Proposal for a European Parliament and Council Regulation (EC) on orphan medicinal products
Date: 1998-07-27
Institutions: European Commission
Subjects: European Medicines Agency, marketing, medical research, medicinal product, research and development

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.07.1998 
COM(1998) 450  final 

98/0240 (COD) 

Proposal 
for a European Parliament and Council 
Regulation (EC) on orphan medicinal products 

(presented by the Commission) 

Proposal 
for a European Parliament and Council 
Regulation  (EC) on orphan medicinal  products 

EXPLANATORY  MEMORANDUM 

JUSTIFICATION 
Objective 
Legal basis and procedure 
Subsidiarity and proportionality 
Legislative and administrative  simplification 
Consistency with other Community policies 
Outside consultation 
Evaluation 
Impact on  firms 

PRESENTATION 

Scope 
Designation criteria 
Committee for Orphan Medicinal Products 
Designation procedure 
Protocol assistance 
Community marketing authorisation 
Market exclusivity 
Other incentives 

TEXT OF THE PROPOSAL 

Article 1  - Purpose 
Article 2  - Scope and definitions 
Article 3  - Criteria for designation 
Article 4  - Committee for Orphan Medicinal Products 
Article 5  - Procedure for designation 
Article 6  - Protocol assistance 
Article 7  - Community marketing authorisation 
Article 8  - Market exclusivity 
Article 9  - Other incentives 
Article 10- General report 
Article 11 - Entry into force 

FINANCIAL  STATEMENT 

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EXPLANATORY  MEMORANDUM 

In  recent  decades,  medicine  and  medical  research  have  made  remarkable  progress  in 
saving  lives, extending  life  expectancy  and  ridding the world  of a number  of  diseases.  The 
most  spectacular  successes  of  all  have  been  in  the  use  of  vaccines  to  prevent  childhood 
illnesses,  in the  use  of  antibiotics  to  combat  infectious  diseases  and  in  the  development  of 
anti-viral  medicinal  products  for  the  diagnosis,  prevention  or  treatment  of  AIDS.  Great 
strides  have  also  been  made  in  the  diagnosis,  prevention  or  treatment  of  cancer  and 
cardiovascular  diseases. 

Nevertheless,  there  are  still  a  great  many  diseases  which  cannot  be  treated  satisfactorily 
and  for  which  no  medication  or  other  diagnosis,  prevention  or  treatment  is  available.  In 
addition  to  the  widespread  and  well-known  diseases  of  this  kind,  there  is  also  a  whole 
series  of  diseases  which  affect  relatively  few  people;  approximately  5 000  such  diseases 
have  been  identified.  The  pharmaceutical  industry  is  reluctant  to  develop  medicinal 
products  to  treat  these  diseases: 
pharmaceutical  research  and  development  are  so 
expensive  nowadays  that  there  is  practically  no  chance  of  any  company  making  the  effort 
to  develop  a  medicinal  product,  to  obtain  authorisation  for  its  use  and  to  place  it  on  the 
market  if  it  is  to  be  supplied  at  normal  prices  to  the  few  patients  who  require  it.  That  is 
why  such  medicinal  products  are known  as "orphan  medicinal  products". 

Society  cannot  accept  that  certain  individuals  be  denied  the  benefits  of  medical  progress 
simply because the  affliction  from  which  they  suffer  affects  only  a  small  number  of  people. 
It  is therefore  up  to  the  public  authorities  to  provide  the  necessary  incentives  and  to  adapt 
their  administrative  procedures  so  as  to  make  it  as  easy  as  possible  to  provide  these 
patients  with  medicinal  products  which  are  just  as  safe  and  effective  as  any  other 
medicinal  product  and  meet  the  same  quality  standards. 

In  the  United  States,  an  incentive  system  for  the  development  of  orphan  medicinal 
products  (the  "Orphan  Drug  Act")  was  introduced 
in  1983.  All  designated  orphan 
products  are  eligible  for  a  federal  tax  credit  equal  to  50  %  of  the  clinical  research 
expenditure;  orphan  products  are  exempted  from  the  application  fee  for  FDA  approval, 
and  the  first  product  authorised  for  a  specific  indication  gets  a  seven-year  marketing 
exclusivity  period.  Congress  also  appropriates  around  $  20  million  for  FDA  for  grants  for 
orphan  products.  Over  the  last  13  years  837  medicinal  products  have  been  awarded  the 
status  of orphan  drug,  of which  323  have  been  aided  by the  grants  program.  At  the  end  of 
1997,  152  orphan  products  had  gone  on  to  obtain  marketing  approval  and  are  now  being 
used  by over  7 million  patients. 

The  success  of  the  U.S.  orphan  drug  program  has  stimulated  many  foreign  countries  to 
seek  to  emulate  it.  A similar  regime  was  introduced  in Japan  in  1995,  in  Singapore  in  1997 
and  in Australia  in  1998. 

In the Euro» 
adopted  spe 
detection,  diagnosis,  prevention  or  treatment. 
administrative  provisions  include  a  reference 

ean  Union,  in the  course  of the  last  decade,  a number  of  Member  States  have 
:ific  measures  to  increase  our  knowledge  of rare  diseases  and  to  improve  their 
In  some  cases,  the  relevant  legislation  or 
to  the  concept  of  "orphan  drug"  or 

"uneconomic  drug".  These  initiatives,  however,  are  few  and  far  between  and  have 
certainly not led to any significant  progress in research on rare diseases. 

At  Community  level,  the  fourth  Framework  Programme  for  research  and  technological 
development  (1994-98),  and  in  particular  the  "Biomedicine  and  Health"  programme 
(Biomed 2),  covers  research  on  the  development  of  orphan  medicinal  and  supports 
fundamental,  clinical and epidemiological research on rare diseases. 

Rare  diseases have further  been  identified  as a priority  area for  Community  action within 
the framework  for  action  in the field of public  health  (COM(93)  559 final and  COM(97) 
225 final). The Commission has recently proposed  a Decision of the European Parliament 
and  Council  adopting  a  programme  of  Community  action  1999-2003  on  rare  diseases, 
including  actions  to  provide  information,  to  deal  with  clusters  of  rare  diseases  in  a 
population and to support relevant patient organisations. 

Experience  in  the  United  States  and  Japan  clearly  shows  that  the  key  element  in  an 
effective  policy of support  for  orphan  medicinal  products research  and  development  is the 
creation  of  an  official  system  for  recognising  orphan  medicinal  products  and  granting 
exclusive marketing rights for a sufficient  period  of time from  the date when the medicinal 
product is actually placed on the market. 

JUSTIFICATION 

Objective 

The  aim  of  this  proposal  is to  establish  a  Community  procedure  for  designating  orphan 
medicinal  products  and  to  introduce  incentives  for  orphan  medicinal  products  research, 
development  and marketing,  in particular  by granting  exclusive  marketing  rights for  a ten 
year period. 

This  proposal  falls  within  a  context  of  the  completion  of  the  internal  market  and  is 
featured  in the Commission's work programme for  1997. 

Legal basis and procedure 

The proposal  establishes  harmonised  criteria  and  a Community  procedure  for  designating 
orphan  medicinal  products; 
it  provides  access  to  the  Community  market,  via  the 
centralised  authorisation  procedure,  for  the  medicinal  products  thus  designated  and 
confers  upon  them  exclusive  marketing  rights  throughout  the  Community  for  a  ten  year 
period. 

Article  100a of the EC  Treaty  constitutes  the  appropriate  legal  basis  for  such  a scheme. 
The importance of the 'market  exclusivity'  provision as an incentive to the success of this 
measure  has  been  reinforced  by  the  experience  in  the  United  States  and  Japan,  and 
confirmed  in  consultations  with  Member  States  and  industry.  Clearly,  Member  States 
acting  independently  cannot  introduce  this  measure  without  a  Community  dimension  as 
such provision would be contradictory to  Directive 65/65/EEC. Equally,  if such measures 
were  adopted  in  an  uncoordinated  manner  by  the  Member  States,  this  would  create 

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obstacles to intra-Community trade, leading to distortions of competition  and run  contrary 
to a single market.. 

