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Orphan Drug Designation and IP Protection

Date: 20 October 2013

Orphan drugs are prevalent and growing public health issue. Governments are now creating laws to insentivise investment in research and development. However how far do these laws reach, and do they have an impact on intellectual property protection?


What is an orphan drug?

Currently around 30 million people in Europe suffer from a rare disease. Some conditions occur so infrequently that the cost of developing and bringing to market a medicinal product to diagnose, prevent or treat the condition would not be recovered by the expected sales of the medicinal product. The development of a new drug is a lengthy and costly process, and consequently pharma companies are often unwilling to invest in the creation of those products. These rare conditions are often referred to as “orphan conditions” and the medicinal products as “orphan drugs”.


It is important that patients suffering from rare conditions get the same quality, safety and efficacy in medicinal products as those with more common illnesses. Therefore it is necessary to stimulate R&D to bring to the market appropriate medication by the pharma industry.



Thus, following in the footsteps of the US (1983), Australia (1988), Singapore (1991) and Japan (1993), the European Union’s (EU’s) Orphan Drug Regulation was introduced in 1999. Under this legislation, a pharma company developing an orphan drug can benefit from a number of incentives, including market exclusivity for the drug for a set period of time.


Legal frameworks at a glance:

  Relevant Administrative Authority Legal Framework Prevalence Market Exclusivity
Europe Committee for Orphan Medicinal Products of the European Medicines Agency Regulation (EC) 141/2000 5 in 10,000 10 years
USA Office of Orphan Drugs Development of the Food and Drug Administration Orphan Drug Act (1983) 7.5 in 10,000 (less than 200,000 in the USA) 7 years
Japan Ministry of Health, Labour and Welfare Orphan Drug Regulation (1993) 4 in 10,000 (less than 50,000 in Japan) 10 years
Australia Therapeutic Good Administration Orphan Drug Policy (1998) 1 in 10,000 (less than 2,000 in Australia) 5 years



Orphan drug Designation

A medicinal product may acquire orphan drug designation if it fulfils the following criteria:


  • The product is intended to diagnose, prevent or treat a life-threatening or chronically debilitating condition (in humans).
  • The condition affects no more than five in 10,000 people in the EU or, without incentives, the marketing of that product would generate insufficient return to justify the necessary investment.
  • There are no alternative methods of diagnosis, prevention or treatment of the condition or, if an alternative method exists, the product will be of significant benefit to those affected by the condition.


Orphan drug designation can be applied for and is given by the Committee for Orphan Medicinal Products at the European Medicines Agency (EMA). It is important to note that orphan designation is not an endorsement by the EMA for the medicinal product to diagnose, prevent or treat the condition, and marketing authorisation is still required.


Under certain circumstances, orphan product designation can be granted for a new orphan indication in an already authorised medicinal product. A company researching the treatment of a rare disease might screen products currently being used for the treatment of different conditions – if the known drug indicates a positive result with regard to treating the orphan condition, the company can apply for orphan drug designation. A separate marketing authorisation will be required, however, as it is not possible to extend an existing marketing authorisation to cover the new orphan indication.


Benefits Gained

The main benefit of orphan drug designation is the market exclusivity. In Europe, no marketing authorisation will be accepted or granted for a period of 10 years for a similar medicinal product with the same therapeutic indication. The period of protection is extended by two years where paediatric studies have been carried out.


Other benefits include tax credit, grants for research, scientific advice, technical assistance and accelerated marketing procedure. It is also interesting to note that parallel applications may be filed with regulatory authorities outside Europe, for example in the US and Japan.


This protection from competing products can also be combined with intellectual property (IP) protection and data exclusivity protection, which prevents reliance by generic companies on original toxicological, pharmacological and clinical data generated to comply with regulatory requirements.


Market Exclusivity

Since authorised orphan drugs benefit from 10 years of protection (12 for paediatric drugs) from market competition with similar medicines showing similar indications, one might wonder why patent protection should also be sought.


The most relevant factor to consider is the term of protection afforded by patents and orphan drug designations. The 10-year period of protection afforded by the EMA can be reduced to six years if the criteria for orphan drug designation are no longer met, inter alia the product becomes sufficiently profitable not to justify maintenance of market exclusivity. Thus, a company might invest large sums into the development of a medicinal product, have the product designated as an orphan drug and obtain market exclusivity. Then, if the product is successful and profitable, the exclusivity may be taken away after just six years, leaving the company vulnerable against competitors entering the market.


By contrast, a European patent provides 20 years of monopoly, and protection can be extended for certain products by up to five years with a Supplementary Protection Certificate (SPC). SPCs are a form of extension provided to compensate for the short effective patent life of medicinal products requiring a marketing authorisation. It is interesting to note that SPCs represent a relatively small area of IP law, but have been the subject of numerous litigations and the source of abundant case law, which shows that even relatively short extensions of the patent term (sometimes just a couple of months) can have significant financial implications, in particular where blockbuster drugs are concerned.


Obviously, the end of the overall term of protection depends on the date on which the marketing authorisation was granted and the patent application was filed, as well as on whether a SPC was granted. Therefore, the necessity for patent protection to extend the period of protection should be assessed on a case-by-case basis. For example, if a patent application was filed less than 10 years before the marketing authorisation was granted, then the patent could prolong protection from competitors, being further extended by applying for a SPC.


The market exclusivity afforded by the orphan drug designation could also become compromised. For example, a marketing authorisation may be granted to a second similar and competing medicinal product if the original company is unable to supply sufficient quantities of the drug, or if the second product is safer, more effective or otherwise clinically superior. These factors are irrelevant with respect to patent protection.


It should be emphasised, however, that the orphan drug scheme prevents not only identical but also similar products from being marketed, and therefore provides valuable protection. Patents can cover the medicinal product (for any use), related compounds, derivatives, compositions, forms and/or different therapeutic indications, but scope of protection is limited to what is claimed.


The process for obtaining and enforcing patents can also be costly and complex, and often companies - in particular those already seeking financial incentives and protection through the orphan drug scheme - cannot or will not invest capital into patent protection. In addition, patents are vulnerable to attacks and can be revoked. Finally, some products may not be patentable - in that case, orphan drug designation becomes crucial.


Orphan drug projects combine a set of incentives that enable companies to reduce their overall R&D costs and, at the same time, secure market exclusivity, which means that high unit prices can be set. These schemes seem to have made orphan products economically viable and, without these incentives, some of the life-saving orphan drugs now on the market would not have been developed.
IP offers complementary and additional protection of the capital invested into drug development and marketing, and it is recommended to combine the protection afforded by the orphan drug designation with patent protection to ensure that optimum coverage is achieved.



An extended version of this article by Dr. Kei Enomoto appeared in Innovations in Pharmaceutical Technology, Issue 46.