Committee on Industry, Research and Energy

Given the impact of the Orphan Regulation on the accessibility and affordability of orphan medicinal products, how should the European Union further promote innovation in the field of orphan medicinal products while guaranteeing access to appropriate treatments for patients suffering from rare disorders?

Submitted by: Patryk Sapała-Niedzin (PL)

Under normal market conditions, the pharmaceutical industry has little interest in undertaking research and marketing products, intended only for a small number of patients suffering from rare conditions, due to the high costs of undertaking research and a low return on investment, combined with difficulties in conducting clinical trials in small patient populations. Legislative incentives enacted to incentivise orphan drug discoveries have constituted a powerful impetus to redirect innovative capacities of companies towards the field of orphan medicinal products. However. the high prices of orphan drugs and their inability to meet standard cost-effectiveness thresholds as well as the construct of the system itself, which allows companies to gain the benefits that accrue from being badged as an orphan drug, call upon the European Commission to revisit the special market status of orphan drugs as well as re-evaluate pricing and reimbursement policies of its Member States.

Key terms

Orphan Medicinal Products refer to medication intended for rare diseases or medicinal products that would not be developed without incentives, as their sales are unlikely to generate sufficient return on investment;
Rare Diseases are defined as life-threatening or chronic, debilitating diseases that affect no more than 5 in 10,000 people in the European Union. Due to the low prevalence of each disease, medical expertise is rare, care offering inadequate and research limited;
Marketing exclusivity connotes a period of time in which a competitive similar products cannot be placed on the market for the same indication unless specific derogations defined in the regulation are accepted;
Disease stratification connotes a practice of creating artificial subsets of a disease with a prevalence higher than that necessary to qualify, with a view of qualifying as several orphan diseases;
Off-label use describes the intentional use of a medicinal product for any indication, population, dosage, administration route or treatment duration other than that approved.

Key Conflicts

Market exclusivity provided for under Orphan Regulation has given pharmaceutical companies the leverage to charge high prices, as no other manufacturer is authorised to market an orphan drug during the period of exclusivity.[3] According to a study conducted on medication intended for the treatment of rare diseases, monopoly based pricing impacts patient access to orphan drugs as well as non-orphan drugs given the pressure to contain increasing health expenditure. Therefore one can conclude that, relevant policies will have to be altered in a manner that promotes fairness and equity without detering investment.[4]

Manufacturers may further increase their market power splitting up diseases into several sub-diseases that qualify as rare diseases, a practice called disease stratification. Creating artificial subsets of a non-orphan disease, with a view to qualifying as several orphan diseases is permissible under the current legislation as long as the manufacturer can demonstrate that only the orphan subset of the larger non-orphan population is an appropriate candidate for treatment with the drug.[5] Off-label use is another method to game the system in order to secure the benefits that accrue from being badged as an orphan drug. Both disease stratification and off-label use allow pharmaceutical companies gaining access to incentives that accrue from being badged as an orphan drug, broadening zones of exclusion and leading to situations where high costs of orphan drugs remain for an extended period, as other companies are discouraged from trying to market a competitive product.

Pharmaceutical manufacturers may further attempt to maximise orphan drug prices within the constraints of domestic pricing policies as Member States have limited negotiation power and little market mechanisms are in place to put downward pressure on prices.[6] Domestic pricing policies have been associated with incentivising marketing authorisation holders to launch new orphan drugs in Member States with a high medicine price in order to have the list prices in the aforementioned Member States referenced to and to delay market entry or not market at all in low-priced Member States in order to not impact the international benchmark.[7] Given the identified limitations of the current domestic pricing policies there has been a call for alternative pricing mechanisms.

Faced with increasing pressure on national healthcare budgets, many jurisdictions have begun to use health technology assessment, including economic evaluation, to assist in decisions concerning the reimbursement of orphan drugs in order to keep down prices, restrict public reimbursement and promote a cost-effective use.[8] Although standard methods of health technology assessment are important in improving the efficiency of healthcare provision, there are concerns about whether they adequately reflect societal preferences for the treatment of rare diseases. Given their high price for an often modest effectiveness, orphan drugs are unlikely to provide value if their cost-effectiveness ratio is compared to a fixed threshold value. The possible deviation between social value and cost-effectiveness calls upon national health technology assessment agencies to use an extended set of criteria, going beyond the conventional core assessment of safety, efficacy and cost-effectiveness.[9]

Stakeholders

The European Medicines Agency (EMA ) plays a central role in facilitating funding and authorisation of orphan drugs. Its Committee for Orphan Medicinal Products (COMP) is tasked with examining any application for orphan designation. It has to forthwith its final opinion to the Commission, which is required to adopt the final decision on the application. In addition, it advises the European Commission on policies and assists its in drawing up guidelines on orphan drugs.

