What Should Be Included in a Canadian Orphan Drug Regulatory Framework

As the new Liberal government turns its mind to the application of substantive policies, it will have to decide what to do with the Canadian orphan drug regulatory framework (ODRF) that has been in development. This framework, based in large part on the example of the United States Orphan Drug Act (US ODA), which has been both praised and criticized, has been in the works since October 2012 and is considered by some to be long overdue. Today’s policymakers would be wise to consider the possibility that the goals of a Canadian ODRF may be different from that of the US ODA – perhaps not all elements of the US ODA should be included in a Canadian ODRF.

Defining orphan drugs

Orphan drugs are medicines created to treat rare diseases; diseases that affect a relatively small number of patients.

Although the number of people affected by each disease is small, the combined effect of rare diseases is large. Combined, rare disease affect an estimated 3 million Canadians, though this number depends on how a rare disease is defined.


Difficulties with the traditional approval process

The small affected population leads to two main impediments to drug availability. The first is the low expected profitability of the drug; due to a small potential market, and the second is difficulties in obtaining regulatory approval; due to difficulties in completing clinical testing with a small pool of potential test subjects.


The US ODA-style solution

To deal with these issues, many countries have developed specialized orphan drug frameworks in addition to their regular drug frameworks. These orphan drug frameworks are designed to speed up and simplify orphan drug approvals. Typically, these frameworks involve incentives such as government funding for research and clinical trials, tax credits, and time-limited exclusive marketing rights. More recently, solutions like common application processes between countries have also been implemented.


The current Canadian approach to orphan drugs

Despite the popularity of these frameworks, up to this point “Canada hasn’t established guidelines for clinical trials or approval timelines for rare disease treatments, which makes companies reluctant to seek drug approvals here”. The lack of a process where incentives outweigh difficulties means many orphan drugs are not approved, and patients must apply for access on a case by case basis; a process which can be slow and inefficient.


Concerns with US ODA-style frameworks

This lack of an ODRF is about to change however, and as this framework is developed, policymakers will need to decide whether or not they wish to follow the US ODA. The US ODA, although often praised as an example of an excellent regulatory innovation, and one that has been followed in several other jurisdictions, is not without criticism. Two criticisms in particular will be considered as examples.

The first is that as medicines become more specialized, they necessarily target smaller population groups. This leads to more and more drugs that qualify for ‘orphan drug’ incentives. For example, “in 2009 and 2010 roughly a third of all drug approvals granted by the Food and Drug Administration in the United States carried an orphan designation”. This can lead to a system of rising healthcare costs due to marketing exclusivities and other extra protections.

The second is that incentivizing orphan drugs leads to a situation where spending a large amount of taxpayer money results in only a very small number of patents eventually being granted. As governments pay for unsuccessful clinical trials, through grants or tax breaks, the ‘overhead’ costs of approved drugs becomes very high; which could contribute to rising health care costs?


Suggestions for a Canadian ODRF

These criticisms of a US ODA-style framework can be easily addressed, even ‘side-stepped’, in a Canadian ODRF. In many cases costs like those exemplified above stem from the two part purpose of the framework; to incentivize companies to seek drug approvals but also to incentivize research into orphan drugs. However, this second goal is arguably of negligible importance in Canada due to the lack of significant existing research and development work here. Therefore, the desired value of an orphan drug framework is limited to speeding up the Health Canada approval of drugs developed in other countries; and this does not require US ODA-style incentives – merely a matching of the Canadian system with the American and European systems; a combined approval process.

As policy makers continue to develop a Canadian orphan drug framework, they would do well to limit protection to that needed to secure the desired value; increased drug approval, not increased drug research.


Ryan De Vries is a JD Candidate at Osgoode Hall Law School and is enrolled in Osgoode’s Intellectual Property Law Intensive Program. As part of the program requirements, students were asked to write a blog on a topic of their choice.
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