Orphan Drug legislation: evaluation of the impact of market exclusivity extension

Worldwide, governments are trying to stimulate drug R&D for unmet health needs with public policies. Most of them target intellectual property because market-exclusivity (ME) period supported by patents protects new drug from direct competition and allows the return of investment. However, the patent holder does not receive commercial benefit until the product has been market approved (MA). Regulatory agencies in the United States (US) and Europe (EU) provide exclusivity extensions for patented drugs, to compensate for patent life that is lost during the lengthy drug R&D and regulatory process. An important contribution made in drug regulation has been to incentivize the development of drugs for rare diseases through ME as policy measure. Orphan Drug (OD) legislation was put in place in the US in 1983 and in the EU in 2000. In the US, ME is granted by the Food & Drug Administration (FDA) for 7 years upon MA, while in the EU, the European Medicine Agency (EMA) provide a 10 years extension. The ME provision is stronger than a patent: it cannot be interrupted by a competitor even if the underlying patent has expired. But the OD ME may be reduced if the product is sufficiently profitable. With the award by FDA and EMA of OD MA to more than 500 molecules, this legislation has contributed to the launch of many new therapeutics. However, the increased availability of OD with their very high cost, and their use for chronic disease raises a debate about accessibility, cost-effectiveness, and reimbursement by health protection systems. As most of the incentives are not contingent to an ultimate drug R&D success, one may wonder about the effects of such public policy. Case studies have supported the opinion that the OD legislation has played an important role in drug R&D for rare diseases, but little empirical research has been performed on the subject. Especially, no existing research has analyzed the link between the characteristics of OD ME and these downstream effects. The objective of this analysis is to evaluate the effective patent and ME life of OD approved in US and EU. Data from the FDA and EMA that classifies all OD with MA since 1983 was extracted. For all drugs, the date of 1st generic was obtained from the Orange Book. A measure of patent expected ME comes from DrugPatentWatch database. Patents' expiry date were retrieved from patent databases. Altogether the information was gathered for 126 OD. Preliminary results indicate that the OD ME provision increases the effective patent and ME life of 58% OD by an average of 4.46 years. Details regarding how ME periods have been changing over time, and what variables affect ME period (designation, therapeutic class, firms, competition,…) will be presented in order to discuss the impact of OD legislation and its ME provision on drug innovation and number of entrants. This analysis can give insights into what the distribution of ME period is likely to be for OD experiencing generic competition in coming years. The author declares no conflict of interest. This work is supported by the French National Institute of Cancer.