CREATIC ATMP newsletter

Orphan drugs and indication stacking: When Orphan Incentives Fall Short

The new pharma package will limit the possibility of getting additional terms of market exclusivity for repurposing of orphan drugs. Instead of receiving a full term of 10 years of market exclusivity for a new orphan disease indication, the same active ingredient will only be eligible for two one-year extension of market exclusivity when repurposed for a new rare disease indication. Is this needed to stop misuse of an overly generous system, or does it represent a fatal blow to repurposing as an innovation strategy in orphan drug development?

By Emma M. Q. S. Nielsen, Student assistant, Centre for advanced studies in bioscience innovation law (CeBIL) & CREATIC

Although rare diseases affect a limited number of people per disease, they collectively affect one in every 17 people in Europe. Despite efforts to stimulate R&D into rare diseases through the European Union's orphan drug framework (REGULATION (EC) No 141/2000), over 95% of more than 6000 recognized rare diseases still have no treatment option (Commission, 2022). Advanced therapies may change this significantly in the coming decades. However, concerns have been raised by stakeholders that the current orphan drug framework has not sufficiently directed development toward rare diseases with the greatest unmet medical need. Instead, priorities have tended to focus on profit optimization, for example focussing on improvements to treatments for indications with existing treatments and focus on the least rare diseases rather than the majority of ultra-rare diseases.

The most prominent incentive in the current orphan drug framework is the orphan market exclusivity, which introduces a stand-alone period of 10 years of market protection for a new orphan disease indication. This protection provides a monopoly-like protection against competition from similar medicines for the same therapeutic indication. Orphan medicinal products can accumulate market exclusivity periods if the same active substance is authorized for several orphan indications. In comparison, the ‘standard' incentives for medicinal products consist of 8 years of data exclusivity, 10 years of market exclusivity and the possibility of one additional year of data exclusivity on top of the ten for a new indication, also known as the 8+2+1 system. Regular medicinal products (those without an orphan designation) are limited by the so-called Global Marketing Authorisation (GMA). The GMA concept means that a new drug only gets one term of regulatory data protection, and a new indication only gives one additional year of data exclusivity on top of the ten. In other words, GMA means that limitations on regulatory exclusivity follow the active ingredient rather than the indication.

The concern with the current orphan drug framework is that accumulation of market exclusivity periods (also known as indication stacking) deters generic entry for long periods of time, possibly indefinitely, which in turn keeps prices high (Thyra de Jongh et al., 2019). The orphan drugs framework is therefore under revision as part of the proposed EU pharmaceutical package. The Commission's proposal introduces a GMA-like model for orphan drugs, aligning the additional market exclusivity for new indications with the 8+2+1 system, while allowing for the possibility of two one-year extension for subsequent indications. The purpose of these changes is to limit the use of indication stacking while supporting development of additional indications (Commissions proposal, 2023). The Council and the European Parliament have reached an agreement on the ‘pharma package'; however, their final position on the issue of indication stacking is not yet known. If the proposed changes to the orphan drug framework are adopted, this would represent a significant overhaul of the system. This is particularly relevant for emerging innovative treatments such as advanced therapy medicinal products (ATMPs), which are increasingly being developed to address rare and ultra-rare conditions, often where no treatment alternatives exist.

Concerns have been raised that overhauling the system and limiting the extensions for additional indications could discourage developers from exploring additional indications in related diseases, thereby undermining an important mechanism for stimulating the development of treatments for rare diseases. Nevertheless, the fact that 95 % of rare disease remain without treatment — despite the availability of indication stacking — suggests that market exclusivity as a main incentive lacks sufficient power to stimulate sustained investment in rare disease R&D. While the Commission's proposal seeks to strike a balance between preventing abuse and stimulating innovation in areas of unmet medical need, it does not address the underlying problem of steering investment towards the development of treatments for rare diseases. This limitation is particularly evident in the field of advanced therapy medicinal products (ATMPs). Despite their potential to provide curative therapies for previously neglected conditions, ATMPs frequently encounter barriers to market access and long-term sustainability, due to high development costs and complex regulatory pathways. As a result several authorised products have subsequently been withdrawn from the market for commercial reasons (Hidalgo Simon and Booth, 2026).

Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or European Research Executive Agency. Neither the European Union nor the granting authority can be held responsible for them.