BRUSSELS, Belgium - The European Commission (EC) has proposed a framework of incentives for orphan drugs, which are products for diagnosis, prevention or treatment of rare diseases.

The initiative - long awaited in Europe - was greeted enthusiastically by European drug and biotechnology industry organizations.

“This proposal will benefit all firms engaged in pharmaceutical research and development,“ the EC said in the introduction to the draft regulation. “It should, however, be noted that in the U.S. - where a similar system has been operating for more than 12 years - most applications for the designation of orphan medicinal products are filed by small firms specializing in biotechnology.“

EMEA To Rule On Orphan Drug Status

Essential elements of the incentives the draft regulation proposes are:

* A 10-year exclusive right for orphan drugs throughout the European Union (EU), during which neither the member states nor the EU would be able to authorize any other product with the same active ingredient and for the same therapeutic purpose; however, the exclusivity may be withdrawn if supply difficulties or a safer and more effective product emerges, and exclusivity may be cut to six years if a member state can show the price is too high.

* A “full or partial waiver“ of the average $100,000 in registration fees for authorization through the European Medicines Evaluation Agency (EMEA).

* The EMEA staff will provide assistance in preparing clinical trial plans, a major problem with orphan drugs since there are by definition few patients on which to test new products.

The procedure for designating medicines as orphan drugs will be handled by the EMEA. Criteria include a requirement that the medicines be used to treat illnesses affecting no more than five in 10,000 people in the EU. A larger patient population is permitted if the disease is transmissible and life-threatening or may lead to invalidity.

The proposal also allows member states to offer tax breaks and other incentives for orphan drug producers, but to ensure a level playing field an EU-wide list of such incentives is to be drawn up.

The EC has at last met its 1997 pledge to come up with a proposal to promote research into medicines for rare diseases. The discussions focused largely on how far EU funds should be used to pay the marketing authorization fees for such products and to what extent marketing exclusivity should be given to qualifying products, although there was also intensive wrangling over the nature of the internal committee mechanisms to make the new measure work.

Initial reaction from the industrial sectors likely to be affected by the proposal was positive.

Jurgen Reden, of the European Federation of Pharmaceutical Industries Associations, said he broadly welcomed the proposal. However, he said the details could be improved, most notably a reduction in conditions attached to an orphan drug designation.

The sponsor will have to establish not only that the product is for an illness affecting no more than five per 10,000 people in the EU, but also that no satisfactory alternative diagnosis, prevention or treatment has been authorized, he noted.

Similarly, the broader definition of an orphan drug as a treatment for more widespread life-threatening and seriously debilitating diseases is conditional on the sponsor establishing “it is unlikely that without incentives, the marketing of the medicinal product in Europe would generate sufficient return to justify the necessary investment.“

As Reden pointed out, these are heavy requirements at such an early stage of development of a potential product.

Proposal Called 'Good Start'

He also was concerned the member states' powers to invoke price to disqualify drugs are inappropriate. It is reasonable to provide some limit on undue profits if a product proves highly successful, he observed, but this should be linked to volume rather than price, particularly since prices in some EU countries are set by the government.

There also are questions over the proposal's attempt to define a “similar medicinal product,“ which is likely to lead to conflicts, Reden said. And the budget for fee waivers is “not generous,“ he added, particularly since there are none of the national tax breaks such as those provided in the U.S.

However, overall Reden judged the proposed mechanism “a good start.“ The regulations now have to go through the complex EU consultative machinery. *