COVID-19 As a Catalyst for Changing Orphan-Drug Regulations

Claudia Wild

March 9, 2021

4 Min Read

A long-awaited (and for months withheld) evaluation of the European Union’s Orphan Drug Regulation (ODR) finally reached the interested public in August 2020 (1). Its publication during the public consultation of the European Commission’s “Pharmaceutical Strategy” was well planned because the latter discusses policies on access, availability, and affordability of new medicines. However, the ODR evaluation shows not only that the intentions behind the legislation have not been fulfilled, but also that its generous incentives (extension of market exclusivity and patent protection, administrative simplification of study protocols and fees as well as tax benefits) have been used to the maximum. Now every third drug approved is an orphan drug (OD) sold for “orphan” prices.

Between 2007 and 2017, 131 drugs were approved as ODs for 107 rare diseases. Twenty-two of those were approved for two or more indications and for different periods of market exclusivity — with significant return on investment over long periods. Currently, 28% of all ODs are oncological drugs with indications for which other treatment options were already available. Intensified public research support for rare diseases, changes in pharmaceutical markets, and other incentive systems such as the US Orphan Drug Act have contributed to development of new ODs. After correcting for such influences, a development effect of only 18–24 new ODs per year is observed. The average effect of the regulation as a contribution to new OD development is therefore ~14%.

Although most ODs are new, they are by no means approved for new indications only, but rather for the same indications over and over again. In addition to the general trend of “orphanizing” drugs and indications, large pharmaceutical companies tend not to conduct research themselves, but to buy up late-stage developments from small biomedical companies (often university spinoffs) — also known as a strategy of “search and development” rather than research and development (R&D). The authors of the evaluation (1) conclude that OD legislation has not directed R&D to actual unmet medical needs but has reduced off-label uses of existing drugs and produced more therapeutic alternatives for the same indications — with extended market exclusivity and patent protection. At the same time as the evaluation, a study was published in which OD revenues were analyzed: Whereas in 2009 there were three ODs with over €1 billion in revenue, there were already 20 such drugs in 2019. The authors of the article called the ODR “lucrative legislation” (2).

The European Commission recently has mandated other evaluations (3, 4), indicating that the drug-development system is broken and that even the highest layers of policy and regulators are aware of it. The break has been widely acknowledged for at least a decade. Former Dutch Minister of Health Edith Schippers put it this way in 2016: “Patent and intellectual property exclusivities are the only cornerstone of the current model. Companies can ask the price they like. This will no longer do. We need to develop alternative business models” (5).

The COVID-19 pandemic reminds us of serious systemic mistakes that we have allowed to happen over the past few decades, resulting in a drug R&D system that publicly funds most high-risk basic research (6) but then sells the findings without conditions and privatizes the profits without hesitation, only for the public to buy the same drugs back at exorbitant prices. The pandemic lends new urgency to debates that have rumbled on for years among legal experts and agents of civil society, pushing regulatory bodies to make long-overdue policy changes. Regarding targeted public research funding for development of therapies and compulsory licensing, we must ensure that the strategies and experiences gained during the pandemic are applied across the board. COVID-19 could be a catalyst for change if public institutions recognize the opportunity to transform a problematic system.

1 De Jongh T, et al. Study to Support the Evaluation of the EU Orphan Regulation. European Commission: Brussels, Belgium, 2019;

2 Marselis D, Hordijk L. From Blockbuster to “Nichebuster”: How a Flawed Legislation Helped Create a New Profit Model for the Drug Industry. BMJ 370, 2020: m2983.

3 Copenhagen Economics. Study on the Economic Impact of Supplementary Protection Certificates, Pharmaceutical Incentives, and Rewards in Europe. European Commission: Brussels, Belgium, 2018;

4 Expert Panel on Effective Ways of Investing in Health. Innovative Payment Models for High-Cost Innovative Medicines. European Commission: Brussels, Belgium, 2018;

5 Ploumen L. Better Life Through Medicine: Let’s Leave No One Behind. The Lancet, 7 November 2016;

6 Cleary EG, et al. Contribution of NIH Funding to New Drug Approvals, 2010–2016. Proc. Natl. Acad. Sci. USA 115(10) 2018: 2329–2334;

Claudia Wild, Priv.-Doz., PhD, is chief executive officer of the Austrian Institute for Health Technology Assessment (AIHTA), Garnisongasse 7/20, A-1090 Vienna, Austria;
[email protected]; 43-1-2368119-0.

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