The US pharmaceutical market for rare diseases presents a critical dichotomy: while the clinical imperative translates to a high reimbursement acceptance rate (typically 86% to 92%) (Oliver Wyman, 2024), the actual patient access pathway is severely constrained. This friction is a systemic operational and legal failure resulting from the collision of multi-million-dollar therapeutic costs, heightened payer budget scrutiny, and an outdated regulatory and data governance infrastructure that has not kept pace with the pace of scientific innovation.
The strategic imperative for biopharma executives is therefore no longer solely to achieve regulatory approval, but to develop an evidence base that is dual-purpose: rigorous enough for the FDA’s novel regulatory pathways and auditable enough for the payers’ Outcome-Based Contracts (OBCs). This has profound consequences for the investment risk, profitability window, and, most critically, patient access.
The US Food and Drug Administration (FDA) has responded to the challenges of ultra-rare disease development by creating flexible approval pathways that increase the reliance on real-world and post-market data. This regulatory flexibility, while essential for patient access, simultaneously raises the commercial barrier for manufacturers.
For therapies targeting ultra-rare populations, the FDA is clarifying its expectations under new frameworks:
The RDEP formalises the use of robust confirmatory evidence to supplement a single adequate clinical study, especially for populations with <1,000 US patients (FDA, 2025). This confirmatory evidence is heavily dependent on natural history studies and post-market data from Expanded Access programs (FDA, 2025).
An emergent pathway for personalised therapies, requiring sequential clinical success and strong evidence of target engagement (Arnold & Porter, 2025).
FDA guidance for Cell and Gene Therapies (CGTs) increasingly requires manufacturers to leverage RWE from sources like registries to satisfy the requirement for verifying clinical benefit (Ropes & Gray LLP, 2025; FDA, 2025). For many curative therapies, this post-market data collection plan is mandated for 15 years or more (FDA, 2025).
This regulatory dependence on RWE creates an impossibility in the US commercial system: The manufacturer needs to start designing the post-approval RWE collection system before launch to satisfy the FDA, but they cannot formally agree on the specific data points for an OBC until after launch and policy acceptance.
Data Sharing Vacuum: Manufacturers must engage payers early to understand the clinical endpoints (e.g., motor function score, relapse rate) that payers would be willing to pay for in an OBC. However, US commercial payers are numerous, unstandardised, and lack a formal, pre-competitive mechanism for sharing claims or clinical data (even anonymised) that would inform a target clinical/financial endpoint before the drug is approved (PwC, 2024; Avalere Health, 2024). This is not an issue of unwillingness, but of structural inability and a trust deficit (Avalere Health, 2024).
Non-Standardised Payer Engagements: The manufacturer is forced to engage hundreds of commercial payers (not just Medicare/Medicaid) in unstructured, non-formalised meetings (Global Genes, 2024). The resulting variability in payer demands (e.g., Payer A wants a 6-minute walk test; Payer B wants hospitalisation rates) makes it impossible to design a single, streamlined RWE registry capable of satisfying all post-market regulatory and commercial demands (FDA, 2025). This necessitates a highly bespoke, resource-intensive, and fractured market access strategy.
The US system’s fragmentation dramatically affects the market’s risk profile, placing immense pressure on the profitability and long-term viability of rare disease development.
The Inflation Reduction Act of 2022 (IRA), as amended by the One Big Beautiful Bill Act (OBBBA) of July 2025, creates a complex strategic landscape for rare disease developers that, while improved, still imposes significant constraints on commercial planning and market strategy.
The July 2025 OBBBA Amendment: Drugs are now excluded from negotiation if designated for one or more rare diseases and all approved indications are for rare diseases.
