Orphan Drugs: Why the US legislation approves more than the EU?

Summary Since the early 2000’s, the European Union (EU) is implementing a policy agenda in favour of rare diseases (RD). A key milestone legislation was the adoption of the Orphan regulation in 1999, in order to encourage the development of “orphan drugs” (OD, i.e. drugs to treat RD and which qualifies as viable from a scientifically aspect but that would not be economically viable in the absence of policy intervention). Mainly operating through the European Medicines Agency (EMA) regulatory framework, this project is aiming at fostering RD drug research and development while ensuring fair access for the patients. In this respect, several incentives are provided to the manufacturer who successfully applied for an orphan drug status, such as a ten-year marketing exclusivity and tax reductions. However, the number of orphan drug designations (as well as orphan drug market approvals) application approvals in Europe is still significantly lower than in it is the US. The goal of this paper is to explain this discrepancy, by providing empirical, quantitative materials on the basis of an analysis of all of the decisions delivered by the EMA for this category of products. More precisely, the validity of three explanations will be further explored and discussed: 1 – Effects of bureaucratic politics at the EMA (avoiding “salami-slicing” behaviours). 2 – Smaller engagement from academics and biotechnology companies (and rent-seekers Big Pharmas). 3 – The consequences of the structure of tax-credits (US vs. EU).