Orphan Medicine Incentives: How to Address the Unmet Needs of Rare Disease Patients by Optimizing the European Orphan Medicinal Product Landscape Guiding Principles and Policy Proposals by the European Expert Group for Orphan Drug Incentives (OD Expert Group)

Abstract

Today policy makers face the challenge to devise a policy framework that improves orphan medicinal product (OMP) development by creating incentives to deliver treatments where there are none and to authorize innovative and transformative treatments where treatments already exist. The European Expert Group on Orphan Drug Incentives (hereafter, OD Expert Group) came together in 2020 to develop policy proposals to facilitate EU policy makers to meet this challenge. The group brings together representatives of the broad rare disease community, including researchers, academia, patient representatives, members of the investor community, rare disease companies and trade associations. The group's work builds on the recognition that only an ambitious policy agenda developed in a multi-stakeholder setting can bring about the quantum leap needed to address unmet needs of rare disease patients today. Along the OMP development path, the OD Expert Group has identified four main needs that a policy revision should address: 1) Need to improve the R&D ecosystem for basic research and company take-up of development. 2) Need to improve the system of financial incentives and rewards. 3) Need to improve the flexibility, predictability and speed of the regulatory pathway. 4) Need to improve the coherence and predictability of demand and pricing for OMPs. This article presents the results of the OD Expert Group work as a set of guiding principles that the revision of the policy framework should follow and a set of 14 policy proposals that address the main needs of OMP development in Europe today.

Keywords: OMP regulation; incentives; orphan drug; orphan medicine; rare disease; unmet need.

FIGURE 1

Incentives for OMP development. Source: The OD Expert Group

FIGURE 2

Applications submitted, designations granted and authorised OMPs by year. Source: European Commission (2020a) and European Medicines Agency (2020). These also contain applications and OMP that have been withdrawn.

FIGURE 3

Applications submitted, designations granted and authorised OMPs cumulative. Note: These numbers include applications and authorised OMPs that have been withdrawn. Source: European Commission (2020a) and European Medicines Agency (2020).

FIGURE 4

Which areas are concerned by a lack of authorised treatments? Note: 1) Based on authorisations between 2000 and 2017. 2) Based on orphan designations between 2000 and 2019. Source: 1) European Commission (2020, 40). 2) European Medicines Agency (2020, 6). 3) European Medicines Agency (2020, 5). 4) European Medicines Agency (2020, 13–14) and Wakap et al., 2020).

FIGURE 5

Main needs and policy proposals. Source: The OD Expert Group

FIGURE 6

Illustration of how modulated incentives can make OMPs financially viable from an investor perspective. The current OMP Regulation aims to improve incentives by fostering basic research (funding), making OMP development less costly and complex (fee reductions, protocol assistance) and allowing for sales revenues with a lower risk of competition (market exclusivity). In that way, the set of incentives currently included in the OMP Regulation paired with a willingness to pay for OMPs at the Member State level has increased the expected return on investment of OMP development projects, as illustrated by the dark blue bars. However, the lack of approved treatment for many rare diseases shows that there is still a need to strengthen incentives for investing in areas where rare disease patients’ needs are still unmet. To respond to this issue, policies can be designed to improve investment incentives overall. The expected return on investment can be increased through measures that reduce costs along the OMP path, reduce the time it takes for an OMP to go from the basic research stage to market access, increase revenues or set other financial rewards for bringing an OMP to the market. Return on investment can also be improved by reducing the risk of failure throughout the regulatory process and increasing the certainty of market access conditions. Implementing such measures will improve investment incentives overall, i.e., it will expand the yellow box. The current policies provide one-size fits all incentives across OMPs and insufficiently incentivises certain types of projects for which investment incentives are particularly weak. A modulated approach to OMP incentives can provide a level of incentives that is just enough to make different OMP development projects (with different investment cases) sufficiently profitable. On the one hand, the current Regulation leaves disease areas where investment projects are not currently carried out. These are all projects to the right hand-side of the vertical dotted line. These are cases where the expected return is below what investors can get elsewhere, i.e., the projects for which the dark blue bar is below the threshold of market required return on investment (ROI). There can be diverse causes for an expected return that is too low even at the current policy incentives, such as an extremely small market size or the lack of basic research which makes the project too costly and risky. To address this, the revised OMP Regulation and a revised overall incentive framework (which may include policies beyond the current scope of the OMP Regulation) can strengthen the incentives for as many projects as possible given the political cost-benefit trade-off. These incentives will further increase the ex-ante return on investment reaching the level required by the market, as shown by the light blue bars. Financial incentives or incentives of another nature could be set to target specific categories of OMPs for which the investment case is particularly weak. These could be, for instance, funding for research dedicated to specific diseases with unmet needs or additional years of market exclusivity for specific OMPs. On the other hand, the current Regulation may apply to some OMP projects for which investment incentives are already stronger today than they were 20 years ago thanks to an increase in knowledge in these areas, the existence of both a strong research base and a market for these medicines. For these OMPs (often labelled “crowded areas”) investment incentives are stronger and may even resemble those for non-OMPs (the projects to the left of the dotted-line yellow box). For instance, these could be rare diseases that are close to the prevalence threshold or where the existence of a large body of research and knowledge facilitates OMP development. In these cases, policy makers should find a balance between providing sufficient incentives to ensure continued development of better treatments and softening incentives where they are not necessarily required. Note: Illustrated example. Source: Copenhagen Economics and the OD Expert Group.

FIGURE 7

Eu rare disease hub. Source: The OD Expert Group.

FIGURE 8

Improving the OMP investment case through targeted financial incentives. Note: Illustrated example. Source: Copenhagen Economics and the OD Expert Group.

FIGURE 9

From pipeline to orphan drugs accessible to patients, number of OMPs. Source: Copenhagen Economics based on EMA data (European Medicines Agency 2020).

FIGURE 10

Share of reimbursed OMPs in selected EU Member States, by type of disease. Note: Between January 1995 and May 2000. Source: Copenhagen Economics based on historical average success rates from EMA data (European Medicines Agency 2020). Download medicine data. https://www.ema.europa.eu/en/medicines/download-medicine-data [Accessed april 21, 2021]).