The Role of Market Exclusivity in Incentivising Research and Development of Orphan Medicinal Products in Europe: A Critical Analysis

• Author: Julie Mac Namara
• Position: BCL International (UCC), LLM Candidate (University of Groningen)
• Pages: 1-18

(2020) 19 COLR 1

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THE ROLE OF MARKET EXCLUSIVITY IN INCENTIVISING RESEARCH AND

DEVELOPMENT OF ORPHAN MEDICINAL PRODUCTS IN EUROPE: A

CRITICAL ANALYSIS

Julie Mac Namara*

A INTRODUCTION

According to the European Commission, orphan diseases affect between 27 million and 36

million people in the European Union (EU).

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Well-known examples include cystic fibrosis and

Gaucher disease. In essence, orphan diseases are life-threatening or chronically debilitating

diseases with very low prevalence.

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As neatly summarised in recital 1 of the preamble to

Regulation 141/2000 EC (the Regulation) on orphan medicinal products:

Some conditions occur so infrequently that the cost of developing and bringing to the

market a medicinal product to diagnose, prevent or treat the condition would not be

recovered by the expected sales of the medicinal product; the pharmaceutical industry

would be unwilling to develop the medicinal product under normal market conditions;

these medical products are called 'orphan'.

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In such circumstances, the lack in returns on investment has the effect that there is little

incentive to invest in the research and development of medicinal products treating orphan

diseases under normal market conditions.

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The importance of access to such medicines for

patients suffering from orphan diseases may be regarded as axiomatic.

Prompted by such concerns, and in light of existing similar legislation in other developed

economies, the pharmaceutical acquis expanded with the introduction of the Regulation on

orphan medicinal products in 2000, entering into force in January of that year.

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The raison

d’être of the Regulation is explicitly economic in nature, as detailed by recital 1 and article 1,

* BCL International (UCC), LLM Candidate (University of Groningen). I am grateful to the staff at the Faculty

of Law at the University of Groningen for their guidance. Further thanks to Rob van der Laan and to the Editorial

Board for their helpful comments in respect of an earlier version of this article.

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European Commission, ‘Rare Diseases’ (European Commission)

<https://ec.europa.eu/health/non_communicable_diseases/rare_diseases_en> accessed 3 March 2020.

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ibid.

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Council Regulation (EC) 141/2000 of 16 December 1999 on orphan medicinal products [2000] OJ L 18/1, recital

1.

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Laëtitia Bénard, Jacqueline Bore and Eveline Van Keymeulen, ‘Rewarding Innovation: Pharmaceutical

Incentives as a Crucial Instrument to Foster Public Health’ (2018) 2 European Pharmaceutical Law Review 72,

78.

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ibid.

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the latter of which provides that the purpose of the Regulation is ‘to provide incentives for the

research, development and placing on the market of designated orphan medicinal products.’

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While it has been lauded as a very successful piece of legislation by many commentators, such

an assessment is tempered by a closer analysis of the intricacies of the market exclusivity

regime under the Regulation, in light of its stated objective.

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Indeed, in spite of the fundamental nature of access to healthcare, this does not preclude the

operation of economic considerations in relation to the orphan medicinal product market. As

Nordberg states:

a non profit activity is not synonym of non economic. Law and economics scholars have

since long proved that any human activity can be studied by in economic theory; even

non commercial activities can be submitted to a cost/benefit analysis and obey to the

supply/demand paradigm.

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This article seeks to analyse the effectiveness of market exclusivity, a core component of the

Regulation, as a mechanism for incentivising the research and development of orphan

medicinal products in the EU. Section B begins with an introduction to the economic rationale

underlying the Regulation, followed by a detailed examination of the market exclusivity regime

in Section C. Section D delves into an analysis of market exclusivity as a key tool for

incentivising investment under the Regulation, outlining its attributes and its shortcomings,

followed by an in-depth exploration of potential means of addressing the issues described, in

Section E. Section F describes the current position and whether it accommodates change,

before providing a brief conclusion in Section G.

B ECONOMIC CONCERNS UNDERPINNING REGULATION 141/2000/EC

Firstly, it is necessary to outline the economic rationale that underlies the Regulation. Orphan

diseases affect only a very small proportion of the population; for example, ‘Hutchinson–

Gilford progeria syndrome’ is an orphan disease with a frequency of 1 in 4 to 8 million,

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The Regulation (n 3) recital 1, article 1.

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Laëtitia Bénard, Jacqueline Bore and Eveline Van Keymeulen, ‘Has th e Orphan Regulation Met its Aims?’

(2018) 2(4) European Pharmaceutical Law Review 179, 192.

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Ana Nordberg, ‘Economic Justification of Patents and Exceptions to Patentability’ (2012) 3 Nordic Intellectual

Property Law Review 316, 326.