Remaining Strategic Constraints and the Mixed-Indication Calculus: While the OBBBA provides stronger protections for pure orphan drugs, it creates a new form of strategic friction for therapies with potential dual rare/common disease utility
Manufacturers developing therapies with biological mechanisms that could address both rare and common diseases now face a forced choice: pursue only rare disease indications to maintain permanent negotiation exemption, or pursue broader indications and trigger Medicare price negotiation timelines (nine years for small molecules, thirteen years for biologics from the approval of the first non-orphan indication) (Arnold & Porter, 2025).
This creates two distinct commercial scenarios with radically different risk profiles. A pure orphan strategy offers pricing protection but limits addressable market size and overall ROI. A mixed-indication strategy maximizes patient reach but accelerates price negotiation exposure, particularly problematic for therapies requiring extended post-market data collection to verify long-term clinical benefit (PhRMA, 2024).
Even with OBBBA protections, the framework still discourages manufacturers from pursuing scientifically logical label expansions if those expansions would cross the rare/common disease boundary. This effectively segregates the US market into two strategic universes, potentially leaving patients with common diseases without access to therapies that could benefit them, simply due to pricing policy architecture (PhRMA, 2024).
Compressed Timeline Pressure for Mixed-Indication Products: For manufacturers pursuing non-orphan indications, the IRA still imposes the fundamental challenge of a compressed revenue window before mandatory price negotiation (Arnold & Porter, 2025). This timeline pressure is particularly acute when combined with the 15-year post-market data collection requirements for CGTs (FDA, 2025), creating a scenario where manufacturers are simultaneously obligated to fund expensive longitudinal studies while facing an approaching price negotiation deadline that will cap revenue potential.
Early-Stage Financing Implications: The strategic uncertainty introduced by the rare/common indication calculus continues to affect early-stage financing decisions (PhRMA, 2024). Venture capital and biopharma investors must now model multiple regulatory and commercial scenarios, each with different price negotiation exposure timelines, increasing the complexity of investment decisions and potentially steering capital away from therapies with ambiguous indication profiles.
The high cost of CGTs necessitates OBCs, but the operational structure required to execute them in the US creates significant complexity and administrative burden, particularly challenging for resource-constrained small biotech firms.
The Data Infrastructure and Coordination Challenge: The longitudinal tracking required for an OBC demands the collection, management, and exchange of patient outcome data across multiple stakeholders. While manufacturers can leverage existing relationships with CROs or third-party data platforms to manage this data collection, the fragmented US payer landscape creates substantial coordination complexity (PwC, 2024; Avalere Health, 2024)
Each payer may have different data security requirements, different definitions of what constitutes acceptable evidence, and different legal frameworks for data sharing. This lack of standardization requires manufacturers to navigate hundreds of unique data governance arrangements rather than a single, harmonized system (Avalere Health, 2024).
When manufacturers or their contracted partners handle identifiable patient health information (PHI) for OBC outcomes tracking, they must ensure compliance with HIPAA requirements, typically through Business Associate Agreements (BAAs) with payers or providers (Office of Inspector General (OIG), 2023). While cloud-based compliance solutions are readily available, the legal due diligence, contract negotiation, and ongoing compliance monitoring across multiple payer relationships adds meaningful operational overhead to the market access process
Unlike centralized healthcare systems, the US lacks a standardized, pre-competitive mechanism for manufacturers to receive anonymized or aggregated outcomes data from payers in a consistent format (PwC, 2024; Avalere Health, 2024). This forces manufacturers to build bespoke data integration solutions for each major payer relationship, multiplying the technical and administrative complexity of OBC execution.
Anti-Kickback and Best Price Administrative Burden: The CMS guidance allowing multiple Best Prices for drugs under a VBP arrangement is a conditional concession (Mintz, 2022). Manufacturers must bear substantial administrative overhead in tracking contingent payments and their resulting Best Price implications across all state Medicaid programs. This burden is compounded by the need to
Monitor and report outcomes-based payment adjustments across dozens of individual state Medicaid programs, each with potentially different reporting requirements and timelines (Mintz, 2022).
