EU Regulatory Reforms Mean Many Orphan Drug Producers Won’t Benefit From Incentives
Executive Summary
The EU’s regulatory reform package if unchanged could make orphan drug development less attractive, warn industry representatives.
Drastically limiting the market exclusivity periods of new orphan indications for existing products and linking additional market exclusivity to high unmet medical need could hamper investment and access to new innovation, warn Alexander Natz, EUCOPE secretary general, and Stefano Romanelli, the organization’s government affairs manager.
The commission’s proposals, published on 26 April, are aimed at modernizing the medicines regulatory and legislative framework. As had been widely anticipated, the proposals include cutting both regulatory data protection and market exclusivity periods. (Also see "EU Pharma Reform Proposes Cuts In Regulatory Protections & Faster Drug Approval Times" - Pink Sheet, 26 Apr, 2023.) (Also see "EU’s Plans for Regulatory Data Protection ‘Unworkable’" - Pink Sheet, 12 May, 2023.)
Under the plans, the 10 years of market exclusivity currently awarded to orphans would be cut to nine years. However, companies would be able to build up 12 months of additional market exclusivity if the product fulfilled a high unmet medical need and another 12 months if it was launched in every EU market. Two more years of exclusivity would be available for the first two additional indications for an approved orphan drug.
The maximum period of marketing exclusivity for orphan drugs could therefore, at least in theory, rise from 10 years to 13 years, but industry is not convinced that companies would actually be able to secure the additional market exclusivity in practice.
According to Natz, one big concern is the plan for a “global orphan marketing authorization.” This means a new orphan indication for an existing orphan product would not be rewarded with a separate period of market exclusivity, as is currently the case. Instead, it would be incorporated into the same exclusivity period as the first indication.
This system is already in place for non-orphan products and new indications for existing products are only granted one extra year of protection. According to Natz, this system has not worked. “There are few new indications for existing products because investors are telling the companies that's not worth the effort,” he said. The costs of conducting further research programs on a known compound, particularly when the period of exclusivity is coming to an end, are unlikely to be recouped with only one year of extra exclusivity, he said.
If this is introduced for orphan products, Europe “will really risk losing a lot of innovation and the ability to bring new treatments to patients in different therapeutic areas,” said Romanelli.
Modulation
EUCOPE also believes that extra exclusivity should not be modulated according to unmet need.
“The concept of unmet need is very complex,” according to Natz. Payers, patients, physicians and industry representatives all have a different view of what it means, he said.
It can differ across patients even within the same disease. For example, if one cancer patient responds to a therapy, but a second patient does not, the latter patient has an unmet need. “It depends on too many factors. It is grading patients… we shouldn't downgrade certain patient groups to not having an unmet medical need while they might not be responding to what's available on the market,” warned Natz.
Nonetheless, EUCOPE does not oppose the idea of modulation altogether. As part of the European Expert Group on Orphan Drugs, it believes that exclusivity periods could be more effectively modulated according to several factors, including the level of R&D that has been conducted and the number of treatments available on the market.
The expert group is made up of researchers, academics, patient representatives, investors and rare disease companies. It is led by a steering group comprising Eurordis (which represents rare disease patients), Professor Maurizio Scarpa from the European Reference Network, and EUCOPE. In March the group issued its own proposals on how the reforms should take shape.
Launch Conditions
The proposal to attach incentives to launch plans is also problematic, said Romanelli. Many companies, particularly small and medium sized firms, will not be able to gain a year of extra protection in return for launching in every EU market. “It is impossible for small companies with 15 staff members to negotiate processes in 27 member states. One year’s extra protection would not help in this way,” said Natz. In addition, pricing and reimbursement procedures and time frames are the responsibility of the national authorities and therefore out of the control of companies, he added. A similar argument has been made regarding this incentive for regulatory data protection extensions. (Also see "EU’s Plans for Regulatory Data Protection ‘Unworkable’" - Pink Sheet, 12 May, 2023.)
There are also practical barriers to fulfilling the launch requirement for orphan drugs. As Romanelli pointed out, there may not be a patient population for the condition in question in some EU countries, while some member states may lack the infrastructure and expertise to administer treatments, particularly advanced therapies.
In place of the launch incentive, EUCOPE suggests working with existing tools to ensure the wide availability of orphan products. Natz pointed to the existing cross-border healthcare directive, under which patients in one EU country can go to another to have treatment that would be reimbursed by the patient’s home country.
In addition, the transparency directive on pricing and reimbursement could be better enforced, said Romanelli. This lays out timelines for pricing and reimbursement decisions, but these are “simply ignored” in many countries, he said.
“Substantial”
Another issue for EUCOPE is that some of the terms in the commission’s reform proposals lack clarity. For example, Romanelli pointed to the “substantial” patient population as mentioned in the criteria for awarding orphan designation.
To gain an orphan designation, the product must offer significant benefit to patients. Significant benefit is defined as “a clinically relevant advantage or a major contribution to patient care of an orphan medicinal product if such an advantage or contribution benefits a substantial part of the target population.”
However, within that definition it remains unclear what substantial means, according to EUCOPE. For example, some might say “substantial” means above 50% of the population, others might say it means more than 70%. “This is critical for investors and companies to know if that product is an orphan. We need to define that,” Natz declared.