Key takeaways

  • Markets for rare disease (RD) medicines often lack treatment alternatives and rely heavily on single suppliers, even when alternatives are available.
  • The reliance on single suppliers in RD markets increases the risk and impact of medicine shortages.
  • Procurement mechanisms favouring single suppliers, such as tenders and reimbursement policies that limit supply diversity, may exacerbate the risk and impact of frequent shortages.
  • Supplier diversity and alternative treatment options in RD medicine markets enhance healthcare system resilience and drive pharmaceutical innovation in areas of high unmet need and societal value.
  • While medicine shortages are widely recognized as a critical issue in non-orphan policies, there is little focus on addressing shortages or diversifying supply to improve resilience in RD medicine markets.
  • Policymakers must ensure consistent and well-aligned policies to support a diversified supply in RD markets at all levels, from regulatory to procurement, including HTA and pricing and reimbursement.

The challenges surrounding the research and development (R&D) and later commercialisation of medicines for rare diseases (RDs) are well known. While policies and incentives have been introduced at regulatory and reimbursement levels to address these challenges, markets for RD medicines are still characterised by a lack of competition and few treatment alternatives for patients.

Access to — and the availability of — effective treatments is crucial for positive health outcomes, patient quality of life, and an efficient health system. A significant risk to this, however, is the occurrence of medicine shortages, which have become more frequent in recent years and can have severe consequences for patients. This risk of shortages can be amplified by certain market characteristics, such as limited competition and a lack of treatment alternatives, as well as procurement mechanisms that promote single suppliers (e.g., tenders). These market characteristics are typical in RD medicine markets, given their small patient populations and low financial incentives for innovators to invest and compete. This results in limited treatment options for patients — sometimes even when appropriate medicines have received regulatory approval. Additionally, because RDs generally are chronic and seriously debilitating, people with RDs are likely to acutely feel the impacts of medicine shortages, especially when treatment alternatives are not available.

Figure: Summary of real case studies discussed in the report, highlighting the risks of single suppliers and the benefits of supplier diversity.

Supplier diversity provides additional resiliency to the healthcare system and can be an enabler for pharmaceutical innovation

Supplier diversity improves supply and healthcare system resilience, helping to mitigate the impact of medicine shortages. Other innovators supplying in the same market could help cover a shortfall in production or provide therapeutic alternatives, which could restore optimal healthcare provision in a shorter period of time, ultimately reducing the likelihood of serious harm to patients and health systems.

Supplier diversity can also be associated with iterative pharmaceutical innovation in well-functioning medicine markets. Iterative innovation provides access to multiple therapies of different classes while it expands in-class competition and access to innovation. This can generate knowledge spillover; help identify remaining unmet needs for patients and provide sufficient return on investment — three elements that jointly drive investment in future innovation towards areas of the highest value to society.

Our policy analysis found that there is mixed progress and recognition of this value

There is generally a recognition that medicine shortages are a critical issue in relevant non-RD-specific policies and strategies. However, this is not currently reflected in RD medicine policies. Indeed, our review found no guidance aimed specifically at preventing RD medicine shortages and/or improving supplier diversity in RD medicine markets in order to enhance supply resilience. This is despite the additional risk and potential impact associated with shortages of these medicines.

Value-based assessments that reward the value added by innovation and incentives for orphan medicinal product innovators are necessary to incentivise future innovation in the areas of highest value and unmet need. However, doing so should not preclude improving supplier diversity and healthcare system resilience by promoting access to approved and valuable further treatment options for patients.

Furthermore, procurement mechanisms and policy should also not function as a barrier to the co-existence of multiple suppliers. They should be designed (within the existing legal framework) in a way that promotes market entry and competition between multiple suppliers of equivalent or similar therapeutic alternatives. For example, tendering mechanisms should aim to avoid using a winner-takes-all design and promote approaches with multiple winners and suppliers.

Policymakers at all levels need to ensure policies are consistent and well-aligned

High-level policy and national strategies can promote sustainable and resilient medicine supplies. There is still room to expand RD policies to prioritise medicine shortage mitigation, supplier diversity, and supply resilience.

HTA, pricing and reimbursement, and procurement policies can help reduce barriers to the availability of medicines and supplier diversity. Value-based assessment of innovation must continue being the core element, complemented by recognition of the value added by supplier diversity and supply resilience.

Procurement mechanisms can adopt more targeted and inclusive decision rules to promote supplier diversity and healthcare resilience against the risk of shortages.

Download Full Publication