Since this proposal  concerns health, a high level of health protection  must be provided  for, 
in accordance with  Article  100a(3).  This means, in particular,  that  the  market  exclusivity 
granted  to  an  orphan  medicinal  product  when  it  is authorised  by  the  Community  can  be 
withdrawn  if the criteria for  designation  are no longer  met  or  if the  price  charged  for  the 
medicinal  product  concerned  is such that  it allows the earning  of an unreasonable  profit  . 
Moreover,  a  second  authorisation  may  be  granted  if  the  holder  of  the  authorisation  is 
unable  to  supply  a  sufficient  quantity  of  the  medicinal  product  or  if  another  medicinal 
product  proves  safer,  more  effective  or  clinically  superior  to  the  one  enjoying  exclusive 
marketing rights. 

Subsidiarity  and  proportionality 

As  pointed  out  in  the  Council  Resolution  of  20 December  1995  on  orphan  medicinal 
products  (OJ C 350,  30.12.1995,  p. 3),  "a  common  European  approach  to  rare  diseases 
and orphan  medicinal  products holds out  advantages in epidemiological,  public health and 
economic terms". 

As  stated  above,  the  problem  of  orphan  medicinal  products  has  to  do  with  the  small 
number  of  patients  concerned  and  the  low  commercial  interest  of  the  medication 
developed  to treat  them.  A common  and  concerted  Community  approach  is clearly  more 
likely to help solve this problem than isolated national initiatives. 

Furthermore,  Community  action  allows the best  possible use  of the  instruments  set  up in 
the pharmaceutical  sector to  complete the internal  market,  and  in particular  the  European 
Agency  for  the  Evaluation  of  Medicinal  Products  and  the  Community  procedure  for 
authorising  the  marketing  of  medicinal  products,  as  established  by  Regulation  (EEC) 
No 2309/93. 

Member  States  should  not,  however,  be  prevented  from  playing  their  part  in  promoting 
research  and  development  work  on  orphan  medicinal  products.  Accordingly,  this 
proposal  provides  for  medicinal  products  designated  as  orphan  medicinal  products  to  be 
covered by the Community procedure for the authorisation  to place medicinal products on 
the market, but it does not rule out the use of national procedures, particularly with  regard 
to  mutual  recognition,  where  these  are  considered  more  appropriate  by  the  operators 
concerned.  Furthermore,  the  proposal  invites  the  Member  States  to  introduce  incentives 
for  research  and  development  work  on  orphan  medicinal  products  and  for  placing  such 
products on the market, within the framework  of their own powers and responsibilities. 

Legislative  and  administrative  simplification 

The  type  of  legislation  proposed  is  a  Regulation.  This  instrument  does  not  have  to  be 
transposed  into the Member  States'  national  legislation  and  is well  suited  to  introducing a 
Community  procedure  for  designating  orphan  medicinal  products  and  for  creating 
exclusive marketing rights. 

A  simple  and  swift  procedure  is  laid  down  for  designating  orphan  medicinal  products, 
making  use  of  the  existing  structures: 
the  European  Agency  for  the  Evaluation  of 
Medicinal  Products  and  the  Standing  Committee  on  Medicinal  Products  for  Human  Use 

(whose opinion  is, however,  required  only where the  Commission's  proposal  differs  from 
the Agency's opinion). 

This  proposal  for  a  Regulation  establishes  the  general  legal  framework.  Where  more 
detailed  administrative  provisions  are required,  it is proposed  that  they be adopted  by the 
Commission  as  guidelines,  in  consultation  with  the  Member  States,  the  Agency  and  the 
parties concerned.  This is the normal way of proceeding in the pharmaceutical  sector. 

Consistency  with  other  Community  policies 

The  accompanying  proposal  was  announced  in  the  Commission's  Communication  of 
26 May  1997 concerning a Programme of Community action  on rare diseases within  the 
framework for  action in the field  of public  health (COM(97)225 final). The main criterion 
for  designating  an  orphan  medicinal  product  within  the  meaning  of 
the  accompanying 
proposal  is  similar  to  the  definition  given  as a guide  in the  proposed  Programme  for  the 
concept of "rare diseases", i.e. diseases with a prevalence in the Community population  of 
less than 5 per  10 000. 

The  proposal  also  extends  the  work  being  carried  out  under  the  Fourth  Framework 
Programme for  Research and  Technological Development  (J 994-1998):  the Biomedicine 
and Health  Programme  (Biomed 2)  includes  an  area  entitled  "Research  on  rare  diseases" 
which covers research  and  development  work  on orphan  medicinal  products  and  supports 
fundamental  and clinical research  on rare diseases. 

Finally, this proposal follows up the Communication from  the Commission on the outlines 
of  an  industrial  policy  for 
the  pharmaceutical  sector  (COM(93)718  final).  The 
introduction  of  incentives  for  R&D  work  on  orphan  medicinal  products  contributes 
towards  the  objective  of  support  for  innovation  and  towards  the  creation  of  a  stable and 
foreseeable  legislative environment  for pharmaceutical  research  in the European Union. 

Outside  consultation 

Interested  parties have been widely consulted  on this proposal.  In February  1995, a group 
of  experts  consisting  of  civil  servants,  academics  and 
the 
pharmaceuticals  industry  and  patients'  associations  met  in Brussels to  consider the  results 
of  a  study  which  had  been  carried  out  for  the  Commission  and  to  draw  from  it  the 
necessary  conclusions. 

representatives  of 

In December  1995, the Council  adopted  a Resolution  calling on the Commission  to  study 
the  situation  with  regard  to  orphan  medicinal  products  in  Europe  and  to  make  any 
appropriate  proposals  for  improving  access  to  medicinal  products  intended,  in  particular, 
for persons suffering  from  rare diseases. 

In  August  1996, Commission  staff  distributed  to  the  interested  parties  a preliminary  draft 
proposal  for  a  Regulation  on  orphan  medicinal  products.  This  was  discussed  at  two 
meetings  of  a working  group  of  the  Pharmaceutical  Committee.  It  was  also  expounded 
and discussed  at a number  of public meetings, notably within the context  of the European 
Parliament's Intergroup on Pharmaceutical  Products. 

these  consultations,  an  amended  preliminary  draft  was  prepared 

Following 
in 
December  1996.  This  new  preliminary  draft  received  widespread  support,  in  particular 
from  associations  of  persons  suffering  from  rare  diseases.  Moreover,  in  March  1997, 

these  associations  set  up  a European  umbrella  organisation  (EURORDIS),  one  of  whose 
main  objectives  is  to  promote  the  swift  adoption  of  European  legislation  on  orphan 
medicinal products. 

Evaluation 

A number of evaluation  mechanisms are included in this proposal. 

Essentially,  these  mechanisms  relate to  the ten-year  period  of exclusive  marketing rights, 
which  provides  the  main  incentive  for  R&D  work  on  orphan  medicinal.  The  exclusive 
marketing rights constitute a particularly  sensitive instrument  which  should be  surrounded 
with  appropriate  safeguards.  That is why the proposal lays down that  the exclusive rights 
may be withdrawn  at the end of the sixth year at the request of a Member  State where the 
latter can establish that the conditions which  originally led to the designation  of a product 
as an orphan medicinal product  no longer apply or that the price charged  for the medicinal 
product  concerned  is such that  it allows the earning of an unreasonable profit.  Moreover, 
a  derogation  may  be  granted  at  any  time  either  because  the  holder  of  the  exclusive 
authorisation  cannot  supply  a  sufficient  quantity  of  the  medicinal  product  or  because 
another medicinal product  has been shown to be safer,  more effective  or clinically  superior 
to the product which has been enjoying  exclusive rights. 

