European policies to bring down the prices of drugs for rare diseases – orphan drugs – are failing. The idea is that the drugs will become cheaper through competition once a 10-year market protection for the pharma expires. But in practice, it often does not work that way. Even years after market exclusivity ends, prices remain high and competition is lacking, according to a study by researchers from Amsterdam UMC, FAST and the Netherlands Healthcare Institute.

The European Orphan Drug Regulation gives pharmaceutical companies 10 years of market exclusivity to encourage the development of drugs for rare diseases. After this period, competition through generics (the same active ingredient but from a different manufacturer) or biosimilars (biologics from a different manufacturer) should bring prices down. In practice, however, this hardly ever happens. In the case of orphan biologicals, competition from biosimilars is often completely absent. Even if generic alternatives become available, this only happens after 14 years on average and only leads to a limited price reduction of about one third. Without competition, prices remain virtually unchanged.

Affordability under pressure
According to Lonneke Timmers, secretary of the Scientific Advisory Board of Zorginstituut Nederland and co-investigator, this is a worrying situation: ‘Society accepts high prices for medicines intended for a small group of patients, but over time those prices have to come down. This is necessary to make room for innovations. If prices remain high, affordability for society is compromised.’

Call for government intervention
The researchers point to the causes of the lack of competition: the small target group, high costs of developing generic alternatives and low expected revenues. This market failure calls for additional policy, argues researcher Sibren van den Berg of Amsterdam UMC: ‘We cannot continue to rely on spontaneous market forces. If competition fails, the government must intervene. Think of mandatory price reductions after exclusivity expires or financial guarantees for generic producers. These policies should be designed carefully and in consultation with manufacturers so that they do not decide to take their drugs off the market.’ Van den Berg is associated with Medicine for Society, a platform set up by Amsterdam UMC to promote affordable medicines for rare diseases and their continued availability.

The study highlights that without policy adjustments, the affordability of orphan drugs remains under pressure, with consequences for patients and society. The full publication can be read in the scientific journal Value in Health: Twenty-Four Years After the Launch of the EU Orphan Regulation: Analyzing Dutch Price Dynamics, Biosimilars, and Generics for Orphan Medicinal Products – ScienceDirect.