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In the European Union, around 30 million people suffer from rare diseases. The EU defines a rare disease as a disease which affects less than one person in every 2,000 people. Because expected sales for drugs to treat rare diseases are small, there is little incentive for drug companies to develop new therapies to diagnose and treat such disorders. In 1999 the EU unanimously passed the Orphan Medicinal Products Regulation, to encourage industry to develop therapies for rare conditions by giving financial incentives.

Author / translator

In the European Union, around 30 million people suffer from rare diseases. The EU defines a rare disease as a disease which affects less than one person in every 2,000 people. Because expected sales for drugs to treat rare diseases are small, there is little incentive for drug companies to develop new therapies to diagnose and treat such disorders. In 1999 the EU unanimously passed the Orphan Medicinal Products Regulation, to encourage industry to develop therapies for rare conditions by giving financial incentives. Orphan drugs are drugs developed for diagnosing and treating rare diseases. In the current system, drug candidates are designated as “orphan” and market authorised through a centralised European procedure. Availability and reimbursement remain a national responsibility. Although orphan drugs can improve health for millions of people, their high development costs, a small market and marketing exclusivity mean that tend to be very expensive for the patients and health care systems.

The case of orphan drugs raises important issues such as

  • How can you put price limits on human life?
  • How can treatments for such rare diseases be properly evaluated?
  • Is it fair that individuals with a rare disease have more money spent on them per unit of health gain than patients with similar health problems arising from more common diseases?
  • Should companies producing orphan drugs keep all their current benefits?
Created 26 January 2010
Last edited 20 June 2018
Topics Ethics, Health, Science
Original French

Policy positions

Policy position 1

Since resources are limited, there should be a limit and only cost effective drugs that benefit the greater number of patients should be reimbursed. If a drug purchaser has to choose between treating 10 patients with drug A or 1 with drug B for a rare disease, then the choice should always be to treat 10 with drug A.

Policy position 2

Only cost effective drugs should be reimbursed, but the approach for orphan drugs should be different than for common diseases. If there is any doubt about the cost effectiveness of an orphan drug, it should be exceptionally reimbursed in certain cases.

Policy position 3

Like position 2, but if there is any doubt about the cost effectiveness of an orphan drug, the benefit of doubt should be given to the patient and the drug should be reimbursed systematically.

Policy position 4

Health is a priority for European citizens. Just as efforts to rescue people after an accident are not restricted, efforts to rescue a patient with a rare disease should not be limited. Cost effectiveness should not be the parameter on which to base reimbursement decisions.

Story cards

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I am Audrey, I work as a nurse. Some time ago I happened to hear doctors talking about orphan drugs. I was listening about the money spent on them and I remember feeling this is not really fair. Two years ago my son was born. He suffers from a rare disease. It doesn’t exist yet a drug on his disease. I would do anything to help him. There is no value in human life if you ask me, until the problem comes close to you, you feel different but when it touches you then you realise how important is not to deny hope to anyone

Audrey Adjas
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I am the director of a pharmaceutical company in England. In this difficult financially year, my company increased its value by 40%. We have been successful by following an alternative business model to the pharma giants who are competing on frequently used drugs for common conditions and require vast marketing budget to market drugs to doctors. We have been developing orphan drugs. Due to the well defined market we do not spend much money on marketing, so everything goes to research. 12 years ago we had 5 employees, now we have 450 so we are contributing significantly to Britain’s economy.

Mary Thomas
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I suffer from a rare disorder. I always hoped for a treatment to appear and a few years ago our doctor told us that a drug was coming in the market. A few months ago I saw on the internet that the medicine is one of the newly designated orphan drugs. I thought this would mean I could have it. This is not true. The pharmaceutical company obtained marketing authorisation in Europe as it is effective and relatively safe. But in Romania the decision was not to reimburse it. It is confusing and incredible to know that a treatment exists but you cannot get it..

