Rare Disease Healthcare Spending Tops Costly Chronic Diseases

While payers have been focusing justifiably on diminishing healthcare spending for chronic conditions, rare disease healthcare spending may exceed chronic disease healthcare spending, according to the National Economic Burden of Rare Disease study.

The survey on which this study was founded received responses from nearly 1,400 individuals regarding costs related to 379 rare diseases in 2019.

“This primary survey was specifically designed and administered for this study to deepen the understanding of the full spectrum of rare disease (RD) impact,” the study explained.

“The survey was able to collect detailed data on a broad set of indirect and non-medical costs of RD that were previously unavailable, especially the impact of RD on unpaid caregivers. This survey was one of the largest surveys conducted so far covering multiple RD communities.”

These diseases impacted 15.5 million people and cost $966 billion. This number exceeds even chronic disease cost estimates including the most expensive chronic diseases driving healthcare spending in the US such as diabetes, cancer, and heart disease.

“Notably, these studies are not easily comparable to ours, as they are based on different data, or include various burden components,” the researchers qualified. "Therefore, any comparison between the findings of this new study and any previous literature should consider these differences.”

Of that $966 billion total, $418 billion was for medical costs--more than a third of the total healthcare spending associated with rare diseases.

Inpatient direct care had the highest price tag at $143 billion. Outpatient followed at $62 billion. Other ancillary care services contributed $49 billion to rare disease healthcare spending and prescription medication nearly equaled that cost ($48 billion).

However, apart from the direct medical cost burden, the study also analyzed the economic impacts that having a rare disease could inflict on a patient’s productivity and output. Indirect costs outweighed direct medical costs (contributing 57 percent to 43 percent, respectively), and the study found that this was largely due to workplace-related losses in revenue.

All in all, productivity losses nearly matched the impact of direct medical expenses on rare disease healthcare spending. Workplace absenteeism contributed $149 billion of the cost. Presenteeism—defined as reduced performance for being at work while sick—and forced retirement led to $138 billion and $136 billion in losses, respectively.

Non-medical costs accounted for approximately 12 percent of healthcare spending related to rare diseases.

Over half of the rare disease population has either an employer-sponsored health plan or Medicaid coverage (56 percent, combined). Nonetheless, the rate of rare disease among Medicare beneficiaries is 11.5 percent, whereas the rate of prevalence among commercial members is 3.8 percent and among Medicaid beneficiaries is 2.7 percent.

Fifty-one percent of rare disease medical costs go toward the working-age population with employer-sponsored health plans. Medicare beneficiaries account for nearly 40 percent of rare disease healthcare spending (39 percent). Medicaid contributes the least to rare disease medical costs, representing only 10 percent of the sum.

On the individual level, excess direct medical costs typically exceed $26,800 more per patient with a rare disease when compared to the typical patient. Privately insured individuals have the highest healthcare spending, followed by Medicaid, and finally Medicare beneficiaries.

Costs decrease from young rare disease patient populations to older patient populations.

For both minors and adults, patients with lysosomal storage diseases had the highest mean excess costs, with a mean of $132,757 excess for those under the age of 18 and $54,996 for those over 18.

For minors, endocrine or metabolic disorders were the diseases with the second highest mean excess cost ($72,285) while for adults diseases of the blood and blood-forming organs were the second highest ($52,201).

This data represents a low estimate on the fiscal impacts of rare disease spending because it only studies 379 out of the 7,000 rare diseases worldwide. However, at the same time, the researchers acknowledged that because they used diagnosis codes to determine prevalence they may have included false positives, which may mean that they underestimated prevalence.

“Our findings show that RD significantly affects individuals living with rare diseases as well as their unpaid caregivers, employers, and payers,” the study explained. “Study findings demonstrate that diagnosis, care navigation, and treatment of rare disease include significant costs to individual households and the health system.”

Nevertheless, the findings could be crucial as payers struggle to achieve the best member engagement, patient experience, and patient outcomes for this complex population of members.

Payers have to rethink member identification due to coding challenges for rare disease, as UnitedHealth Group has found. They also have to modify their member engagement approach to recognize that individuals with rare diseases and their families are much more involved in their healthcare and health insurance than the average member.

Payers also must face the cost challenges of prescription drugs for rare diseases. The debate over this issue largely has been a showdown between the titans of the payer industry and those of the pharmaceutical industry. But it is a conversation that may require a speedy resolution as the healthcare industry and patients increasingly leverage cell gene therapies.