Exempting Rare Disease Drugs from Medicare Pricing Pilots Would Erase Most Retail Savings, Harvard Analysis Finds
核心洞察
A Harvard researcher's modeling shows that exempting rare disease drugs from the GUARD Part D pilot would eliminate most projected retail drug savings.
Orphan-designated drugs are among Medicare's most expensive per patient, with 42% of high-spend branded drugs holding at least one orphan indication.
The Congressional Budget Office (搜索) has already revised the cost of existing orphan drug exemptions upward to as much as $8.8 billion from $4.9 billion.
A new analysis from a Harvard University researcher finds that carving rare disease treatments out of a proposed Medicare drug pricing pilot would eliminate the vast majority of savings projected from retail prescription drugs. The finding arrives as biotechnology companies actively lobby the Trump administration for precisely that exemption from two pilot programs: the Global Benchmark for Efficient Drug Pricing (GLOBE) and Guarding U.S. Medicare Against Rising Drug Costs (GUARD).
The retail-drug savings estimate applies specifically to GUARD, which covers Medicare Part D. The analysis is one researcher's modeling of a policy that has not been decided; it is not an agency estimate, and the pilots remain proposed rather than final.
The Arithmetic Behind the Carve-Out
A rare disease exemption sounds narrow by definition, since orphan diseases affect small patient populations. The opposite is true in practice: orphan-designated drugs are among the most expensive per patient, and several rank among the highest-spending products across Medicare.
The two pilots cover different segments of the program. GLOBE targets Part B and is proposed to run from October 2026 through 2031. GUARD targets Part D and is proposed to begin in January 2027, also through 2031. Both would require manufacturer rebates when United States prices exceed those in comparable countries, tested in randomly selected geographic areas covering roughly one-quarter of Medicare beneficiaries. Drugs already subject to a maximum fair price under the existing negotiation program would be exempt.
Scale of Orphan Drug Spending in Medicare
Published modeling illustrates the magnitude. Of 645 branded drugs covered under Medicare Parts B and D as of 2022, 172 are projected to reach or exceed $200 million in annual Medicare spending between 2026 and 2030. Among those, 73—or 42 percent—have at least one orphan indication.
Breaking that group down further: 28 already meet exemption criteria under the Inflation Reduction Act, 15 meet the newer Orphan Cures Act exclusion criteria, and 30 are approved for both orphan and common indications.
A single example underscores how large individual numbers can be. Ibrutinib, sold as Imbruvica, treats rare blood cancers (搜索) and cost Medicare nearly $2.4 billion in 2023 despite being used by roughly 17,000 Part D patients. Negotiation secured a 38 percent reduction from its list price beginning in 2026. Under a broadened carve-out, a drug of that profile would be exempt.
Existing Exemptions and Their Growing Cost
Federal law already contains a version of the rare disease exemption. The Inflation Reduction Act excluded from price negotiation any orphan drug approved to treat only one rare disease with no other approved indication. The Orphan Cures Act, enacted as part of the One Big Beautiful Bill Act, widened it to cover drugs with multiple orphan designations and no non-orphan indications.
The taxpayer cost of that widening has already been revised upward. The Congressional Budget Office (搜索) revised its forecast last fall to show the added exemptions will cost up to $8.8 billion, rather than the previously estimated $4.9 billion.
An expansion beyond the current law would pull in drugs that treat both rare and common conditions. Because a product only has to qualify once to be excluded, a broad carve-out creates an incentive to seek an orphan designation for a drug that will earn most of its revenue elsewhere.
Harvard Medical School researchers Benjamin Rome and Aaron Kesselheim, who have published repeatedly on this question, have argued that expanding the exemption would unnecessarily limit the number of eligible drugs while allowing continued high prices for products earning billions in Medicare.
Arguments on Both Sides
The industry case is not frivolous. The Rare Disease Company Coalition (搜索) is lobbying for exclusion, arguing that rare disease drug development serves small patient populations, meaning fixed research costs are recovered from fewer people. Companies contend that price constraints reduce the incentive to pursue conditions with limited markets, and that patients with rare diseases have historically had few or no options. Smaller biotechs with narrow portfolios have less room to absorb the impact.
The counterargument centers on targeting. Critics say the exemption as written does not distinguish between a genuinely small-market therapy and a blockbuster that happens to carry an orphan designation alongside common indications, and that the incentive it creates is misaligned with the policy's stated purpose.
Both positions can be partly right. Whether an exemption protects rare disease innovation or shelters high-revenue products depends entirely on how narrowly it is drawn—the decision now before the administration.
Consequences for Medicare Beneficiaries
For people on Medicare, the connection runs through two channels. The first is out-of-pocket cost: the pilots are designed to reduce beneficiary coinsurance on covered drugs, and CMS estimated beneficiaries would save $1.5 billion when the first negotiated prices took effect in 2026. Drugs excluded from a program do not generate those savings.
The second is premiums. Part D premiums reflect overall program spending, so reduced spending on high-cost drugs can moderate what every enrollee pays, including people who never take the medications in question.
Patients should not expect any immediate change from this analysis, and nobody should alter or stop a prescription based on pricing policy news. Anyone struggling with drug costs now has existing options worth raising with a clinician or pharmacist: the Part D out-of-pocket cap, the Medicare Prescription Payment Plan that spreads costs across the year, Extra Help for low-income beneficiaries, manufacturer patient assistance programs, and therapeutic alternatives where they exist.
Next is a decision on the pilots' final structure, followed by which drugs are selected. The debate concerns which drugs face price constraints, not whether patients keep access to them. An exempted drug stays on the market at its existing price, and a drug included in a pilot remains available at a rebated one. Neither outcome removes a treatment from the shelf.