Regional and National Health Technology Assessment Agencies are public bodies that provide recommendations on medicines and other healthcare products, determine their reimbursement status and support the price negotiation process. The regional and national bodies operate within various national or regional, legal and procedural frame- works and continue to explore areas of collaboration with the European Medicines Agency, within their respective remits.

The European Organisation for Rare Diseases (EURORDIS) is a non-governmental patient-driven alliance of patient organisations active in the field of rare diseases.It supports measures that would allow quicker access to safe and efficacious orphan medical products but highlights the need for a supranational approach to ensure that access, founded on clinical evaluation, is not fragmented at national level on grounds of cost considerations, taking precedence over clinical value and utility.

Existing Measures and Current Legislation

The Orphan Regulation (Regulation (EC) No. 141/2000) establishes the procedures for obtaining orphan designation. It aims to stimulate research, development and market approval of orphan drugs. It grants sponsors of designated orphan drugs incentives to support research and development, including protocol assistance, market exclusivity and a centralised marketing authorisation procedure. In order to qualify for the incentives, the sponsor in question must obtain orphan designation. A medicinal product is designated as an orphan medicinal product if its sponsor can establish that without incentives the sale of the drug would not generate sufficient income to justify the necessary investment and no satisfactory alternative exists or that the proposed treatment has a significant benefit compared to existing treatments.

Relevance of the Topic

Rare diseases affect an estimate of 30 million Europeans.[1] If equal access to appropriate treatments for patients suffering from rare disorders are to be ensured, further research has to be conducted in the field of orphan drugs. Due to the difficulties in conducting clinical trials in a small patient populations combined with the low return on investment, pharmaceutical companies have been reluctant to

further innovate in the field of orphan drugs. The legislative incentives enacted in the Orphan Regulation to incentivise orphan drug discoveries, have constituted a powerful impetus for pharmaceutical companies to undertake orphan drug research. However, despite therapeutic promises contained in most projects and significant impact linked to burgeoning research and marketing expenditures, access to orphan drugs within the European Union remains limited.[2] In order to increase patient access to new and innovative therapies, it is essential to revisit the special market status of orphan drugs as well as re-evaluate pricing and reimbursement policies.

The Orphan Designation Process provided for under Regulation (EC) No. 141/2000

The Communication on Rare Diseases (COM (2008) 679 ) sets out an overall strategy for support to Member States in ensuring effective and efficient recognition, prevention, diagnosis, treatment, care, and research for rare diseases in Europe. It calls for adequate mechanisms for definition, codification and inventory of rare diseases and production of good practice guidelines, in order to provide a framework for recognition of rare diseases and sharing of knowledge and expertise and fostering research on rare diseases, including cross-border cooperation and collaboration to maximise the potential of scientific resources across Europe.

Health Technology Assessment (HTAs) is a research-based tool to support decision-making in healthcare. HTAs assess the added value of new or existing health technologies compared to other health technologies. The nature of health technology assessment varies between Member States in terms of the evidence and the appraisal focus of the evidence, as well as in the role of health technology assessment within each health care system.

Pharmaceutical pricing policies are designed with national objectives in mind. Member States are free to set their national and regional pharmaceutical pricing policies as long as they comply with the Directive 89/105/EC. It defines a series of procedural requirements designed to streamline the duration and ensure the transparency of national pricing decisions.

Food for thought questions

Taking into consideration the high costs of research and development of orphan medicinal products, should the European Commission encourage innovation in regard to all rare disorders while lowering the prices of orphan drugs?
Should the European Commission focus on research in the area of orphan diseases bearing in mind the increasing pressure on national healthcare budgets and the ubiquity of other health-related challenges across Member States?
Bearing in mind the impact of orphan designation on the accessibility and affordability of orphan medicinal products, how can the relevant policies be altered in a manner that promotes fairness and equity without detering investment in the field?