OBJECTIVES: We aim to understand the value of pursuing NCCN compendia without a formal FDA approval for an orphan drug indication expansion to circumvent Inflation Reduction Act (IRA) drug negotiation.

METHODS: Jakafi and Imbruvica, two orphan products that pursued oncology indication expansions and are on the Medicare Top 50 Spend List, were selected to measure the impact of the retroactive application of the IRA on the total addressable market size. Total addressable market for each product was compared between two scenarios: 1) standard indication expansion opening eligibility for Medicare Part D Negotiations at year 9 post initial FDA approval; 2) the product had NCCN compendia listing only without full FDA-approval and is exempt from price negotiation under the IRA provisions.

RESULTS: Both Jakafi and Imbruvica would need to reach >90% of the addressable patient population through NCCN compendia to achieve a higher total addressable market size than formal FDA indication approval pursuit even with a 60% negotiated WAC price.

CONCLUSIONS: Despite the potential risk of Medicare negotiations, manufacturers should still consider indication expansion for Orphan products as price negotiations do not begin until 9 years post launch and only a limited portion of the population is ultimately impacted by price negotiation. Given the marketing challenges associated with foregoing a formal FDA approval, manufacturers are unlikely to avoid formal indication expansion to prevent possible price negotiations. Instead, manufacturers may be incentivized to launch at higher prices to offset IRA-driven revenue losses given a generally high price tolerance for oncology products. Launch timing of the second indication (i.e., total time on market prior to price negotiation eligibility), population size of the second indication, and payer mix across indications may influence the overall impact on Medicare price negotiation for different products.