The  proposal  also  provides  that  the  Commission  should  assess  the  application  of  the 
system  six  years  after  it  had  been  introduced  and  should,  within  this  period,  publish  a 
report on the experience acquired. 

Impact  on  firms 

This proposal  will benefit  all firms engaged  in pharmaceutical  research  and  development, 
regardless of their size, location or sphere of activity. 

It  should,  however,  be  noted  that  in  the  United  States -  where  a  similar  system  to  that 
being  proposed  has  been  operating  for  more  than  12 years -  most  applications  for  the 
designation  of  orphan  medicinal  products  are  filed  by  small  firms  specialising  in 
biotechnology  and  genetic  engineering  (since  the  vast  majority  of  rare  diseases  are 
developmental  disorders of a genetic or other kind). 

No changes in the  industrial  sector  will  result  from  the adoption  of this proposal,  since it 
provides for an incentive system which firms are clearly at liberty to ignore. 

The  proposal  should  stimulate  pharmaceutical  research  and  development  within  the 
Community,  and this can only have a positive effect  in terms of job  creation  (in particular 
highly-qualified jobs), investment and the creation of new  firms. 

There  is  no  particular  provision  relating  to  small  and  medium-sized  enterprises. 

PRESENTATION 

Scope 

The  proposed  system  covers  medicinal  products  for  human  use  within  the  meaning  of 
Directive 65/65/EEC.  This  includes  any  substance  or  combination  of  substances  which 
may be  administered  to  human  beings  with  a  view  to  making  a  medical  diagnosis  or  for 
treating  or  preventing  a  disease.  It  should  be  noted,  in  particular,  that  vaccines  are thus 
covered. 

This  definition  excludes  medical  devices  and  nutrition  supplements.  This does  not  mean 
that  these  products  can  play  no  role  in  the  diagnosis,  prevention  or  treatment  of  rare 
diseases.  However,  the incentive arrangement  introduced  by this proposal  can be applied, 
by  means  of  its  own  mechanism,  only  to  medicinal  products  which  are  covered  by  the 
marketing authorisation  system. 

Medicines for  veterinary  use are also excluded,  as will readily be understood  from  the aim 
of  the  proposal.  Although  a  similar  problem  arises  in  the  field  of  animal  health, 
particularly  with  regard  to  "minor  species",  it  cannot  be  dealt  with  in  the  context  of this 
proposal. 

Designation  criteria 

It is generally accepted  that two types of criteria can be used for  the designation  of orphan 
medicinal  products:  epidemiological  criteria  (the  prevalence  or  incidence  of  the  disease 
concerned  within  a  given  population)  and  economic  criteria  (the  presumption  that  the 
medicinal  product  to  be  used  for  treating  the  disease  concerned  is  not  commercially 
viable).  These  two  types  of  criteria  are  not  necessarily  mutually  exclusive  and  may 
therefore  be combined where appropriate. 

Epidemiological  criteria  present  clear  advantages  as  they  are  much  better  suited  than 
economic criteria to an objective  evaluation  at the time of designation.  Assessing whether 
it  will  be  possible  to  obtain  a  reasonable  return  on  the  investment  needed  to  develop  a 
medicinal product  many years before  it is actually placed  on the market  obviously involves 
a good  deal of speculation. 

In the United  States, an economic criterion  was used  initially (Orphan  Drug  Act  1983):  it 
had  to  be  established  that  the  costs  of  developing  the  medicinal  product  and  supplying  it 
to  the  general  public  could  not  reasonably  be  expected  to  be  covered  by  sales  of  the 
medicinal  product  in the  United  States.  This  system,  however,  proved  unsuccessful  and 
it  in  1984  by  adding  a  concurrent  epidemiological  criterion: 
Congress  amended 
designation  may now be obtained  by showing  either  that  the  condition  in question  affects 
fewer  than  200 000 persons or that the development  costs  cannot  reasonably  be  expected 
to  be  covered.  All  designations  obtained  between  1984  and  1992  in  the  United  States 
were awarded  on the basis of the epidemiological  criterion alone. 

The only objection  sometimes  raised  to the use of epidemiological  criteria  is based  on the 
observation  that  some of the medicinal  products designated  as orphan  drugs in the United 

States  have  subsequently  proved  to  be  (extremely)  profitable.  Such  cases,  however,  are 
very rare (approximately  1% of all designations!), which  suggests that the  epidemiological 
criterion  used  in  the  United  States  does  indeed  enable  appropriate  candidates  to  be 
selected for  designation. 

It  is therefore  proposed  that  an  epidemiological  criterion,  based  on  prevalence,  be  used 
initially.  In the above-mentioned  Communication  concerning  a programme  of  Community 
action  on  rare  diseases,  the  Commission  has  proposed  to  define  rare  diseases  as  life-
threatening  or  chronically  debilitating  diseases  which  are  of  such  low  prevalence  that 
special  combined  efforts  are  needed  to  address them  so  as to  prevent  significant  prenatal 
and  early  morbidity  and  mortality  or  a considerable  reduction  in an individual's  quality  of 
life or socio-economic potential; it is further  indicated that,  as a guide, low prevalence can 
be understood  as meaning a prevalence in the total  Community  population  of less  than  5 
per  10 000.  For  the  sake  of  consistency,  the  same  prevalence  is  proposed  in  the 
accompanying  proposal.  It  should  be  noted  that  this  ratio  is lower  than  that  used  in  the 
United  States (7.5 per  10 000) and  slightly greater than that used  in Japan  (4 per  10 000). 
Prevalence  is established  within  the  Community  so  that  medicinal  products  intended  for 
preventing  or  treating  diseases  which  are  very  widespread  in  the  Third  World  (tropical 
diseases, for  example) but uncommon  in Europe will benefit  from  the new system. 

It  also  appears  desirable  to  encourage  research  and  development  work  on  medicinal 
products for  the diagnosis,  prevention  or treatment  of certain  conditions which, while not 
exactly  fitting  into  the  category  of  rare  diseases,  have  hitherto  not  benefited  sufficiently 
from  medical  progress,  namely  life-threatening  or  chronically  debilitating  communicable 
diseases.  These  medicinal  products  should  be  awarded  the  status  of  orphan  medicinal 
products even where prevalence of the condition exceeds 5 per  10 000, always provided it 
can  be  shown  that,  without  the  incentives  provided  by  this  status,  development  of  these 
medicinal  products would  not be undertaken. 

Finally,  where  it  can  be  established  that  the  marketing  of  an  orphan  medicinal  product  is 
proving  more  profitable  than  had  been  foreseen,  any Member  State  may  request  that  the 
exclusive marketing  rights be withdrawn  at the end  of the sixth year following  issue of the 
authorisation to place the product  on the market (see below "Market  exclusivity"). 

Committee for Orphan Medicinal  Products 

With  regard  to  the  evaluation  of  applications  for  designation,  it  seems  reasonable  in  the 
first  instance  to  use  the  existing  structures,  namely  the  European  Agency  for  the 
Evaluation  of Medicinal Products,  set up under Regulation  (EEC) No 2309/93, which  has 
the necessary infrastructure  and resources for carrying out this task. 

The  evaluation  itself  could,  no  doubt,  be  carried  out  by  the  Committee  for  Proprietary 
Medicinal  Products -  which,  within  the  Agency,  is  responsible  for  all  scientific  matters 
relating  to  the  evaluation  of  medicinal  products  for  human  use.  This,  however,  would 
present  a  number  of  disadvantages.  For  one  thing,  it  would  confer  upon  one  single 
Committee  the  power  both  to  express  a  view  on  applications  for  designation  as  orphan 
medicinal product  and, subsequently, to give opinions on applications for the  authorisation 
to  place  those  products  on  the  market.  Furthermore,  the  Committee  for  Proprietary 
Medicinal Products already has a considerable workload. 

