Orphan Drug Market Exclusivity Extension versus Patent Monopoly

Governments are trying to stimulate drug R&D for unmet health needs with public policies. Most of them target intellectual property because market-exclusivity (ME) period supported by patents protects new drug from direct competition and allows the return of investment. However, the patent holder does not receive commercial benefit until the product has been market approved (MA). Regulatory agencies provide exclusivity extensions for patented drugs, to compensate for patent life that is lost during the lengthy drug R&D and regulatory process.

A contribution made in drug regulation has been to incentivize the development of Orphan Drugs (OD) for rare diseases through ME as policy measure. The ME is granted by the Food & Drug Administration (FDA) for 7 years upon MA. The ME provision is stronger than a patent: it cannot be interrupted by a competitor even if the underlying patent has expired. But the OD ME may be reduced if the product is sufficiently profitable.

As most of the incentives are not contingent to an ultimate drug R&D success, one may wonder about the effects of such public policy. Case studies have supported the opinion that the OD legislation has played an important role in drug R&D for rare diseases, but no existing research has analyzed the link between the characteristics of OD ME and these downstream effects. The objective of this analysis is to evaluate the effective patent and ME life of OD approved.

OD with MA was extracted from the FDA database, and patents’ expiry date were retrieved in order to measure the expected ME. Preliminary results indicate that the OD ME provision extends the effective ME life supported by patent monopoly. Details regarding how ME periods have been changing over time, and what variables affect ME period (designation, therapeutic class, firms, competition …) will be presented in order to discuss the impact of OD legislation and its ME provision on drug innovation and number of entrants.

The author declares no conflict of interest. This work is supported by the French National Institute of Cancer (Grant # 9580).