Orphan Drugs under EU Competition Law: The Price is not Right

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.