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Orphan drug incentives set to remain in place in Europe.
It could have been a volcano, but a European threat to pharmaceutical innovation is now looking less like storms of lava and poisonous gases, and more like smoke. Four years after Dutch Health Minister Edith Schippers famously led European health ministers into an assault on European Union encouragement for rare disease research, and after countless calls for the scheme to be abolished to prevent rapacious drug firms from abusive exploitation and massive overcharging for dubious products, the European Commission published in early August an evaluation that leans towards keeping the scheme in place.
Schippers was backed by many other national health ministers when she argued that the incentives the EU offered for developing orphan and pediatric drugs—and notably market exclusivity rewards—were disproportionate. The scheme was permitting “inappropriate market behavior” by drug firms, with salami-slicing of indications to qualify for support under the orphan drug scheme and “very high prices for benefits that are not always clear.” But under diplomatic pressure from bigger EU countries—Germany and the UK in particular – the more radical action she was advocating was diluted to a call for a full evaluation of the schemes.
It is this evaluation which has at last appeared, and it reveals broad support for the principle of the scheme. The Commission says the program has “fostered the development and availability of medicines for patients with rare diseases and for children,” and has “redirected private and public investment toward previously neglected areas through incentives, obligations, and rewards.” There are now more medicines for patients with rare diseases and for children, they have become available faster, and have reached more patients, it says. Clinical trials in children have been boosted and so has the development of new medicines for them. And the “off-label” use of drugs for adults in children has declined accordingly. Individual countries “could not have achieved this result due to the small number of patients concerned and the fragmentation of the market,” and overall, “incentives remain relevant to encourage the development of medicines for rare diseases.”
The evaluation is not entirely complimentary. The benefits “come with a cost,” the Commission says, and may in some cases (such as market exclusivity of 10 years) be over-generous or unjustified, it says, warning of lack of clarity over “whether the additional market exclusivity period was needed to recover the additional costs of R&D.” And the medicines developed “are not accessible by patients equally in all member states,” it adds.
The scheme has created “inefficiencies which need to be corrected,” the evaluation concludes—and its conclusion is now likely to guide the EU’s future action in this area. So changes are coming. But the current European Commission has repeatedly espoused innovation and industrial competitiveness—including in healthcare—since it took office in late 2019, and that will play into the follow-up. For an industry anxious that another blow was to be struck at its research efforts and its intellectual property protection, there is an air of palpable relief over the evaluation. All the more so, since the political environment for the drug industry over the last few years has been largely hostile, with surging resentment about drug prices.
The battleground is now likely to shift to broader issues of the European pharmaceutical market. The evaluation has pointed the way, in its comments on problems of access to innovative products developed under the scheme. “It ascribes the difficulties mainly to factors outside the scope of the scheme, “such as strategic launch decisions by pharmaceutical companies and national pricing policies and reimbursement systems.”
This is familiar territory to the drug industry, and while it is rocky terrain, the industry holds an advantage in Europe in that each member state has its own pricing and reimbursement system, which leaves concerted EU action a very remote prospect. What is most likely to result in the foreseeable future is an intensified debate over identifiable costs of research, and over how far public-funded research has contributed. The tone of this debate is reflected in one of the few responses so far to the evaluation from civil society (summer is still summer in Europe): the European consumers organization, BEUC, said: “ Shedding light onto R&D costs will be crucial to move toward a medicines pricing model that works better for consumers. That is why manufacturers who wish to benefit from orphan drug incentives must be required to submit data on these costs to both the European Medicines Agency and national authorities.”
REFLECTOR is Pharmaceutical Executive’s correspondent in Brussels