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Global Health and Patents: Rare Diseases and Orphan Drugs- Part I


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Etymologically, the word ‘orphan’ is derived from the Greek word ‘orphanos’ and refers to a child without at least one parent. ‘Orphan disease’ relates to the word ‘orphan’ in two ways. Firstly, it includes those diseases that have been sidelined by the medical community. Secondly, and more popularly, it includes those diseases that affect a marginal section of society. The World Health Organization defines an ‘orphan disease’ as affecting anywhere between 6.5-10 people in a population of 10,000. There are jurisdictional differences in defining such diseases. For instance, in the USA, it is fewer than 200,000 individuals, in Japan, 50,000, in Australia, 2000, and in Europe, fewer than 5 in 10,000. While the disease may seem rare, even if the disease affects just 1% of the population, it translates into 80 million people. Over 7000 rare diseases have been identified, and their global impact is significant, with approximately 6% of the global population suffering. A majority of these rare diseases are life-threatening and often receive little to no attention from the medical community. The drugs developed for the treatment of such diseases are referred to as “orphan drugs”. For instance, Ivacaftor (Kaftrio) is used for the treatment of cystic fibrosis, a disease that damages the respiratory and digestive systems of humans and affects around 1-5 in 10,000 people. Similarly, Soliris (Eculizumab) was developed for the treatment of paroxysmal nocturnal hemoglobinuria, an immune system disease, affecting approximately 6 in a population of 1 million yearly.


In the pharmaceutical industry, the development process for medicines is long, drawn, and costly, and its profit is not guaranteed because of the highly saturated market and enhanced competition. The process consists of 5 steps: 

  1. Discovery and research, including the development of a potential molecule. 

  2. A  preclinical research involving safety tests in laboratories. 

  3. A complex clinical trial phase where the dosage levels and safety are checked on volunteers and patients. 

  4. Presentation of data by the drug company to regulatory agencies to secure market authorisation following successful clinical researchThis stage may be stalled because of bureaucratic delays. 

  5. Post-marketing safety monitoring and surveillance by the regulatory agencies. 


This entire procedure may take place over 15 years, and demands huge investments, usually over 2.6 billion USD. There is also a chance that a drug may fail at different stages, particularly at the clinical research stage. For instance, it has been predicted that around 90% of medicines fail to meet the safety standards.


In the case of common diseases, the lengthy and costly drug development procedure may seem fruitful because of a secure market capitalization and guaranteed profits. However, in the case of rare diseases, since the market size is relatively lower, the companies encounter pricing and reimbursement challenges. The high research and development costs often outweigh the limited target consumers.


Still, states have recognised their humanitarian duty to promote the treatment of such rare diseases, often enacting legislations and providing incentives that drive the development of medicines for these rare diseases. For instance, in the USA, the Orphan Drug Act, 1983 includes incentives like tax credits, waiver of prescription fee, and 7 years market exclusivity after approval, thereby preventing competitor medicines from selling during this period. The USA has established an Orphan Product Grants Program for promoting research funding. In Europe, the incentives range from technical assistance during applications, 10-year market exclusivity, additional benefits for MSMEs, etc.


One way of ensuring market exclusivity is through the grant of patents. However, the market exclusivity assured to the pharmaceutical industries may come at the cost of the affordability of these medicines for the patients. Companies often charge exorbitant prices to recoup the cost of their investments. Thus, the states must tread the delicate line between affordability and sustainability. If drug companies are disallowed to charge additional costs to patients suffering from rare diseases, they may pass on these expenses by increasing the prices of medicines treating common diseases.


How Orphan Drugs Exploit Patent Law


A patent grants the patent holder exclusive rights over the commercial exploitation of their innovation, including medicines. Patents are time-bound in nature, typically granting protection for up to 20 years from the date of application. However, businesses often employ strategies to extend their patent monopoly. These strategies include claiming a second medicinal use of a known, previously patented medicine, or secondly, to make small structural changes to the original medicine, or its non-active ingredient, so as to give it the guise of a “new medicine”. The second technique is termed “evergreening,” as is commonly employed by pharmaceutical companies to extend their monopoly. This hampers the evolution of generic counterparts and consequently hinders affordable drug access. While the Controller General of Patents, Designs and Trade Marks serves to protect the larger public interests when granting protection over novel innovations, in the case of orphan drugs, the regulatory agency may show an inclination to be influenced by big pharmaceutical companies. This results in “regulatory capture” (a process by which regulatory entities are dominated by the interests they regulate and not the public interest) and poses a threat to the public welfare aims of IPR protection. 


Establishing such a market monopoly allows the companies to dictate exorbitant prices, particularly in the case of orphan drugs, where substitutes are minimal. For instance, it has been estimated that orphan drug treatment is 13.8 times more expensive in comparison to patients suffering from common diseases, with the former running over USD 100,000 annually.


Courts in the USA have condemned these exploitative practices of pharmaceutical companies. In Association for Accessible Medicines v. Brian E. Frosh, 2018 SCC OnLine US CA 4C 79, the court highlighted that these businesses operate a “closed distribution system” where patients lack suitable alternatives and “face a debilitating illness or even death absent these drugs, (and therefore) they must accept whatever price a manufacturer charges” These patents assure the companies a monopoly “pricing power”, where their wishes alone determine the market rate. This results in a failure of market forces, demanding state intervention due to the gross inequality in the consumers’ bargain for reasonable prices. 


As countries with the highest population densities, India and China are most affected by the issue of insufficient orphan drug development. While the international average of the population suffering from rare diseases has been estimated at between 6-8%, in India, the number equates to  72 to 96 million individuals. In China, over 10 million people have no access to orphan drugs because of the lack of a conducive infrastructure necessary for the development of orphan drugs. The Chinese regulatory agencies decline market exclusivity, financial incentives, and reimbursements for pharmaceutical companies investing large amounts in orphan drug development research and clinical trials. 


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