The Orphan Regulation, introduced in 2000, offers a 10-year exclusivity to recoup investments on orphan medicinal products (OMPs). Despite expectations of price drops, many OMPs seem to lack competition after exclusivity. This study examines OMP price trends and the entry of generics/biosimilars in The Netherlands.
OMPs authorized before January 1, 2010, were included unless they had active substance patents or were withdrawn before the end of market exclusivity. Data on European generic/biosimilar authorization were gathered from the European Medicines Agency and Dutch Medicines Evaluation Board. List price data were collected from the Dutch national database.
Twenty-eight small molecules and 9 biologicals were included in the primary analysis, all authorized between 14.0 to 22.3 years. The median of their most recent prices in The Netherlands was 81% of the initial price (range 11%-104%). Eleven small molecule (39%) and 8 biological (89%) OMPs did not have a generic/biosimilar registered. If generic/biosimilar entry did occur, this was after a median of 14.2 years (range 11.5-20.3 years). Median prices of OMPs with generic/biosimilar competition were lower than those without (to 66% vs 88% of the initial price, respectively, P .01).
Postexclusivity competition and subsequent price decrease is limited for OMPs. First, generics/biosimilars for OMPs enter later than non-OMPs. Second, for some OMPs (especially biologicals), there is no competition at all. Third, prices of OMPs with generic/biosimilar competition decreased only minimally compared with non-OMPs. New policies are needed to correct this apparent market failure.
This study examines the pricing and competition of orphan medicinal products (OMPs) in The Netherlands, focusing on how these drugs, which treat rare diseases, are priced and how often generics or biosimilars enter the market after the expiration of their market exclusivity. The EU Orphan Regulation grants a 10-year exclusivity period to OMPs, intended to recover research and development costs. However, the anticipated competition and price reductions after this period are not commonly observed.
The research shows that generics and biosimilars for OMPs take longer to enter the market compared to non-orphan drugs, with an average entry time of 14.2 years. For biological OMPs, competition is particularly scarce due to small market revenue. Even when generics or biosimilars do enter the market, price reductions are modest, averaging a decrease to 70% of the original price, unlike non-orphan drugs, which can see prices drop significantly more.
For small molecule OMPs, a larger market revenue tends to increase the likelihood of generic entry. However, this trend does not hold for biological OMPs, indicating different market challenges for these drug types. Some OMPs are used beyond their initial rare disease indication, especially in oncology, leading to more competition and sharper price decreases due to a broader patient base.
The study suggests that the lack of competition and limited price decreases highlight a market failure that requires policy intervention. Potential solutions could include new pricing policies that ensure price reductions after exclusivity or incentives to encourage generic and biosimilar competition. However, such policies must be carefully designed to maintain the availability of these important drugs and avoid withdrawing them from the market due to reduced profitability.
Overall, the study calls for a balanced approach to policy reform, considering the unique challenges of both biological and small molecule OMPs, as well as those with varying market revenues. Addressing these issues is crucial to ensure sustainable access to essential medicines for patients with rare diseases while supporting innovation in drug development.