On 26 April 2023, the European Commission published its long awaited proposal to revise the EU pharmaceutical legislation.  The proposal includes a new draft Regulation, which will repeal Regulation (EC) No 726/2004, the Orphan Medicines Regulation 141/2000 and the Paediatric Regulation 1901/2006.

As expected, the draft Regulation significantly shakes up incentives available to the developers of orphan medicines. The proposed changes form part of the Commission’s plan to rebalance the incentives schemes by shifting the focus to the areas of high unmet medical needs and fostering a faster generic and biosimilar competition.  Another major change relates to the new powers of the European Medicines Agency (“EMA”) with regard to orphan designations.   

We discuss the key changes below.

Orphan designation criteria

The proposal maintains the prevalence criterion of not more than five affected persons per 10,000.  However, the Commission — based on the EMA’s recommendations — will be able to lay down different criteria for certain types of diseases if the criteria “are not appropriate due to the specific characteristics of certain conditions or any other scientific reasons”.  Recital 91 indicates that this is intended to better identity rare diseases: “for conditions which have a short duration and high mortality, measuring the number of people that acquired the disease during a specific time period would better reflect if it is rare within the meaning of [the] Regulation than measuring the number of people who are ‘affected by it’ in a specific moment of time.”  The EMA will thus have quite a broad discretion to propose new criteria for orphan designations.

In addition, the definition of significant benefit has been tightened and the clinically relevant advantage or a major contribution to the patient care will only be recognised “if such an advantage or contribution benefits a substantial part of the target population”. 

Orphan designation procedure

In the hope to expedite the orphan designation procedure, the draft Regulation gives powers to the EMA to adopt decisions granting, refusing and transferring an orphan designation.  This is also in line with the replacement of the Committee for Orphan Medicinal Products (“COMP”) by one or more new working parties.

To establish whether the orphan designation criteria are fulfilled, the EMA may consult the Committee for Medicinal Products for Human Use (“CHMP”) or one of its working parties, but the consultation is optional.  Once the designation is granted and the sponsor wishes to transfer the orphan designation, the sponsor will need to seek prior approval by the EMA.  Surprisingly, the draft Regulation does not foresee the possibility to appeal against negative decisions issued by the EMA, in particular like a refusal of the orphan designation or of a transfer.

Another major change relates to the validity of the orphan designation which will expire after seven years. The validity may be extended based on a “justified request” if the sponsor can provide evidence that the relevant studies supporting the use of the designated orphan medicinal product in the applied conditions are ongoing and promising with regard to the filing of a future marketing authorisation (“MA”) application.  The Commission inserted this provision to incite faster development and authorisation of designated orphan products. However, this could simply result in companies applying for orphan designation at a later stage in the development process.

Duration of market exclusivity

The draft Regulation introduces a new concept of a modulated market exclusivity. The Commission expects that such an approach will incentivise R&D of orphan medicines addressinghigh unmet medical need and ensure market predictability as well as fair distribution of incentives.

Products are considered to address a high unmet medical need if:

1. there is no authorised medicine for the condition or the new product brings exceptional therapeutic advancement; and
2. the new product results in a meaningful reduction in disease morbidity or mortality.

This concept of a high unmet medical need is very vague, but should be further clarified in EMA guidelines.

The modulated periods of the market exclusivity are as follows:

• orphan products addressing high unmet medical needs will benefit from the longest market exclusivity of 10 years,
• well-established use orphan products will benefit from 5 years market exclusivity, and
• all the other orphan products will benefit from 9 years market exclusivity.  

The market exclusivity can be prolonged by 12 months for supply of the product (the same conditions apply as for the prolongation of the data and marketing protection  – see our blog post on changes to the regulatory data and marketing protection).

On top of that, the market exclusivity can be extended by additional 12 months if an MA holder obtains an MA for one or more new therapeutic indications for a different orphan condition, provided that the approval is granted at least two years before the end of the exclusivity period.  Such a prolongation may be granted twice, if the new therapeutic indications are each time for different orphan conditions.  This is in contrast to the current rules, where each therapeutic indication for a different orphan conditions benefits from a separate orphan market exclusivity period.

The prolongation of the market exclusivity, either for supply of the product or approval of new therapeutic indications, is not available for well-established use products.  In addition, if a product benefits from the market exclusivity extension based on the approval of new therapeutic indications, the product will not benefit from the additional 12 months of data protection based on the authorisation of an additional therapeutic indication that brings “a significant clinical benefit in comparison with existing therapies” (Article 81(2)(d) of the draft Directive).

Effect of market exclusivity

The draft Regulation introduces major changes to the scope of market exclusivity for orphan medicines:  

• Where an MA holder holds more than one orphan MA for the same active substance, there will be a single exclusivity period starting from the date when the first orphan MA was granted.  This is the so-called “global orphan MA” approach.  
• MA applications for a similar medicinal product (including generics and biosimilars) will be possible before the market exclusivity expires, i.e. “where the remainder of the duration of the market exclusivity is less than two years”.  Therefore, the de facto market exclusivity periods will be shortened because the MA for similar products can be granted immediately after the market exclusivity expires. Under the current rules, market exclusivity prevents not only the granting of MAs but also acceptance of MA applications.  This means that in practice under the current rules, the market exclusivity is extended by the review and approval time.
• Market exclusivity will no longer protect similar medicinal products for which the market exclusivity has already expired against generic or biosimilar applications.  

Finally, the Regulation contains specific transitional provisions, but there will probably be many discussions on how they apply to various specific situations.

This blog is based on the wording of the EU’s proposal published on 26 April 2023.  This wording could significantly change during the legislative process.  Our Dublin, Brussels, Frankfurt and London teams will continue to monitor this legislation. We will be hosting a webinar to discuss the impact on 9 May. To sign up for the webinar please click here.