It  therefore  appears  preferable  to  establish  a  new  committee,  operating  within  the 
Agency - which would  provide  it with  a  Secretariat  - and  consisting  of persons  appointed 
by the Member  States  and  selected  on account  of their  role  and  experience  in the field of 
rare  diseases.  The  committee  would  also  have  three  representatives  of  patients' 
associations,  to  be  designated  by the  Commission,  and  three  persons,  also  appointed  by 
the  Commission,  on  a  recommendation  from  the  Agency,  specifically  to  liaise  with  the 
Committee  for  Proprietary  Medicinal  Products.  The  setting  up  of  such  a  Committee, 
including  representatives  of  patients'  associations,  has  been  supported  both  by  the 
Member  States'  representatives  and  in  the  context  of  the  European  Parliament's 
Intergroup on Pharmaceutical  Products. 

Designation  procedure 

The designation  procedure  should be flexible  and rapid.  Applications would be  processed 
by  the  Agency  Secretariat,  enabling  the  Committee  for  Orphan  Medicinal  Products  to 
deliver its opinion within 60 days of the Secretariat's validation of the application. 

The designation  of an  orphan  medicinal  product  entails  important  legal  consequences  not 
only  for  the  sponsor  but  also  for  the  third  parties  concerned  and  must  therefore  be  the 
subject  of  a  decision  by  a  Community  institution,  in  this  case  the  Commission.  The 
Commission  would  have  30  days  to  take  this  decision.  Where,  in  exceptional 
circumstances, the Commission  considers taking a decision  which differs  from  the opinion 
of  the  Committee  for  Orphan  Medicinal  Products,  the  procedure  of  the  Standing 
Committee  on  Medicinal  Products  for  Human  Use  would  be  applicable  (type  Ilia 
committee procedure). 

Protocol  assistance 

The  development  of  an  orphan  medicinal  product  presents  specific  problems  which  must 
be  taken  into  account.  To  take  but  one  example,  it  may  be  difficult  to  find  enough 
patients  willing  to  take  part  in  clinical  trials  for  a  medicinal  product  which  might  be  of 
benefit  only to a very few people. 

The  proposal  therefore  allows  the  sponsor  the  possibility  of  requesting  the  Agency's 
assistance  in  developing  a  protocol,  in  carrying  out  or  following  up  clinical  trials  and  in 
connection with any other matter relating to the application for  an authorisation. 

Community  marketing  authorisation 

The Community  marketing  authorisation  (issued  by the  Community  under  what  is known 
as  the  "centralised  procedure")  is  the  simplest  and  quickest  way  of  placing  medicinal 
product  on  the  market  throughout  the  Community.  Orphan  medicinal  products  must 
therefore  be given  (easier)  access to  this procedure.  Two  measures  are provided  for  this 
purpose. 

First, the applicant  for  an authorisation  relating to  an orphan  medicinal  product  should be 
exempted  from  the  requirement  to  show  that  the  medicinal  product  meets the  conditions 
In  most  cases,  an  orphan 
set  out  in  the  Annex  to  Regulation  (EEC)  No 2309/93. 
medicinal  product will indeed  meet the criteria set  out  in that  Annex, either because it has 
been  produced  by  biotechnology  (most  rare  diseases  are  developmental  disorders  of  a 

9-

genetic or other kind  and the diagnosis, prevention  or treatment  of such  diseases normally 
calls  for  genetic  engineering),  or  because  the  medicinal  product  is  regarded  as  being  of 
significant  therapeutic  importance.  The simplest  solution,  however,  is to lay down that an 
orphan medicinal product  has full  right of access to the centralised  procedure. 

Secondly,  it  must  be borne  in  mind  that  access to  the  centralised  procedure  is subject  to 
the payment of a fee to the Agency,  in accordance with  Regulation  (EEC) No 297/95.  In 
the  case  of  a  medicinal  product  whose  commercial  viability  is  doubtful,  the  payment  of 
this fee  may constitute  a serious obstacle.  Moreover,  people  suffering  from  rare  diseases 
have  the  right  to  expect  the  same  guarantees  of  quality,  safety  and  efficiency  as  for  any 
other  medicinal  product,  and  there  should  be  no  question  of  lowering  these  standards.  A 
mechanism  must  therefore  be  set  up  whereby  the  applicant  for  an  authorisation  for  an 
orphan  medicinal  product  could  be  exempt  from  paying  all  or  part  of  the  fee  while  the 
Agency (and thus the rapporteur  and experts responsible for the evaluation) would be paid 
for  the services provided.  Accordingly,  it is proposed  to  introduce  an annual  contribution, 
from  the  Community  budget,  to  be  allocated  specifically  to  exemptions  from  fees  in  the 
case of orphan medicinal products (see the Financial  Statement). 

It  should  be noted  that,  while the  centralised  procedure  can  certainly  be used  for  orphan 
medicinal products, such use is not obligatory.  Any such obligation  would  be incompatible 
with  the  aim  of this  proposal  and  with  the  principle  of  proportionality.  If,  for  whatever 
reason,  the  sponsor  of  an  orphan  medicinal  product  prefers  to  use  the  decentralised 
procedure (mutual recognition), he must be able to do so. 

Market  exclusivity 

Market  exclusivity  is  unanimously  regarded  as  crucial  to  any  system  of  incentives  for 
research and development work on orphan medicinal  products. 

In  the  accompanying  proposal,  market  exclusivity  is  granted  only  where  the  medicinal 
product has been designated  as an orphan  medicinal product by the Community and  where 
the  Community  has  issued  a  marketing  authorisation  in  respect  of the  medicinal  product 
concerned. 

The  protection  thus  granted  prevents  the  Community  or  a  Member  State  from 
subsequently  issuing a marketing  authorisation  for  the same product  (, i.e. the same active 
It  does  not  prevent  the  marketing  of  another 
substance)  and  for  the  same  indication. 
product  for  the  same  indication,  which  would  constitute  an  unjustified  restriction  on 
therapeutic  innovation,  on  the  rights  of  third  parties  and  on  patient  expectations.  It  is 
certainly  not  easy  to  establish  the  degree  of  similarity  between  medicinal  products, 
particularly  in  the  case  of  macro-molecules  (proteins)  which  differ  only  very  slightly  in 
their  sequence  of amino  acids.  Experience  acquired  in the  United  States  in this field will 
be  particularly  useful  in  helping  the  Commission  to  draw  up  the  necessary  guidelines,  in 
consultation  with the Member  States and the Agency. 

It is important  to  note that  designation  alone  confers  neither  exclusive  rights nor  rights of 
precedence. It follows  that  a number  of sponsors  may,  in principle, obtain  the  designation 
of the same product/indication  combination,  subject  to the application  of other  intellectual 
property rights which, of course, are in no way affected.  In this event,  the first sponsor to 
obtain  a Community  marketing  authorisation  for  this  product/indication  combination  will 

- 1 0-

prevent  the  other  sponsor(s)  from  subsequently  obtaining  a  Community  or  national 
authorisation for the same product/indication combination. 

It is proposed to limit the duration of the exclusive right within the Community to a period 
often  years (seven years in the United  States).  This is the same period  as is granted for 
the protection  of data relating to the test  results provided by the holder of the marketing 
authorisation in support  of his application.  This period  may,  however,  be reduced to  six 
years at the request  of a Member  State  if the latter can  show  either  that  the  criterion or 
criteria  used  at  the  time  of  designation  no  longer  apply  (prevalence  of  less  than  5  per 
10 000  or  presumed  commercial  non-viability  of  a  medicinal  product  to  be  used  for 
treating  a  life-threatening  or  chronically  debilitating  communicable  disease)  or  that  the 
holder  of the  marketing  authorisation  demands  a price  for  the  product  which  cannot be 
justified. 

