Six-Month Market Exclusivity Extensions To Promote Research Offer Substantial Returns For Many Drug Makers

To incentivize pharmaceutical manufacturers to invest in areas of unmet medical need, policy makers frequently propose extending the market exclusivity period of desired drugs. Some such proposals are modeled after the pediatric exclusivity patent extension program, which since 1997 has provided six additional months of market exclusivity for drugs studied in children. The most recent proposal would encourage rare disease research by providing six months of extended exclusivity for any existing drug that is granted subsequent FDA approval for a new rare disease indication. Yet the economic impact of such proposals is rarely addressed. We found that for the thirteen FDA-approved drugs that gained supplemental approval for a rare disease indication from 2005 through 2010, the median projected cost of clinical trials leading to approval was $29.8 million. If the exclusivity extension had been in place, the median discounted financial gain to manufacturers would have been $94.6 million. Median net returns would have been $82.4 million, with higher returns for drugs with higher annual sales. Extending market exclusivity would provide substantial compensation to many manufacturers, particularly for top-selling products, far in excess of the cost of conducting these trials. Alternative strategies to incentivize the study of approved drugs for rare diseases may offer similar benefits at a lower cost.