European policy aimed at reducing the prices of medicines for rare diseases, known as orphan medicines, is falling short. The underlying assumption is that these medicines will become cheaper once the 10-year market exclusivity period for pharmaceutical companies expires, as competition should then enter the market. In practice, however, this often does not happen. Even years after market exclusivity has ended, prices remain high and competition is often absent, according to a study by researchers from Amsterdam UMC, FAST, and the National Health Care Institute.

The European Orphan Regulation grants pharmaceutical companies 10 years of market exclusivity to stimulate the development of medicines for rare diseases. After this period, competition from generics, medicines with the same active substance produced by another manufacturer, or biosimilars, biological medicines produced by another manufacturer, should lead to price reductions. In practice, this rarely occurs. For biological orphan medicines, competition from biosimilars is often entirely absent. Even when generic alternatives do become available, this happens only after an average of 14 years and leads to a limited price reduction of around one-third. Without competition, prices remain virtually unchanged.

Affordability under pressure

According to Lonneke Timmers, secretary of the Scientific Advisory Board of the National Health Care Institute and co-author of the study, this is a concerning situation: “Society accepts high prices for medicines intended for small groups of patients, but over time those prices should come down. This is necessary to create room for new innovations. If prices remain high, affordability for society comes under pressure.”

Call for government intervention

The researchers point to several reasons why competition often fails to materialise: small patient populations, high development costs for generic alternatives, and low expected returns. This market failure calls for additional policy measures, says researcher Sibren van den Berg of Amsterdam UMC: “We cannot continue to rely on spontaneous market forces. If competition fails to emerge, governments need to intervene. This could include mandatory price reductions after exclusivity expires or financial guarantees for producers of generic medicines. Such policies must be carefully designed in consultation with manufacturers, to prevent companies from withdrawing their medicines from the market.” The study emphasises that without policy changes, the affordability of orphan medicines will remain under pressure, with consequences for both patients and society.

Read the full article here: Twenty-Four Years After the Launch of the EU Orphan Regulation: Analyzing Dutch Price Dynamics, Biosimilars, and Generics for Orphan Medicinal Products – ScienceDirect