little provisions, it’s not hard for some to go unnoticed — like a provision to change medicare drug price controls. The new budget law, officially titled the One Big Beautiful Bill Act, reverses a Biden-era law put in place under the 2022 Inflation Reduction Act (IRA) that crtics say disincentivized pharmaceutical companies from finding multiple uses for medications designed to treat rare diseases. These medications are known as “orphan drugs.”
What are orphan drugs?
Orphan drugs are medications approved to treat rare diseases and conditions. For a disease to be considered rare, it must affect fewer than 200,000 people in the United States.
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What was the Biden-era rule regarding orphan drugs?
When the IRA was signed in 2022, it created something called the Drug Price Negotiation Program under Medicare. The program allowed the federal government to negotiate the prices of certain high-cost prescriptions directly with their manufacturers.
Orphan drugs were exempt from the negotiation program, but only if the drugs were approved to treat a single issue. That means if a drug has only been approved to treat just one rare disease, drugmakers can pretty much name their price, and the federal government can’t try to get it lowered.
However, many orphan drugs can be used to treat multiple rare diseases, as many of them have similar root causes, like a gene mutation or an autoimmune disorder.
The IRA basically took away pharmaceutical companies’ incentives to study whether orphan drugs can treat multiple rare diseases. In fact, after it went into effect in 2022, multiple orphan drug makers canceled studies to see if their prescriptions could be used to treat more than one rare disease.
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The number of orphan drugs approved to treat more than one disease was cut in half after the Inflation Reduction Act took effect in 2022.
A report released by the National Pharmaceutical Council in May found the number of orphan drugs approved to treat more than one disease dropped by half, from 12.1% to 6.3%, after the IRA took effect.
Now, the “Big, Beautiful Bill” is changing that by allowing orphan drugs designated to treat more than one rare disease to be included in the IRA’s Drug Price Negotiation Program.
The provision almost didn’t make it
While the provision, the Optimizing Research Progress Hope and New (ORPHAN) Cures Act, to change the Drug Price Negotiation Program was included in House Republicans’ original legislation, the Senate tried to get rid of it over concerns it violated the Byrd Rule.
According to the Economic Policy Innovation Center, a conservative think tank, the Byrd Rule “requires reconciliation bills in the Senate remain focused on fiscal issues, subjecting nonbudgetary provisions to a point of order.”
The Senate Parliamentarian ruled the provision did not violate the Byrd Rule.
Are there any downsides?
The Congressional Budget Office (CBO) has estimated passing the ORPHAN Cures Act will cost the federal government about $5 billion over the next ten years, according to Politico. Critics of the act say that takes away from the money that otherwise would have been saved through the Drug Price Negotiation Program.