Although  market  exclusivity  is  very  important  in  encouraging  industrial firms to  spend 
money  on  research  which  is  of  low  commercial  interest,  it  must  not  be  allowed  to  run 
counter to the interests of patients or the requirements of public health.  Accordingly, this 
proposal  provides  for  a  possible  derogation  from  the  exclusive  marketing  rights  if  the 
holder of those rights is unable to provide the medicinal  product in sufficient  quantities or 
if another  applicant  can  show  that  his  own  version  of  the  medicinal  product  is  safer  or 
more effective.  These matters will also be dealt with in the above-mentioned guidelines to 
be  published  by  the  Commission.  It  should  be  noted  that  where  such  a  derogation  is 
granted,  the  market  exclusivity  is  not  actually  withdrawn,  and  still  prevents  further 
authorisations for the same medicinal product in the same indication. 

Other incentives 

Market  exclusivity  is  undoubtedly  the  primary  incentive  for  a firm to  develop  orphan 
medicinal products, but it is certainly not the only one.  It would be up to the Community 
and the Member  States,  within  their  respective  spheres  of  competence,  to  provide  other 
incentives  for  developing  medicinal  products  - notably,  but  not  exclusively,  those 
designated  as  orphan  medicinal  products  by  the  Community.  At  Community  level,  the 
main incentives will no doubt take the form of support for research.  At national level, tax 
incentives (in particular tax credits) will provide the most effective  stimulus to research. 

The Commission will  draw up a detailed list of all the incentives available, on the basis of 
information provided by the Member States. 

-11  -

TEXT  OF THE  PROPOSAL 

Proposal  for a European Parliament and Council 
Regulation (EC) on orphan medicinal  products 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article  100a thereof, 

Having regard to the proposal from  the Commission, 

Having regard to the opinion of the Economic and  Social Committee, 

Acting in accordance with the procedure laid down in Article  189b of the EC Treaty, 

(1)  Whereas  some  conditions  occur  so  infrequently  that  the  cost  of  developing  and 
bringing to the market  a medicinal  product  to diagnose, prevent  or treat the condition 
would  not be recovered  by the expected  sales of the  medicinal  product  ; whereas  the 
pharmaceutical  industry  would  be  unwilling  to  develop  the  medicinal  product  under 
normal  market  conditions ;  whereas  these  medicinal  products  are  therefore  called 
"  orphan " ; 

(2)  Whereas patients suffering  from  rare diseases should be entitled to the same quality of 
treatment  as  other  patients ;  whereas  it  is  therefore  necessary  to  stimulate  the 
research,  development  and  bringing  to  the  market  of  appropriate  medications  by  the 
pharmaceutical  industry  ; whereas incentives for  the development  of orphan  medicinal 
products  have  been  available  in  the  United  States  since  1983  and  in  Japan  since 
1993; 

(3)  Whereas, in the European  Union, only limited action has been taken  so far,  whether at 
national  or  at  Community  level,  to  stimulate  the  development  of  orphan  medicinal 
products ;  whereas  such  action  is  best  taken  at  Community  level  in  order  to  take 
advantage  of  the  widest  possible  market  and  to  avoid  the  dispersion  of  limited 
resources ;  whereas  action  at  Community  level  is  preferable  to  uncoordinated 
measures  by  the  Member  States  which  may  result  in  distortions  of  competition  and 
barriers to intra-Community trade ; 

(4)  Whereas  orphan  medicinal  products  eligible  for  incentives  should  be  easily  and 
unequivocally  identified  ;  whereas  it  seems  most  appropriate  to  achieve  this  result 
through  the  establishment  of  an  open  and  transparent  Community  procedure  for  the 
designation  of potential  medicinal  products as orphan  medicinal  products ; 

(5)  Whereas  objective  criteria  for  designation  should  be  established  ;  whereas  these 
criteria  should  be  based  on  the  prevalence  of  the  condition  for  which  diagnosis, 
five 
prevention  or  treatment  is  sought;  whereas  a  prevalence  of  no  more  than 
affected  person  per  ten  thousand  is generally  regarded  as the  appropriate  threshold ; 
whereas  medicinal  product  intended  for  a  life-threatening  or  seriously  debilitating 
communicable  disease should  be eligible even  when  the prevalence  is higher  than five 
per ten thousand ; 

- 1 2-

6)  Whereas  a  Committee  composed  of  experts  appointed  by  the  Member  States  by 
reason  of  their  experience  in the  research  or  treatment  of  such  conditions  should  be 
established  to  examine  applications  for  designation  ; whereas  this  Committee  should 
in addition include three representatives of patients'  associations, to be  designated by 
the  Commission,  and  three  other  persons,  also  designated  by  the  Commission,  on  a 
recommendation  from  the Agency ; whereas the Agency should  be responsible for  the 
adequate co-ordination  between the Committee on orphan  medicinal  products and the 
Committee on proprietary  medicinal products ; 

(7) Whereas patients with such conditions deserve the same quality,  safety  and efficacy  in 
medicinal  products  as  other  patients ;  whereas  orphan  medicinal  products  should 
therefore  be submitted to the normal  evaluation  process ; whereas sponsors of orphan 
medicinal  products  should  have 
the  possibility  of  obtaining  a  Community 
the  granting  of  a  Community 
authorisation;  whereas, 
authorisation,  the  fee  to  be  paid  to  the  Agency  should  be  waived  at  least  in  part ; 
whereas  the  Community  budget  should  compensate  the  Agency  for  the  loss  in 
revenue thus occurred ; 

in  order  to  facilitate 

(8)  Whereas experience in the United  States and Japan  shows that the strongest  incentive 
for  industry to invest  in the development  and marketing of orphan  medicinal  products 
is the  prospect  of  obtaining  market  exclusivity  for  a  certain  number  of  years  during 
which  part  of  the  investment  might  be  recovered  ;  whereas  data  protection  under 
article  4(8)(a)(iii)  of  Council  Directive  65/65  is  not  sufficient  incentive  for  that 
purpose;  whereas  market  exclusivity  should  however  be  limited  to  the  therapeutic 
indication  for  which  orphan  medicinal  product  designation  has  been  obtained ; 
whereas,  in  the  interest  of  patients,  the  market  exclusivity  granted  to  an  orphan 
medicinal  product  should  not  prevent  the  marketing  of  a  similar  medicinal  which  is 
safer,  more effective  or otherwise clinically superior ; 

(9)  Whereas  sponsors  of  orphan  medicinal  products  designated  under  this  Regulation 
should be entitled to the full  benefit  of any incentives granted by the Community or by 
the  Member  States  to  support  the  research  and  development  of  medicinal  products 
for the diagnosis, prevention  or treatment  of such conditions, including rare diseases ; 

(10) Whereas  the  specific  programme  Biomed  2,  of  the  Fourth  Framework  Programme 
for  research  and  technological  development  (1994-1998),  is  supporting  research  on 
the  treatment  of  rare  diseases,  including  methodologies  for  rapid  schemes  for  the 
development  of  orphan  medicinal  products  and  inventories  of  available  orphan 
medicinal  in Europe; whereas  these  grants  are to  promote  the  establishment  of  cross 
national  co-operation  in  order  to  implement  basic  and  clinical  research  on  rare 
diseases;  whereas  research  on  rare  diseases  will  continue  to  be  a  priority  for  the 
Commission,  as  it  has  been  introduced  in  the  Commission's  proposal  for  the  Fifth 
Framework  Programme  (1998-2002)  for  research  and  technological  development  ; 
whereas this Regulation  establishes  a legal  framework  which  will  allow the  swift  and 
effective  implementation  of the outcome of this research ; 

13 

(11) Whereas  rare diseases  have been  identified  as  a priority  area for  Community  action 
within the  framework  for  action  in the field of  public  health  (COM(93)  559 final) ; 
whereas  the  Commission,  in  its  communication  concerning  a  programme  of 
Community  action  on  rare  diseases  within  the  framework  for  action  in the  field  of 
public health (COM(97)  225 final) has decided  to  give  rare diseases  priority  within 
the  public  health  framework  ; whereas  the  Commission  has  proposed  a  European 
Parliament and Council Decision  adopting a programme of Community  action  1999-
2003 on rare diseases in the context of the framework for action in the field of public, 
including  actions  to  provide  information,  to  deal  with  clusters  of  rare  diseases  in a 
population  and  to  support  relevant  patient  organisations;  whereas  this  Regulation 
carries out one of the priorities laid down in this programme of action, 

HAVE ADOPTED THIS REGULATION : 

-14 

Article 1 
Purpose 

The purpose of this Regulation  is to lay down a Community  procedure for  the  designation 
of  medicinal  products  as  orphan  medicinal  products  and  to  provide  incentives  for  the 
research,  development  and  bringing  to  the  market  of  designated  orphan  medicinal 
products. 