Alexandru Dumitrescu
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When I became 27 I learned that I suffer from multiple sclerosis. Even since then I have managed to live an active life controlling my condition with drugs. Nevertheless, I live with the possibility that these drugs may one day stop being effective. I heard that the national health system denied a new treatment for my disease, finding it not cost effective (not “worth it” for society). At the same time it is paying for the treatment of one girl with a rare condition that costs €100,000 year while treatment for my more common disease (affecting between 1 and 1000 people) would only cost €15000 a year. I feel really concerned about this

Fiona Javara
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My name is Leila, I am a doctor working with patients with a rare disease. There are discussions in my country on whether a new drug for this disease will be approved. I hear a lot about great costs, but I am not sure this is true. The drug will cost € 400 000 per year per person. When 100 patients are treated, this means a cost of € 40 000 000 Compared with a common anti-hypertensive drug that costs € 144 per year per patient, For treatment of 8 .000.000 patients this means a cost of 1.52 billion €. The drug expenditure for a common disease is much more costly.

Leila Suleiman
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I work at the Institute of Health in London. I feel that the case of orphan drugs contains many loopholes. Take the XYZ disease drug which affects around 10,000 people world-wide. Treating a patient may cost €200,000 to €600,000 annually. The drug was first developed at the US National Institutes of Health and was manufactured by a pharmaceutical company. The company first justified the high price because it was produced with difficulty. Recently the use of genetically modified cells made production much cheaper. The price of the drug though all these years hasn’t been lowered. I find it unconscionable that someone can still charge that much.

Professor Jack Brown
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My daughter is 12 and suffers from hyperammonaemia, a rare disease that leads to a toxic build-up of ammonia in the body. Sodium phenylbutyrate is used for treatment. A drug company now holds the marketing licence for the drug and charges €900 per 300g. This means we pay €3 per gram, compared with 30 cents we paid when it was prepared by the local pharmacist and sold as a chemical for laboratory work, not a drug for patient use. Treatment is extremely expensive now – they say it is of better quality too - but I am afraid that I will not get the money needed from the state to reimburse me

Marta’s story
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I work as a senior vice-president at a pharmaceutical company which developed a successful orphan drug. Personally I believe that six-figure costs per patient on orphan drugs are justified by the development cost and the fact that they keep patients out of hospitals. Products that are brought to market successfully can cost €100 million overall. These drugs are very expensive to develop and very high-risk — fewer than one in 100 makes it to market. This needs to be taken into account when fixing the price. These drugs can save healthcare systems the cost of a lifetime of chronic disease hospital care.

Francois’s story

INFO CARDSISSUE CARDS

Challenges from orphan drugs market

How can you keep costs low and make drugs available for patients while giving incentives for companies to stimulate research and make more and better orphan drugs?

Economic evaluation versus ethical issues

Isn’t there an opposition between collective choices and individual preferences? Is it right to spend many resources for few people? Is there a moral obligation of society not to abandon individuals?

Who accepts the financial risk in research?

The health care system alone? Is responsibility shared with the patient? Or it is to be shared with the marketing authorisation holder in case the product is not as effective as initially thought?

Do we all have equal rights on treatment?

Should patients suffering from rare conditions be entitled to the same quality of treatment as other patients?

Special measures for allocating resources

Special measures are in place to support research and development of orphan drugs at EU level. Should a similar status be dedicated in decisions about allocating resources for reimbursement at a national level?

Maximising health outcomes

EU states that all patients should have equal access to quality of care. If we aim to maximise health outcomes, shouldn’t the cost effectiveness of orphan drugs be the same as for other technologies?

The rule of rescue

It is the attempt to help someone in danger, no matter the costs. Shall we apply this rule when it comes to rescue the life of someone with a rare and life threatening disease?

