Orphan Drug Policies: How Does Canada Compare?

“In Canada, however, there is currently no formal orphan drug policy despite the fact that rare diseases have a significant impact on this country and its healthcare system.”

Across the world, rare disease patients need access to highly specialized pharmaceuticals in order to help treat their illnesses. Due to the low prevalence of many rare diseases, it can be hard to research and develop treatments for these small, fairly unprofitable, markets. Thus, governments around the world have implemented orphan drug policies, which incentivize pharmaceutical companies to develop drugs to treat rare diseases. In Canada, however, there is currently no formal orphan drug policy despite the fact that rare diseases have a significant impact on this country and its healthcare system.

Health Canada defines a rare disease as an illness or condition that affects fewer than 5 in 10,000 Canadians¹. It is estimated that 1 in 12 Canadians have a rare disease, with half of those patients being children¹. Rare diseases are particularly costly in childhood, as they account for one third of deaths in the first year of life².

The purpose of an orphan drug policy is to fulfil one or more of the following objectives³:

1. Incentivize the development of new orphan drugs
2. Allow for the creation of regulatory processes that speed up drug approval, in order to quickly make these treatments accessible to patients
3. Increase the affordability of orphan drugs for patients, often through governmental coverage of partial or full drug costs

While Canada currently does not have a formal orphan drug policy, the federal government has considered creating one in the past. For example, in 1996, Health Canada rejected a proposal for an orphan drug policy³. The country is not completely opposed to the idea of such a policy however, since in 2012, the Minister of Health proposed an orphan drug framework that would improve patient access to rare disease drug treatments. In lieu of a formal policy, Canada has various pathways that fulfill some of the objectives of an orphan drug policy. For example, Canada has a 300 day review process in order to get these drugs to market quicker³.

In the United States, the Orphan Drug Act was signed in 1983, with the aim to incentivize pharmaceutical companies to develop drugs for the rare disease community, which is not large enough to guarantee profits⁴. To be considered a rare disease in the U.S.A., patient prevalence for the disease must be under 200,000 in the whole country⁴. The Orphan Drug Act put several policies into place, including: seven year market exclusivity for new orphan drugs, tax credits, research and development grants, fast-tracked drug approval, and the removal of barriers to drug application processes. So far, this Act has shown success in several of these areas. Twenty-five years after the conception of the Act, over 2000 drugs have been classified as orphan drugs in the U.S.A., and 300 are currently approved for sale⁴. There remains, however, many issues with the Orphan Drug Act. For one, oncology orphan drugs have become overrepresented in the market. If an orphan drug can be used to treat multiple rare diseases, then it is more profitable for the pharmaceutical company. Often, many types of cancers, including rare cancers can be treated with the same, or similar, drugs. Thus, rare diseases in need of treatment research are neglected by drug companies. Another issue arises with how market exclusivity for new drugs allows pharmaceutical companies to charge high prices for their drugs⁵. The safety of orphan drugs must also be considered. In the United States, these drugs are often discontinued because they are unsafe, or for being unprofitable⁴. This can leave rare disease patients unable to find alternative treatments. The United States also does not regulate prescription drug prices. This means that patients often end up needing to pay 20-33% of drug costs⁴. In 2014, this meant that 1 in 7 rare disease patients paid over $500 on orphan drug prescriptions, and for 1 in 500 patients, spending was over $7500⁶. Therefore, if Canada were to implement a policy such as the Orphan Drug Act, it would have to carefully monitor drug prices, ensure the drug review and approval process is thorough, and find a way to incentivize the development of non-oncological orphan drugs.

The European Union has a different approach to ensuring that the rare disease community has access to drug treatments. To gain orphan status, a drug must be intended to treat a disease that is life-threatening or chronically debilitating with a prevalence of less than 5 in 10,000⁵. Or, it must be a drug that likely will not make enough profit to justify its development from an economical standpoint. For diseases that already have a drug treatment, the European Medicines Agency stipulates that the new drug must be of “significant benefit”⁵. This allows the EU to be more selective in which drugs are approved, and thus, oncology drugs for rare cancers are not overrepresented in the EU drug market, giving way for the development of drugs for other rare diseases. Such a stipulation could benefit Canada as well, so that it can encourage the development of orphan drugs for a wide variety of rare diseases.

Australia has a similar healthcare system to Canada, and thus, it can be used to compare the effectiveness of orphan drug access with and without a formal orphan drug policy. The Australian Orphan Drug Program was fully implemented in 1997, in the hopes of making drugs for rare diseases more accessible³. Like the United States, this policy aimed to incentivize sponsors to develop more orphan drugs. It allows for rapid drug review and approval, as well as offering advice and assistance for clinical trials and review applications. In addition to this, there are no fees for applying for orphan drug status. It does not provide any grants, tax credits, and does not provide market exclusivity, and requires that rare diseases are seriously debilitating or life threatening to be considered under the program³. In a comparison of access, between 2008 and 2017, of the 119 orphan drugs approved in the United States, 6 were approved earlier in Australia, with the longest delay being nearly ten years³. While the approval process in the United States is faster on average, it is largely inconsistent, while Australia confines drug approval to under two years, for the most part. This is similar in Canada, where an accelerated review process for orphan drugs takes 314 days, on average³. While not a fleshed out program, this accelerated process allows orphan drugs to get to market quicker. This shows that Australian and Canadian patients are able to access new orphan drugs within a reasonable time frame compared to the United States. Despite not having a formal orphan drug policy, Canada does not suffer in terms of orphan drug access compared to Australia.