Article 2 
Scope and  definitions 

For the purpose of this Regulation : 

-  medicinal product  means a medicinal product for  human use, as defined  in Article 2 of 

Directive 65/65/EEC, 

-  orphan medicinal product  means  a medicinal  product  designated  under  the terms  and 

conditions of this Regulation, 

-  sponsor  means  any  legal  or  natural  person,  established  in  the  Community,  seeking  to 

obtain the designation  of a medicinal  product  as orphan  medicinal  product, 

-  Agency  means the European  Agency for the Evaluation  of Medicinal  Products. 

Article 3 
Criteria for designation 

1.  A medicinal product  shall be designated  as orphan  medicinal product  if its sponsor can 
establish that  the  medicinal  product  is  intended  for  the  diagnosis,  prevention  or 
.  treatment  of  a  condition  affecting  less  than  five  per  ten  thousand  persons  in  the 
Community  at  the  time  that  the  application  is  made  and  that  there  exists  no 
satisfactory  method  of  diagnosis,  prevention  or treatment  of the considered  condition 
that  has  been  authorised  in  the  Community  or,  if  such  method  exists,  that  it  can 
reasonably  be  expected  that  the  medicinal  product  will  be  safer,  more  effective  or 
otherwise clinically  superior. 

2.  Notwithstanding  paragraph  1,  a  medicinal  product  may  also  be  designated  as  orphan 
medicinal  product  if its sponsor can establish  that  the medicinal  product  is intended  for 
a life-threatening  or  seriously  debilitating  communicable  disease in the Community  and 
that it is unlikely that,  without  incentives, the marketing of the medicinal  product in the 
Community would generate sufficient  return to justify  the necessary  investment. 

3.  The  Commission  shall,  in  consultation  with  the  Member  States,  the  Agency  and 

interested  parties, draw up detailed guidance for the application  of this Article. 

- 15 

Article 4 
Committee for Orphan Medicinal Products 

1.  A  Committee  for  Orphan  Medicinal  Products,  hereinafter  referred 

to  as 

'the 

Committee', is hereby set up. 

2.  The task of the Committee shall be : 

a)  to  examine  any  application  for  designation  of  a  medicinal  product  as  orphan 
medicinal product which is submitted to it in accordance with this Regulation, 
b)  upon  request,  to  advise the Commission  on the establishment  and  development  of 

an orphan medicinal product policy for the European Union, 

c)  to  assist  the  Commission  in  international  liaison  on  matters  relating  to  orphan 
medicinal  products,  particularly  the  United  States  and  Japan,  and  in  liaisons  with 
patients support groups. 

3.  The Committee  shall  consist  of one member  nominated  by each  Member  State,  three 
members  nominated  by the  Commission  to  represent  patient  organisations  and  three 
members  nominated  by  the  Commission  on  the  basis  of  a  recommendation  from  the 
Agency.  The  members  of the  Committee  shall  be  appointed  for  a term  of three  years 
which  shall be renewable. They  shall be chosen by reason  of their  role and  experience 
in treatment  of or research into rare diseases. 

4.  The Committee shall elect its Chairman for a term of three years, renewable once. 

5.  The  representatives  of  the  Commission  and  the  Executive  Director  of  the  Agency 

Agency or his representative may attend  all meetings of the Committee. 

6.  The Agency shall provide the Secretariat  of the Committee. 

Article 5 
Procedure for designation 

1.  In order to obtain the designation  of a medicinal product  as orphan  medicinal  product, 

the sponsor shall submit an application to the Agency. 

2.  The application  shall be accompanied  by the following  particulars and documents: 

a)  name or corporate name and permanent address of the sponsor, 
b)  qualitative and quantitative particulars of the medicinal  product, 
c)  proposed therapeutic indication, 
d)  the justification  that Article 3 paragraph  1  or 2 is applicable. 

3.  The  Commission  shall,  in  consultation  with  the  Member  States,  the  Agency  and 
interested  parties,  draw  up  detailed  guidance  on  the  format  and  content  in  which 
applications for designation are to be presented. 

4.  The Agency shall verify  the validity of the application  and prepare a summary report  to 
the  Committee.  Where  appropriate,  it  may  request  the  sponsor  to  supplement  the 
particulars and documents accompanying the application. 

5.  The Agency  shall  ensure that  an  opinion  is given  by the  Committee  within  60  days of 

the receipt of a valid  application. 

16-

6.  When  preparing  its  opinion,  the  Committee  shall  use  its  best  endeavours  to  reach  a 
consensus.  If  such  a  consensus  cannot  be  reached,  the  opinion  shall  consist  of  the 
position  of  the  majority  of  members.  The  opinion  may  be  obtained  by  written 
procedure. 

7.  Where the opinion  of the Committee is that  the application  does not  satisfy  the criteria 
set out in Article 3 paragraph  1, the Agency shall forthwith  inform  the sponsor.  Within 
30 days of receipt  of the opinion,  the sponsor  may submit  detailed  grounds for  appeal, 
which the Agency  shall refer  to the Committee. The Committee  shall consider  whether 
its opinion should be revised at the following  meeting. 

8.  The  Agency  shall  forthwith  forward  the  final  opinion  of  the  Committee  to  the 
Commission,  which  shall  adopt  a  decision  within  30  days  of  receipt  of  the  opinion. 
Where,  exceptionally,  the  draft  decision  is  not  in  accordance  with  the  opinion  of  the 
Committee,  the  decision  shall be adopted  in accordance with the  procedure  laid  down 
in  Article  72  of Regulation  (EEC)  N°  2309/93.  The  decision  shall  be  notified  to  the 
sponsor  and  communicated  to  the  Agency  and  to  the  competent  authorities  of  the 
Member States. 

9.  The  designated  medicinal  product  shall  be  entered  in  the  Community  Register  of 

Orphan Medicinal Products. 

Article 6 
Protocol  assistance 

1.  The  sponsor  of  an  orphan  medicinal  product  may,  prior  to  the  submission  of  an 
application  for  marketing  authorisation,  request  advice  from  the  Agency  on  the 
conduct  of the various tests and trials necessary  to  demonstrate  the quality,  safety  and 
efficacy  of the medicinal  product. 

2.  The  Agency  shall  draw  up  a  procedure  on  the  development  of  orphan  medicinal 

products, which shall cover in particular : 
a)  assistance  in  the  development  of  a  protocol  and  for  the  follow  up  of  clinical 

investigations, 

b)  regulatory  assistance  for  the  definition  of  the  content  of  the  application  for 
authorisation  within  the  meaning  of  Article  6  of  Council  Regulation  (EEC)  N° 
2309/93. 

