Healthy Skepticism Library item: 18924

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Publication type: Journal Article

Roos JCP, Hyry HI, Cox TM
Orphan drug pricing may warrant a competition law investigation
BMJ 2010 Nov 16; 341:
http://www.bmj.com/content/341/bmj.c6471.extract

Abstract:

EU legislation offers an exclusive marketing period as an incentive for companies to develop drugs for rare diseases. But pricing for orphan drugs hinders access and may warrant a competition law investigation, say Jonathan C P Roos, Hanna I Hyry, and Timothy M Cox

Orphan drug legislation in the European Union has promoted the development of treatments for very rare diseases by bestowing 10 year marketing exclusivity. This market monopoly is one of the benefits that comes under the European Union’s Regulation EC No 141/2000 (see webtable 1) and has enabled manufacturers to charge what many consider “exorbitant” prices for orphan drugs1 (table 1⇓).

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Table 1
Orphan drugs and their approximate costs

These necessary drugs, which are very costly, profoundly affect the wellbeing of patients who2 struggle to persuade national health systems, operating under significant constraints,3 to finance their treatment.4 5 Orphan drug costs already consume 5% of the Belgian national drug budget6 and are predicted soon to consume 6-8% of healthcare budgets of larger EU countries such as France5—an unsustainable position.

Current high pricing thus hinders access to treatment7 and contravenes the aim of the Orphan Regulation: “Patients suffering from rare conditions should be entitled to the same quality of treatment as other patients”.8

Why are orphan drug prices so high in Europe?
The regulation did not create an oversight body to regulate prices and protect consumers from market abuse, by contrast with other state sanctioned monopolies (for example, OFWAT regulates water prices in England 9). However, if the product is deemed sufficiently profitable, the exclusivity period can be reduced to six years under Article 8(2). But a recent EU-commissioned investigation has noted fears that it could “substantially” reduce investment incentives.10 Thus this “claw-back” provision seems never to have been invoked and is unlikely to be …