EU orphan drugs law and the emergence of SMEs

According to data, 220 SMEs were created, responsible for the development of 51% of orphan medicines in Europe. [Shutterstock/Gorodenkoff]

This article is part of our special report Reviewing orphan drugs law: A tough equation.

The legal framework provided by the current EU orphan drugs regulation has encouraged a number of small and medium-sized companies (SMEs) to develop innovative technologies in the fight against rare diseases in Europe, stakeholders have told EURACTIV.com.

The Orphan Regulation was introduced in 2000 and its main objective was to address the challenge of regulating medicines that treat patients with rare diseases.

Around 246,000 people suffer from such diseases across the EU. The European Commission is expected to present by the end of July an evaluation study on the pros and cons of the application of orphan regulation.

EURACTIV understands that the executive wants to re-visit some terms of the regulation; however, patients and the pharma industry have voiced their concern about potential changes in the incentives’ regime, which could prove to be detrimental for innovation and research.

Pharmaceuticals have generally been reluctant to invest in rare disease treatments because of their limited commercial potential. Shortening the timeframe of market exclusivity period, for example, could further diminish the industry’s willingness to invest and thus leave patients stranded.

Commission’s ‘risky’ move to re-visit orphan drugs regulation

The European Commission is expected to present by the end of July an evaluation study on the pros and cons of the application of orphan and paediatric regulations, which deal with a niche segment of rare diseases that affect fewer than five in 10,000 people.

On the other hand, public health systems across the bloc want to save as much money as possible while simultaneously protecting their population. Striking a happy balance will not be an easy task for the EU executive.

A personal SME story

Another aspect of this issue is the growing importance of SMEs, as some 220 pharmaceutical SMEs have sprung up, accounting for the development of 51% of orphan medicines in Europe.

One of those is Lysogene, a France-based phase 3 clinical-stage biopharmaceutical company focusing on treatments for rare paediatric neurodegenerative disorders with high and unmet medical needs.

The creation of the company in 2010 had a very personal touch: its founder and CEO, Karen Aiach, decided to launch her own company after her daughter Ornella was diagnosed with Sanfilippo syndrome type A, a devastating and deadly disease.

Aiach then abandoned her audit specialist career and started her own company to tackle this highly unmet medical need.

In the beginning, she invested her savings and managed to attract the attention of several venture capital firms and investment banks.

The company has so far succeeded in developing a polyvalent technology platform broadly applicable to central nervous system diseases and building up relations with academic centres, key opinion leaders and patient groups around the world.

“The EU Orphan Regulation is particularly beneficial for SMEs developing orphan drugs (OMP-SMEs), like us, due to the financial incentives, support from agencies and patient access,” Lysogene told EURACTIV in an emailed response.

The company said OMP-SMEs are in general more vulnerable to economic failure than companies with a broader portfolio and the EU orphan law has been helpful.

“The Regulation supports SMEs by encouraging them to develop technologies, innovation and gain expertise which can often apply or be adapted to other rare diseases,” the company said.

“It has definitely helped SMEs to explore ‘niche’ areas as it increases the focus on rare diseases and provides SMEs with some interesting incentives. It also contributes to an increase in basic research projects in rare diseases which can be developed in collaboration with SMEs or from which SMEs can emerge,” the company added.

Incentivising SMEs

For Lysogene, the Orphan Regulation has helped some SMEs flourish thanks to a number of tools it provides.

“The public announcement of orphan drug status has a positive effect on investors; it demonstrates robust proof of concept and a product’s potential endorsed by key regulators,” the company said, adding that access to H2020 funding programme is also granted.

The company said the direct financial incentives linked to the orphan status enable SMEs to access procedures at the European Medicines Agency (EMA) that would otherwise have a cost.

“We benefited from fee reductions for scientific advice procedures, whose cost ranges between €22 and €90k, with a 75% reduction for orphan products that can reach 100% if paediatric-related questions are discussed during the scientific advice.”

Moreover, fees of additional procedures with EMA are waived when the company is also an SME.

“This allows us to seek advice on our products’ development on a regular basis without being blocked by the potential cost of these procedures,” Lysogene said, adding that the EU orphan regulation also allows SMEs to receive additional advice and support from agencies specific to orphan products and their associated challenges.

“The orphan status gives us access to protocol assistance, a scientific advice procedure focusing on challenges of product development in rare diseases.”

Still a challenging environment

EURACTIV also contacted the European Confederation of Pharmaceutical Entrepreneurs (EUCOPE), which said the environment of rare diseases is very challenging for smaller companies.

“Most of them are far from making a profit and they re-invest in very risky R&D. It is vital not to strangle them to keep competition in the field,” EUCOPE warned.

The association added that although the regulation has helped foster the development of OMPs, the competitiveness in Europe is decreasing and might lead to postponing innovation, especially in the rare diseases area.

“The EU simply cannot afford this innovation blackhole.”

EUCOPE explained that a lesson to be learnt from the pandemic is that “where there is a will, there is a way”.

“The potential of digital to bring together clinical trial data for rare diseases for instance – needs to be used post-crisis for rare diseases.”

[Edited by Zoran Radosavljevic]

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