Article 7 
Community  marketing  authorisation 

1.  The  person  responsible  for  placing  on  the  market  an  orphan  medicinal  product  may 
request  that  authorisation  to  place the  medicinal  product  on  the  market  be granted  by 
the  Community  in  accordance  with  the  provisions  of  Regulation  (EEC)  N°  2309/93 
without  having  to  justify  that  the  medicinal  product  qualifies  under  any  part  of  the 
Annex to that Regulation. 

2.  A  special  contribution  from  the  Community,  distinct  from  that  provided  for  in Article 
57 of Regulation  (EEC) N° 2309/93, will be allocated  every year  to  the  Agency.  This 
contribution  will be  used  exclusively  by  the  Agency  to  waive,  in  part  or  in  total,  the 
fees  payable  under  Community  rules  adopted  pursuant  to  Regulation  (EEC)  N° 

- 1 7-

2309/93.  A  detailed  report  of  the  use  made  of  this  special  contribution  shall  be 
presented by the Executive Director of the Agency at the end of each year. Any surplus 
occurring  in  a  given  year  shall  be  carried  forward  and  deducted  from  the  special 
contribution for the following year. 

3.  The marketing authorisation granted for an orphan medicinal  product  shall  cover only 
those therapeutic indications which fulfil  the criteria set out in article 3. This is without 
prejudice  to  the  possibility  to  apply  for  a  separate  marketing  authorisation  for  other 
indications outside the scope of this Regulation. 

Article 8 
Market  exclusivity 

1.  Where a marketing  authorisation  is granted  pursuant to Regulation  (EEC) 2309/93  in 
respect  of an orphan medicinal  product,  the  Community  and the Member  States shall 
not, for a period often  years, accept another application for a marketing authorisation, 
nor grant a marketing authorisation  or extend  an existing  marketing authorisation,  for 
the same therapeutic indication, in respect of a similar medicinal product. 

2.  This  period  may  however  be  reduced  to  six  years  if,  at  the  end  of  the fifth year,  a 
Member State can establish that the criteria laid down in Article 3 are no longer met in 
respect of the medicinal  product concerned  or that the price charged for the medicinal 
product concerned  is such that it allows the earning of an unreasonable profit.  To this 
end, the Member State shall initiate the procedure laid down in Article 5. 

3.  By derogation to paragraph  1, and without prejudice to intellectual  property law or any 
other provision of Community  law,  a marketing  authorisation  may be granted,  for the 
same therapeutic indication, to a similar medicinal product  if: 
a)  the holder of  the marketing authorisation of the original  orphan medicinal  product 

has given his consent to the second applicant, or 

b) the holder of the marketing authorisation of the original orphan medicinal product is 

unable to supply sufficient  quantities of the medicinal product, or 

c)  the  second  applicant  can  establish  in  the  application  that  the  second  medicinal 
product,  although  similar  to  the  orphan  medicinal  product  already  authorised,  is 
safer, more effective  or otherwise clinically superior. 

4.  At the end of the period  of  market  exclusivity,  the  orphan  medicinal  product  shall be 

removed from  the Community Register of Orphan Medicinal. 

5.  For the purpose of this Article, a "similar medicinal product" means one which consists 

of: 
-  the  same  chemical  active  substance  or  active  moiety  of  the  substance,  including 
isomers and mixture  of isomers,  complexes,  esters,  other  non-covalent derivatives, 
provided  that  the  pharmacological  and  toxicological  activities  of  the  latter  are 
qualitatively and quantitatively identical to those of the original product, 

-  a substance  with  the  same  biological  activity  (including  those  that  differ  from  the 
original  substance  in  molecular  structure,  source  material  and/or  manufacturing 
process) provided that the pharmacological  activity of said substance is qualitatively 
and quantitatively identical to that of the original product, 

1 8-

-  a  substance  with  the  same  radiopharmaceutical  activity  (including  those  with  a 
different  radionuclide,  ligand,  site  of  labelling  or  molecule-radionuclide  coupling 
mechanism)  provided  that  its  diagnostic  or  therapeutic  indications  are  identical  to 
those of the original  product. 

6.  The  Commission  shall,  in  consultation  with  the  Member  States,  the  Agency  and 

interested  parties,  draw up detailed guidance for the application of this Article. 

Article 9 
Other incentives 

1.  Medicinal  products  designated  as  orphan  medicinal  products  under  the  provisions  of 
this Regulation  shall be eligible for  incentives made available by the Community  and by 
the  Member  States  to  support  the  research,  development  and  availability  of  orphan 
medicinal products. 

2.  Within  six  months  of  the  adoption  of  this  Regulation,  the  Member  States  shall 
communicate  to  the  Commission  detailed  information  about  the  measures  they  have 
enacted  to  support  the  research,  development  and  availability  of  orphan  medicinal 
products. This information  shall be updated  on a regular basis. 

3.  Member  States  shall  also  consider  waiving,  in  part  or  in  total,  the  fees  to  be  paid  in 

respect of applications to place orphan medicinal products on the market. 

4.  Within  one  year  from  the  adoption  of this  Regulation,  the  Commission  shall  publish  a 
detailed  inventory  of all incentives  made available by the  Community  and  the  Member 
States  to  support  the  research,  development  and  availability  of  orphan  medicinal 
products. This inventory will be updated  on a regular basis. 

Article 10 
General  report 

Within six years of the entry into force  of this Regulation,  the Commission  shall publish a 
general report on the experience acquired  as a result of the application of this Regulation. 

Article 11 
Entry into force 

This Regulation  shall  enter  into  force  on  the thirtieth  day  following  its publication  in the 
Official Journal of the European Communities. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly  applicable  in  all  Member 
States. 

- 1 9-

F I N A N C I AL 

S T A T E M E NT 

1. 

TITLE OF OPERATION 

Proposal for a European  Parliament and Council Regulation on orphan  medicinal 
products 

2. 

BUDGET HEADING  INVOLVED 

B5-3120 

Community Contribution to EMEA budget  -EMEA  staff and operational 
expenditure  related  to  the  functionning  of  the  Committee  for  Orphan 
Medicinal Products and the provision of protocol assistance. 

B5-3121 

Special  contribution  for  orphan  medicinal  products  for  the  financing  of 
fee exemptions (to be created) 

3. 

LEGAL  BASIS 

Art  100a of the Treaty establishing the European  Community 

4. 

DESCRIPTION  OF OPERATION 

4.1  General  objective 

The present proposal aims at : 

• 
• 

establishing a Community procedure for the designation  of orphan  medicinal  products 
setting  out  incentives  for  research,  development  and  marketing  of  orphan  medicinal 
products, in particular by the granting of a  10 year market exclusivity  period. 

4.2 

Period  covered  and  arrangements  for  renewal 

The proposed Regulation has no fixed duration. 

The  Commission  will  publish,  within  one  year  from  entry  into  force  of  the  Regulation,  a 
detailed  inventory  of  all  incentives  made  available  by  Community  and  Member  States  to 
support the research, development and availability of orphan medicinal products. 

The Commission  will publish  within 6 years  of entry  into force  of the Regulation  a general 
report on experience acquired. 

20 

5.  CLASSIFICATION  OF EXPENDITURE  OR  REVENUE 

NCE; NDA 

6.  TYPE OF EXPENDITURE OR REVENUE 

Contributions from  the Community will cover the following types of expenditure: 

6.1  EMEA  operational  expenditure  related  to  the  designation  of  orphan  medicinal 
products  (Title  3  of  EMEA  budget),  compensated  by  the  basic  Community 
contribution to the EMEA budget. 

6.2  EMEA  staff  expenditure  related  to  designation  and  protocol  assistance  for  orphan 
medicinal  products  (Title  1 of EMEA  budget), compensated  by the basic  Community 
contribution to the EMEA budget. 

6.3 

Fee exemptions  for  applications  for  protocol  assistance  and  marketing  authorisations 
(Title  3  of  EMEA  budget),  compensated  by  the  special  Community  contribution  to 
the EMEA budget for medicinal  products. 