Benefits for the state from orphan medicines

When a rare diseases receives an orphan drug, think about the money the state saves in terms of less days of hospital care, no cost of disabilities, less days of work lost by the patient, and tax returns on the industry’s profits

Forecasts for new orphan drugs

Few additional drugs are predicted to enter the market over the next 10 years. 85 to105 additional drugs are predicted, depending on the rate of drug discovery, time taken to develop them, and success in marketing authorisation.
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the solidarity principle

In Europe, most health care systems are based on the solidarity principle: the wealthier sharing the burden of diseases by paying more to health insurance. Couldn’t this apply to the use of treatments for life-threatening orphan drugs?

Orphan drugs and public resources

To be reimbursed by a healthcare system a drug needs to be safe, effective, and a cost effective use of public resources. Should drugs for rare diseases be expected to generate sufficient sales to recoup these or should they be subsidised centrally?

Constrains due decisions in local level

Large differences exist between Member States. Hospital orphan drugs are funded at a local hospitals level in some countries with no guarantee for the drugs to reach the patients

Social value

If a drug is not cost-effective, can funding of it be justified if the public is willing to give up some of the overall health gain produced by the health care system?

The utilitarian approach

In making decisions regarding ethical dilemmas this approach tries to bring the greatest good to the greatest number of people’. Does investing vast resources for rare conditions, go against this principle?

Right to health care

Article 2 of the European Convention of human rights protects the right of every person to their life

Clinical evidence on ultra orphan drugs

Clinical evidence on ultra-orphan drugs is often based on short-term outcomes rather than long-term effectiveness, and the relationship between the two may not be proven. In this case, how can the utility of these drugs be proved?

Evaluation of orphan drugs

Central mechanisms designed to evaluate drugs will encourage bringing medicines that benefit the patients, give early access, allow choice and efficient healthcare.

Availability for treatments

Even when drugs exist they may still not be available to patients. Successful access to these drugs often only comes following political pressure, legal challenges and persistent advocacy. What happens to patients who cannot fight because they are too sick?

Opportunity cost

In a society such as ours in which finite resources cannot meet all needs, doesn’t money spent on one service mean money can’t be spent on another?

Supportive care over orphan drugs?

For some patients the amount spent on home-help services could have bigger impact on their quality of life than spending it on orphan drugs. Shall we make this a bigger priority?

Orphan drugs over supportive care?

Disease-modifying therapies, unlike best supportive care, offer the option of future knowledge, which may in turn, lead to a cure or at least prevent the disease from worsening

Rare diseases and insurance

Most rare diseases do not have specific approved treatments. Many are treated “off-label”, using products for other diseases. Health insurance often refuses to cover off-label uses since they are being used in a way that is not approved

Downfalls of market exclusivity

Think about how market exclusivity may have excluded potential treatments and companies with competitive prices from coming into the market...

The ‘salami slice’...

Drug companies can "salami slice" a disease any way they choose to obtain orphan drug designation for drugs with large market

Pricing policy

In the spirit of solidarity among Member states, the cost of a drug should be decided according to the wealth of each country. Higher price in wealthier countries would allow more affordable prices in less wealthy countries, as it is done for AIDS drugs

Current EU Incentives for orphan drugs

- market exclusivity for 10 years from authorisation time(no competitor product can be authorised during these 10 years, unless proven superior),
- financial incentives (fees reduction , free advice on development )
-Priority to EU research programmes
- national incentives in Member States (tax reductions).

Orphan drugs in Europe

During 2000 - 2009, the Committee for Orphan Medical Products received 873 orphan drug designation applications. 598 gained positive opinion. 60 received market authorisation (official approval for use). There are 7000 rare diseases, most do not benefit from a specific medicine.

Reimbursement of orphan drugs

The main factor that determines access to an orphan drug is the reimbursement by national health insurance systems. The annual cost of these treatments (€ 6000 to € 300 000) is beyond the budget of average households.

Economic advantages

The Orphan Drug Regulation (since 1999) has resulted not only in more jobs in the EU but also in increase in Research & Development.

Benefits for small enterprises

The incentives under the current regulation - market exclusivity, protocol assistance etc - have made it possible for small enterprises to develop new drugs. 1/3 of companies creating orphan drugs are “startups”.