Maintain detailed audit trails demonstrating that VBP arrangements meet CMS requirements for being offered to state Medicaid programs, creating ongoing documentation and compliance costs (Mintz, 2022).
Navigate the interaction between commercial payer OBCs and Medicaid Best Price calculations, where any outcomes-based rebates or refunds could potentially affect federal rebate obligations, creating pricing volatility and financial uncertainty (Avalere Health, 2024).
The cumulative effect of these operational challenges—non-standardized payer requirements, fragmented data governance, legal coordination complexity, and Medicaid Best Price administrative burden—creates a substantial resource drain that disproportionately affects small and mid-sized rare disease developers. While not insurmountable, this operational friction significantly extends the timeline and cost required to achieve broad, unrestricted patient access through OBC agreements.
The cumulative effect of intensified utilisation controls, the strategic constraints imposed by the amended IRA framework, and the operational complexity of executing OBCs across a fragmented payer landscape is a dramatic contraction of the window of opportunity—a critical period in which developers can generate revenue to offset R&D costs, financiers can realise returns, and patients can gain quick access to transformative therapies.
The window is compressed by two factors: first, the administrative delays inherent in negotiating hundreds of unique, data-intensive OBCs across non-standardized payer requirements; and second, for products pursuing mixed rare/common indications, the price negotiation deadlines imposed by the IRA. This dual pressure, while mitigated for pure orphan drugs by the OBBBA, still makes strategic planning complex and the US market less predictable for therapies with broad mechanistic potential (Ropes & Gray LLP, 2025; Arnold & Porter, 2025).
The patient suffers the most. The operational complexity translates to access delays (often 12–24 months post-approval to achieve broad, unrestricted access) and access limitations (due to financial toxicity barriers and unstandardised PA protocols) (Global Genes, 2024). Additionally, patients with common diseases may be denied access to potentially beneficial therapies if manufacturers strategically avoid non-orphan indications to preserve pricing protection.
While the US system continues to grapple with operational fragmentation, the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) has announced a transformative rare disease framework that will be finalized and implemented in 2026. This framework directly addresses the core systemic failures that define the US experience and offers a compelling structural alternative.
Announced in November 2025, the framework introduces several mechanisms that fundamentally streamline rare disease development and access (MHRA, 2025; Regulatory Focus, 2025)
The framework will introduce a new “investigational marketing authorization” that allows a single approval to be issued for both a clinical trial application and marketing authorization based on compelling but limited evidence, with a strict safety monitoring plan and scheduled reviews of real-world evidence (Regulatory Focus, 2025). This eliminates the duplicate regulatory work and sequential delays inherent in traditional pathways
Unlike the US system where FDA approval and payer reimbursement are completely separate processes, the MHRA framework includes early alignment between MHRA and healthcare partners to ensure regulatory and HTA processes run in parallel, with coordination with NHS organizations (Pharmafocus, 2025). This pre-emptively solves the US impossibility of designing post-market evidence systems before knowing what endpoints payers will accept.
The framework establishes a Rare Disease Consortium composed of representatives from MHRA, NICE, Department of Health and Social Care, NHS, patient advocacy groups, academia, and industry (MHRA, 2025). This creates the formal, pre-competitive mechanism for data sharing and standardized endpoint development that is structurally absent in the US fragmented payer landscape.
The UK leverages the single provider of genomics and unique, diverse datasets of the NHS for rare disease evidence generation (PMLiVE, 2025). The framework enhances evidence-sharing within the UK and globally to better pool scarce data (Regulatory Focus, 2025), eliminating the need for manufacturers to negotiate separate data governance arrangements with hundreds of individual payers.
Patient voice will be central to the framework, with input incorporated into regulatory development sessions and licensing deliberations, particularly to inform benefit-risk assessments for rare diseases (MHRA, 2025). The MHRA is developing guidance on broader evidence sources including real-world evidence, in-silico trials, artificial intelligence, and machine learning models (MHRA, 2025).