7.  FINANCIAL  IMPACT 

The  management  of  applications  for  designation,  protocol  assistance  and  marketing 
authorisations will result in the following  expenditure on the EMEA budget. 

Meetings  costs  at  the  EMEA  and  staff  costs  to  be  financed  by  the  basic  subsidy.  Fee 
exemptions will be financed  by a a special contribution from  the Community budget. 

Projections  are based  on the following  estimated  number of applications  for  designation  and 
fee  waivers  for  protocol  assistance  and  marketing  authorisations  under  the  centralised 
procedure : 

Projected  number  of  applications  for  designation,  protocol  assistance  and  marketing 
authorisations for orphan medicinal products : 

Year 

2000 

2001 

Number 

5 

8 

2002 

12 

2003 

12 

21 

7.1  Meetings  costs  and  staff  costs  to  be  financed  by  an  increase  of  EMEA  basic 

subsidy 

A - Meeting costs 

Quarterly two-days meetings of the Committee for  Orphan  Medicinal  Products  at 
the EMEA with  interpretation. 

Reimbursement  of  travel  and  accommodation  expenses  for  21  delegates  in 
accordance with the rules set out by the Management Board of the Agency. 

Cost per meeting (ECU) in  1998 

Total annual meeting costs (4 meetings per year) 

24 000 

96 000 

2000 

2001 

2002 

2003 

100 000 

102 000 

104 000 

106 000 

B - EMEA Staff costs 

The  management  of  designation  and  protocol  assistance  for  orphan  medicinal 
products will require the creation of a specific team within the EMEA  Secretariat. 

Team human resources and corresponding staff costs (in ECU at current costs) 

Position and grade 

Annual salary 
per staff 
member 

Total team 
direct staff 
costs 

Total team 
staff costs 
(including 
overheads) 

1 principal administrators  (A5) 

94 000 

94 000 

124 080 

3 scientific administrators (A7) 

70 000 

210 000 

277 200 

1 administrative assistants (B3) 

56 000 

56 000 

73 920 

2 clerical assistants (C3) 

45 000 

90 000 

118 800 

Total staff costs per budget year 

450 000 

594 000 

C - Total  of meeting and  staff  costs 

Meetings 

Staff 

TOTAL 

2000 

100 000 

400 000 

500 000 

2001 

102 000 

606 000 

708 000 

2002 

104 000 

618 000 

722 000 

2003 

106 000 

630 000 

736 000 

-22 

7.2  Fee exemptions to be financed  by a special Community  contribution  to  EMEA 

Under  article  7(5)  of  Council  Regulation  (EC)  297/95  on  fees  payable  to  the 
EMEA, the Executive Director may grant fee waivers or reductions to applications 
submitted  under  the  centralised  procedure,  in  exceptional  circumstances  and  for 
imperative  reasons  of public  and  animal  health.  Fee exemptions  arc granted  after 
consultation  of  the  competent  scientific  committee  on  the  basis  of  criteria 
determined by the Management  Board. 

The  same  procedure  would  be  used  for  fee  exemptions  or  reductions  for 
applications  for  marketing authorisations  for  orphan  medicinal  products under the 
new Regulation. 
On the basis  of the current  proposal  for  a  Council  Regulation  on  fees  payable  to 
the EMEA, the basic fee for a full  application for a marketing authorisation would 
amount  to  ECU  200  000.  The  contribution  for  fee  exemptions  is  based  on  the 
expected  number  of  applications  and  on  the  assumption  that,  on  average,  fees 
would be reduced by half. 

7.3 Overall  budgetary  impact 

The  overall  impact  of  the  proposed  measures  on  the  EMEA  budget  can  be 
estimated as follows  and would determine the basis for Community contributions. 

Contributions would be constituted by the following : 

2000 

2001 

2002 

2003 

500 000 

708 000 

722 000 

736 000 

500 000 

800 000 

1 200 000 

1 200 000 

Community  contribution 
(meeting  and staff  costs) 

Special  Community 
contribution  for  fee 
exemptions 

Total 

1 000 000 

1 508 000 

1 922 000 

1936 000 

8.  FRAUD  PREVENTION  MEASURE 

control  procedures.  The  Management  Board, 

Council  Regulation  (EEC)  No  2309/93  provides  for  specific  adoption  and 
composed  of 
budgetary 
representatives  of Member  States,  Parliament  and  Commission,  is responsible  for 
adopting  the  annual  draft  budget  (Article  55).  Budgetary  control  mechanisms  are 
described  in Article  57,  including  the  appointment  of  a  financial  controller  by  the 
Management  Board. 

-23 

9. 

ELEMENTS OF COST-EFFECTIVENESS  ANALYSIS 

9.1  Specific  and quantitative  objectives 

In  its  Resolution  of  20  December  1995  on  orphan  drugs  (OJ  no  C  350,  30.12.1995), 
Council called for "a common European approach to rare diseases and orphan drugs" with a 
view to hold  "advantages  in epidemiological,  public health  and  economic terms" and  called 
on  the  Commission  to  "make  appropriate  proposals  with  a  view  to  improving  access  to 
medicinal products intended particularly for people suffering  from  rare diseases". 

This  proposal  is  designed  to  harmonise  the  legislative  provisions  relating  to  orphan 
medicinal  products  and  creates  incentives  for  the  research  and  development  at  Community 
level, without prejudice to other incentives which could made available at national level. 

The proposed Regulation will in particular allow for access to EMEA resources to sponsors, 
and in particular : 

-  Scientific  resources made available by Member States to the EMEA for evaluation work, 
notably  the  network  of  2  000  experts  covering  the  full  range  of  expertise  needed  to 
ensure the highest possible quality of the Agency's scientific opinions. 

-  Direct  access  to  the  centralised  procedure  which  allows  for  a  speedy  and  high  quality 
review  leading  to  the  granting  of  a  single  authorisation  to  market  valid  throughout  the 
Community,  thereby  ensuring  quick  availability  of medicinal  products to  patients  whilst 
allowing sponsors a speedy return on investments. 

In addition, the Regulation provides for financial  and technical assistance as  follows 

-  Following  designation,  possibility  of  fee  exemptions  for  applications  for  marketing 
authorisations  and  scientific  and  regulatory  advice,  which  will  facilitate  access  to 
centralised procedure in particular to small and medium size enterprises ; 

-  Scientific/regulatory  advice  and  protocol  assistance,  which  will  provide  sponsors  with 
the scientific  and  regulatory  expertise available  at  EMEA,  in particular  in the follow  up 
of clinical  trials and preparation  of the dossier.  The close  involvement  of CPMP  and  its 
working  parties  in  the  process  will  establish  a  link  which  would  eventually  facilitate 
evaluation  of the dossier  should  the  sponsor  choose to  submit  the  application  under  the 
centralised procedure. 

9.2  Grounds for the operation 

The Regulation  provides for efficient  mechanisms and substantial  incentives  for  research 
and  development  likely  to  facilitate  access  to  European  patients  of  medicinal  products 
intended for rare diseases, in line with Community policy in this respect. 

9.3  Monitoring and evaluation of the operation 

A  detailed  report  of  the  use  made  of  the  Community's  special  contribution  will  be 
presented by the Agency's Executive Director at the end of each year. 

In  addition,  time  for  designation  of  orphan  medicinal  products,  time  to  marketing 
authorisation  and availability  of orphan  medicinal  products  on the European  market will 
be assessed,  particularly  in comparison with the USA and Japan, as part of the EMEA's 
performance goals and targets monitored by the EMEA Management  Board. 

24-

ISSN 0254-1475 

COM(98) 450  final 

DOCUMENTS 

EN 

05  08  10  15 

Catalogue  number  :  CB-CO-98-460-EN-C 

ISBN  92-78-38188-8 

Office  for Official  Publications of the European  Communities 

L-2985  Luxembourg