“Consumer spending on prescription drugs in Canada has risen from $2.6 billion in 1985, to $33.7 billion in 2018”

In reviewing some of the orphan drug policies around the world, there are a few takeaways that Canada can reflect on when considering the creation of a formal policy. For one, learning from the United States, Canada should carefully regulate prescription drug prices, so that orphan drugs are not financially inaccessible to patients. It should also try to incentivize the development of orphan drugs that treat underrepresented rare diseases, instead of focusing solely on oncological treatments for profits. Canada could follow in the EU’s footsteps by approving multiple orphan drugs for a single disease only if they provide significant and different benefits. In comparison to Australia, Canada already has an orphan drug approval process that is fast and efficient, and thus does not need to focus as much on advocating for this aspect of orphan drug policy.

As of 2019, the Canadian government is hoping to reduce affordability barriers to orphan drugs, improve provincial and territorial drug coverage plans, and provide early access to diagnostic tests². One key step of doing this is being able to collect information on orphan drugs, including evidence of their safety, efficacy, and cost. In 2019, Health Canada assembled nineteen recommendations to help put a plan in place to improve orphan drug access, in a report titled Canadians Affected by Rare Diseases and Disorders: Improving Access to Treatment¹. One key point made in the report is that investments into rare diseases should be made for research on the diseases themselves, rather than for orphan drugs. This way, there is more information on which to base drug development. It was also acknowledged that the largest barrier to orphan drug access in Canada is affordability¹. The federal government regulated the prices of patented drugs, however, it is the responsibility of provinces and territories to determine which drugs will be reimbursed through their respective drug coverage plans. The report also suggests that early diagnosis of rare diseases would save money, because while a genetic test that screens for over 7000 diseases, many of them rare diseases, costs $1000, the accumulation of doctor’s visits and other tests for those without an early diagnosis costs an average of $8000 per patient¹.

Thus, the Canadian budget will make some room for investments into rare disease research and orphan drug development over the following years. Consumer spending on prescription drugs in Canada has risen from $2.6 billion in 1985, to $33.7 billion in 2018⁷. To make prescription drugs more affordable, the government hopes to implement a three faceted plan:

1. The creation of the Canadian Drug Agency, which will negotiate prescription drug prices, in the hopes of lowering the cost of drugs by up to $3 billion per year
2. A national formulary, consisting of a comprehensive list of prescribed drugs
3. A national strategy for high-cost drugs for rare diseases

All together, the budget will provide $35 million over the next four years to create the formulary, along with an investment of up to $1 billion over 2022-2023, and $500 million per year ongoing to help lower the prices of orphan drugs in Canada⁷.

For the Canadian rare disease community, this will mean that there will be a significant reduction in prescription drug prices, as well as a more effective system of prescribing efficient drugs in the future. By assessing one’s own orphan drug policies, as well as those of other countries around the world, governments can thoroughly and meticulously implement future policies with high expectations of success.

Victoria Chharawala

1. Standing Committee on Health. Canadians Affected by Rare Diseases and Disorders: Improving Access to Treatment. Ottawa, Canada: Standing Committee on Health; 2019. https://www.ourcommons.ca/Content/Committee/421/HESA/Reports/RP10349306/hesarp22/hesarp22-e.pdf

Standing Committee on Health. House of Commons Standing Committee on Health Calls on the Government of Canada to Take Action in Improving Access to Treatment for Canadiants with Rare Diseases and Disorders. Ottawa, Canada: Standing Committee on Health; 2019. https://www.ourcommons.ca/DocumentViewer/en/42-1/HESA/news-release/10332830

Lexchin J, Moroz N. Does an orphan drug policy make a difference in access? A comparison of Canada and Australia. Int J Health Serv. 2019 Nov 6; 50(2): 166-172. https://doi.org/10.1177/0020731419886526

Wellman-Labadie O, Zhou Y. The US orphan drug act: rare disease research stimulator or commercial opportunity? Health Policy. 2010 May; 95(2-3): 216-228. https://doi.org/10.1016/j.healthpol.2009.12.001

Vokinger KN, Kesselheim AS. Application of orphan drug designation to cancer treatments (2008-2017): a comprehensive and comparative analysis of the USA and EU. BMJ Open. 2019 Aug 29; 9: 1-6. doi:10.1136/bmjopen-2018-028634

Chua K, Conti RM. Out-of-pocket spending on orphan drug prescriptions among commercially insured adults in 2014. J Gen Intern Med. 2018 Oct 15; 34(3): 338-340. 2019 Nov 6; 50(2): 166-172. https://doi.org/10.1007/s11606-018-4694-1

Department of Finance. Moving Forward on Implementing National Pharmacare. Ottawa, Canada: Department of Finance Canada; 2019. https://www.budget.gc.ca/2019/docs/themes/pharmacare-assurance-medicaments-en.pdf

Cite This Article:

Chharawala V., Lombo L., Guertin H. Orphan Drug Policies: How Does Canada Compare? Illustrated by V.Chharawala. Rare Disease Review. December 2020. DOI:10.13140/RG.2.2.14786.40646.