The framework enables a single marketing authorization to be granted for therapies with variable components tailored to individual patient characteristics, enabling individualized medicines at scale (Pharmafocus, 2025).
Timeline and Economic Context: A draft of the framework is anticipated by Spring 2026, followed by external review and public consultation in 2026, with a refined and implementable model expected by late 2026 (Pharmafocus, 2025). The UK framework explicitly acknowledges the £340m annual cost of delayed diagnosis and limited treatment options, plus £4.7bn in health-related disability costs and £14.9bn annual economic loss (National Voices, 2024), demonstrating a system-level commitment to addressing rare diseases that contrasts sharply with the US’s fragmented, payer-by-payer approach.
The Structural Contrast: Integrated Design vs. Market Fragmentation
The MHRA 2026 framework represents integrated, system-level design where regulatory approval (MHRA) and value assessment (NICE) are coordinated, a single national healthcare system (NHS) provides unified implementation, and post-market data collection serves both regulatory and value assessment needs simultaneously. This directly eliminates the operational frictions that define the US system: the data sharing vacuum, non-standardized payer requirements, fragmented data governance, and the impossibility of pre-approval commercial alignment.
The US approach, by contrast, remains characterized by fragmented, market-based negotiation where FDA approval is separate from payer decisions, manufacturers negotiate individually with hundreds of commercial payers plus Medicare/Medicaid, each payer has different evidence requirements and payment structures, and post-market data must satisfy multiple, non-standardized stakeholder needs.
The US reimbursement system, despite leading in clinical innovation and maintaining a high overall acceptance rate, fundamentally fails in the operationalisation of value. The US relies on decentralised, post-market commercial audits (OBCs)—a system that creates substantial administrative burden, lacks standardization, and imposes coordination complexity that extends patient access timelines. While the July 2025 OBBBA amendments to the IRA provide meaningful relief for manufacturers committed to pure rare disease portfolios, they simultaneously create a new strategic bifurcation that may limit therapeutic development for diseases that span the rare/common boundary.
The core operational challenges remain: the fragmented payer landscape lacks standardized data-sharing mechanisms, creating the need for hundreds of bespoke OBC arrangements with unique data governance requirements (PwC, 2024; Avalere Health, 2024). The absence of pre-competitive data exchange protocols forces manufacturers into resource-intensive, unstructured negotiations with individual payers (Global Genes, 2024). The Medicaid Best Price administrative overhead continues to create pricing volatility and compliance burden across dozens of state programs (Mintz, 2022).
In stark contrast, jurisdictions like the UK and the EU offer structurally superior models for rare disease access (OECD, 2023). The UK’s forthcoming 2026 MHRA rare disease framework exemplifies this divergence: while the US system continues to operate through fragmented, post-hoc commercial negotiations, the UK is building an integrated system with coordinated regulatory-HTA alignment, collaboration infrastructure, and unified data standards (MHRA, 2025; Regulatory Focus, 2025; Pharmafocus, 2025).
This centralized structure significantly reduces the unpredictable coordination challenges, non-standardized data requirements, and administrative friction that defines the US market. The trajectories are now clearly diverging: the UK is actively reforming toward integrated, patient-centred system design, while the US system’s current architecture—combining fragmented operational requirements with the persistent strategic constraints of the amended IRA framework—continues to create complexity for rare disease R&D investment and undermines the swift, reliable patient access that the UK and EU models, while not flawless, are better structurally designed to deliver.
The MHRA 2026 framework is not merely an incremental improvement but a fundamental reimagining of the rare disease development and access paradigm. It offers a blueprint for how regulatory science, health technology assessment, and healthcare delivery can be integrated to serve both innovation and patient access. For the US system to remain competitive as a destination for rare disease development, it must confront the reality that its fragmented, post-hoc negotiation model is increasingly at odds with the operational demands of modern precision medicine.
For further discussion or strategic support on navigating these integrated market access pathways, contact us at [email protected]
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