Effective Market Exclusivity of New Molecular Entities for Rare and Non-Rare Diseases

Objective: Extended market exclusivity is a key incentive for the development of drugs for rare diseases (orphan drugs). This study aims to quantify the effective market exclusivity period of small molecule new molecular entities (NMEs) approved by US FDA from 2001-2012, with special attention to the impact of orphan drug status on market exclusivity. We also make a simple estimate of revenues orphan NME holders earned during the additional orphan exclusivity period.

Data: Our sample is comprised of small molecule NMEs approved by the U.S. Food and Drug Administration (FDA) in the period 2001 to 2012. We utilize FDA’s Orange Book data to identify all NMEs approved in this period. We combine the Orange Book data with information from drug labels to identify NMEs that were approved for rare diseases, non-rare diseases or both, the timing of the approval for orphan and non-orphan indications, as well as the number of indications. We also utilize data from Quintiles IMS National Sales Perspective to estimate the market size of each NME. In addition, we create indicators for dosage form, year of approval, review division and Paragraph IV challenge that are derived from the various sources stated above.

Analysis: We compute the effective exclusivity period for each NME as the time from NME approval until approval of the first generic competitor. We then regress the effective exclusivity period for each NME on market size, orphan disease indication, and other NME market factors using a Cox Proportional Hazards model. We also calculate regression adjusted median market exclusivity periods for both orphan and non-orphan NMEs to estimate the effective exclusivity extension from orphan status. Finally, we calculate additional revenue earned by orphan drugs during this extended exclusivity period.

Results & Conclusion: Our main findings suggest that NMEs with an orphan indication receive two more years of effective market exclusivity than non-orphan NMEs. We also compare the effective exclusivity of drugs that have multiple indications (orphan and non-orphan) with drugs that have only orphan or non-orphan indications. We find that drugs with both orphan and non-orphan indications have longer exclusivity periods than drugs with an orphan or non-orphan indication only.

Disclaimer: The views presented in this paper are those of the authors and do not reflect the views or policies of the Food and Drug Administration.