Orphan Drugs under EU Competition Law: The Price is not Right
Authors: Andrea Parziale
In principle, pharmaceutical producers lack the incentives to develop orphan drugs, i.e. medicines intended to treat rare diseases. Regulation (EC) n. 141/2000 addresses the issue, providing orphan drug producers with accelerated approval, tax benefits, and a ten-year market exclusivity period. Today, orphan drug prices are extremely high and are set independently of ordinary pharmaceutical pricing criteria. Consequently, some scholars suggest that a competition law action for unfair prices under Art. 102, let. a, TFEU may be warranted. This paper claims that the prohibition of abuse of dominant position could play a role in reducing orphan drugs’ prices. First, it is shown that market exclusivity provides orphan drug manufacturers with a dominant position in their reference markets. Then, the paper applies and adapts the excessive price test developed by the ECJ to orphan drugs. Civil liability could also play a role, by compensating the damages suffered by NHSs. Finally, recent enforcement developments in the EU concerning excessive prices of medicines confirm the potential role of competition law in curbing orphan drug prices.
Keywords: Competition Law – Orphan Drugs Pharmaceutical Regulation – Pharmaceutical Pricing – Reimbursement Regimes – Abuse of Dominant Position – Unfair Prices – Civil Liability