Objectives: For rare diseases it may be difficult to generate data from randomized trials to support funding of a drug. Enzyme replacement therapies for diseases of inherited metabolic enzyme deficiency provide an example of this dilemma. The Ontario Public Drug Programs convened the Drugs for Rare Diseases Working Group to develop a policy for assessing these drugs. Methods: The Drugs for Rare Diseases Working Group developed terms of reference expecting that the ideal policy product would be transparent and consistent and address unique aspects of the treatment of a specific rare condition while being adaptable to other dissimilar conditions. The perspective was that of a public payer addressing requests for funding generated for a specific drug, and included respect for the principles of “accountability for reasonableness” of Daniels and Sabin. Results: A seven-step framework was developed and tested by using the case study of idursulfase for mucopolysaccharidosis II (Hunter disease). Estimation of clinical effectiveness was done by using decision modeling. The model developed informed funding recommendations and ultimately led to an agreement with the manufacturer allowing funding of idursulfase in Ontario. Conclusions: This policy framework attempts to address the policy challenges of funding drugs for rare diseases. The framework will be used to assess other drugs in future and will inevitably require modification with experience. It is hoped that it may be of value to other policymakers.