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By Sven Bostyn
The development of orphan drugs, so named for the rare diseases they treat, has been incentivized through regulation in the European Union. The primary reward is 10 years’ market protection (or exclusivity).
But are these incentive mechanisms working as they should? To date, only 131 orphan drugs have been brought to market. Findings from the European Commission’s long-awaited evaluation of the orphan drug system in Europe, 20 years after its inception, suggest there may be cause for concern.
Regarding drugs for pediatric use, there is little evidence that the system has led more drugs to market, besides those for which there is also an adult market.
This confirms our 2018 Report conclusions. The same is true for the areas of the greatest “unmet medical need.”
Moreover, these incentives may lead to less competition, delayed generic entry, and more market concentration in the orphan drug area, already reputed for high prices. Two manifestations of note, which we flagged in our 2018 report, and which will likely become more prevalent as personalized medicine advances, are the practices of so-called “salami slicing” and “indication stacking.”
“Salami slicing” refers to the practice of splitting certain common diseases into many artificial subsets. Each of these subsets could then be considered a rare disease (such as certain forms of cancer).
“Indication stacking” is the phenomenon where orphan products are authorized for two or more orphan indications on the market. These indications refer to distinct orphan conditions (though often overlap in their practical application), and each entitles the product in question to a period of market exclusivity, which may run in parallel, with their own start and finish dates. In the EU, 22 orphan drugs have stacked indications. As each of those stacked indications elicits a new 10 years’ market protection period, and delays generic entry, the question is whether this accumulation is within the rationale of the system.
The European Commission thinks that the negative impact is limited, as each exclusivity period is tied to a specific orphan indication. I am more concerned, as a scenario identical to the one we see in the area of further medical indication (FMI) patents looks inevitable. In short, a generic pharmaceutical company can be held liable for patent infringement where it sells drugs for which there is no longer patent protection on the active pharmaceutical ingredient (API) as such, but where there is still active patent protection for some FMI of that API. By supplying the market with drugs comprising the API, physicians may prescribe and pharmacies may dispense the generic drug for FMI.
Similarly, an orphan drug that is supplied by a generic manufacturer for indications which are no longer protected by the orphan drug exclusivity period, might be prescribed by physicians and dispensed by pharmacies for an orphan drug indication which is still under market exclusivity. Such cross-label use is common. In such scenario, indication stacking will de facto delay generic entry until the last exclusivity period for the last orphan drug indication for the API has lapsed. In our 2018 Report, we made suggestions to tackle these practices. My prognostication is that this will be one of the future battlefields of orphan drug exclusivity, and close scrutiny of the orphan drug exclusivity system remains necessary.
Acknowledgement: This work was supported by the Collaborative Research Program for Biomedical Innovation Law, which is a scientifically independent collaborative research program supported by the Novo Nordisk Foundation (grant NNF17SA0027784).
Dr. Sven Bostyn (LLB, Lic. Jur., LLM law, PhD law) is Associate Professor of Biomedical Innovation Law at the Center for Advanced Studies in Biomedical Innovation Law (CeBIL), Faculty of Law, University of Copenhagen.