After authorisation and before the market

National or regional governments will decide on the assessment of the therapeutic value of the drug, whether to add it to the reimbursement list, its price, its availability in hospitals.

Drawbacks of orphan drugs

Orphan drugs are often expensive to produce and, by definition, will benefit only small numbers, therefore their price is often really high in order to compensate company’s costs.

National authorities – the UK example

The National Institute of Health and Clinical Excellence has suggested that the health care system pays premium prices for orphan drugs based on: severity of the disease, evidence of health gain, whether the disease is life threatening. These criteria vary across Europe.

Cost of a patient without orphan drug

A survey of haemophilia patients (a rare disease) in the Netherlands showed that treated patients were working 17 years more in 2001 than in 1972. Cost of hospitalisation where treatment is denied can reach €100,000 per year.

Constrains on access to drugs

Some companies do not provide their marketing approved products in all Member States due to the constraints of pricing (e.g. different taxation laws), reimbursement (delays in some countries) and small return on investments for the company

Cost of orphan drugs in overall budget

The cost of orphan drugs is not a major concern today for the member states (they make up one percent or less of most nations’ pharmaceutical budgets)...

Development costs of an orphan drug for a company

Development costs for orphan drugs are substantial, although a little lower than overall costs of mainstream pharmaceuticals (clinical development programmes involve smaller patient numbers).

Characteristics of rare diseases

2/3 of the rare diseases are serious, chronic, and often life- threatening. Characteristics include early appearance; chronic pain; motor or intellectual deficiency, and early death in many cases. Creating therapies for all these is a real unmet need.

Approval of orphan drugs in the UK

In the UK for every £30,000 spent prescribing an orphan drug, the benefit for patients must add up to the equivalent of one patient living a year of good-quality life. Other countries also reimburse based on this method, but have different thresholds.

No second chance

In many orphan cases there is no “second chance” to conduct an additional clinical study if the available data prove inadequate because there are not enough patients

Orphan drugs in the market

In some countries a proportion of licensed orphan drugs never reach the patients because they are too expensive

High cost per patient

the cost per patient associated with some orphan drugs, can be as high as €500,000 per year and involve treatment for a lifetime

Costs for a family with rare disease

In a family where a child has a rare disease, often one of the parents either stops or significantly reduces work. As a consequence, while expenses increase; income is reduced.

Lack of harmonisation across Europe

Current EU regulation leaves to Member States the practical implementations on orphan drugs resulting in a lack of harmonisation even across the countries themselves. Some EU citizens may have access to a given drug, whilst others don’t, depending on where they live.

Availability of Orphan drugs

Once the marketing authorisation is granted, the legal delay for placing medicinal products on the EU market is 180 days. However, the average delay is 189 days at the moment, and in some Member states is up to 700 days.

Development process for pharmaceutical companies

The process from the discovery of a new molecule to the orphan drug marketing for a company is long (average 10 years), expensive (tens of millions of euros) and very uncertain (among ten molecules tested, only one may have a therapeutic effect).

Benefits from rare diseases

Research on rare diseases has been fundamental to the identification of most human genes identified so far and to a quarter of the innovative medicinal products that received market approval in the EU

Marketing authorisation procedures in Europe

As experts on rare diseases are also rare, the authorisation of orphan drugs is almost always made at the European level to benefit from the greatest amount of expertise available.
The procedure for marketing authorisation must be less than 210 days

Orphan drugs resulting into cure for common diseases

Some orphan drugs are eventually found to be beneficial for common disorders, (epoetin-alpha, originally approved to treat anaemia is now used in patients undergoing cancer chemotherapy)

Market authorisation

The decision to authorise a product is based on balancing its efficacy, its risks, and its quality. If it is highly efficient but potentially dangerous, marketing may be refused. The marketing authorisation, is not based on economic grounds.

Reimbursement decision

The decision to reimburse is the response to the following question: can society afford to pay for this treatment? Is it worth it? The reimbursement decision is based on economic grounds.

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