The Evolving Global Landscape for Orphan Drug Exclusivity

Orphan drug frameworks across major jurisdictions are being recalibrated as authorities seek to stimulate the development of drugs to address unmet patient need while controlling costs and enabling patient access. For the first time, China has introduced market exclusivity for up to seven years. In the U.S., there has been legislative affirmation of the longstanding approach of the Food and Drug Administration (FDA) to orphan drug exclusivity in the U.S., clarifying the scope of orphan exclusivity. In the EU, nearly 10 years after the Council of the EU proposed “strengthening the balance” in EU pharmaceutical systems, the new General Pharmaceutical Legislation is in its final stages and is set to reduce the baseline period  of market exclusivity in the EU, while creating opportunities to partially recoup the reduced exclusivity periods if specific new requirements are met. The UK is maintaining existing orphan drug exclusivity periods and is exploring a new innovative rare disease therapies regulatory framework. 

This Sidley Update examines these latest developments and the implications for sponsors navigating the global rare disease landscape.

Starting in May 2026, certain orphan drugs in China are to be given a market exclusivity for up to seven years, to the extent the market authorization holders can guarantee the product supply in China. Implementing details of this market exclusivity mechanism is to be published by the National Medical Products Administration (NMPA). 

China defines a rare disease as a condition satisfying at least one of three criteria: a neonatal incidence of less than 1 in 10,000, a prevalence of less than 1 in 10,000, or an affected population of fewer than 140,000 people. To date, over 200 diseases have been recognized as rare diseases in China, listed in two catalogs published by the People’s Republic of China Health Commission in 2018 and 2023, respectively.  

China’s NMPA offers a priority review pathway to innovative drugs treating rare diseases, under which sponsors are able to have preinvestigational new drug and pre–new drug authorization consultations with the agency and their products are reviewed by a dedicated team with an expediated timeline. In particular, for orphan drugs that have been approved outside China and not yet in China, the agency pledges to complete the technical review within 70 working days, nearly half the regular approval timeline.  

With regard to reimbursement, over 100 orphan drugs treating 42 rare diseases have been included in the National Reimbursable Drug List (NRDL), the largest medical insurance coverage in China. In general, sponsors would have to offer about a 50% price cut in exchange for the NRDL inclusion. 

United States — Orphan Drug Exclusivity After Catalyst

Since the passage of the U.S. Orphan Drug Act in 1983, the FDA has worked to balance the scope of the incentive provided to drug sponsors with its efforts to ensure the availability of safe and effective treatments for patients with rare disease. In a recent development, Congress affirmed FDA’s longstanding approach to this balance in its passage of statutory language in the Consolidated Appropriations Act of 2026, responding to a 2021 judicial decision that had challenged FDA’s interpretation of the statute.

Under the U.S. Orphan Drug Act, sponsors are required to undertake a two-step process to obtain this exclusivity: (1) First, a sponsor must apply to FDA for an Orphan Drug Designation (ODD) under 21 U.S.C. § 360bb prior to submission of a marketing application,¹  and (2) the sponsor must apply for and receive approval for the drug that received such designation to receive Orphan Drug Exclusivity (ODE) under 21 U.S.C. § 360cc. Once granted, ODE bars FDA from approving the same drug for the same disease or condition during the exclusivity period. However, exclusivity can be pierced if FDA grants approval to another product it determines to be “clinically superior.” As explained below, the “clinical superiority” exception is a vulnerability to ODE in the U.S., the EU, and the UK.  

FDA’s longstanding interpretation of the statute has been to grant ODD for broad indications, in the interest of incentivizing research and development, while granting ODE only to the specific indication(s) supported by the approval data.² FDA’s oft-stated rationale is that such grant of narrow ODE benefits patients by allowing subsequent sponsors to develop and seek approval for the same drug for other indications within the same designated orphan disease. 

FDA’s approach was rejected in 2021 when the Eleventh Circuit, in Catalyst Pharms., Inc. v. Becerra, disagreed with FDA’s interpretation of the statute, holding that the language of the U.S. Orphan Drug Act is clear that the scope of ODD and ODE must be the same.³  Thus, in the Court’s view, if a drug received ODD for an entire orphan disease, it must — upon approval — receive ODE for that entire disease, potentially blocking approval of the same drug for any other indication within the disease for seven years. FDA publicly disagreed with the Court, expressing concern that “[s]ponsors could seek approval and exclusivity for their drugs by focusing on the smallest, easiest-to-study populations. Under the interpretation in the Catalyst decision, such an approval would result in exclusivity for their drug for the entire disease, even though the sponsors did not invest in studying and developing their drug for all individuals with the disease.”⁴  FDA concluded that the decision was not “in the best interest of public health, rare disease patients and rare disease product development” and that it did not intend to implement the decision beyond the drug at issue.⁵  The Catalyst decision thus introduced some uncertainty for sponsors as they attempted to predict FDA’s practice regarding breadth of ODE. 

This period recently came to an end when Congress passed the Retaining Access and Restoring Exclusivity (RARE) Act, included in the Consolidated Appropriations Act of 2026, to codify FDA’s longstanding approach and overturn the broader interpretation adopted in Catalyst.⁶  Specifically, the RARE Act replaces the language “same disease or condition” in the statute with “same approved use or indication within such rare disease or condition,” making clear that the scope of ODE is statutorily limited to the approved indication. Notably, the RARE Act states that the change applies retroactively to both drugs and biological products “regardless of the date on which the drug was so designated, and regardless of the date on which the drug was approved.”

By clarifying that ODE applies only to the approved use or indication within a rare disease or condition rather than the broader disease covered by the orphan drug designation, Congress has resolved the uncertainty created by the Eleventh Circuit’s decision in Catalyst and returned to FDA’s longstanding approach. Sponsors should therefore expect FDA to continue granting broad ODDs while limiting ODE to the specific approved indication supported by the application.

European Union — Orphan Market Exclusivity Under the New GPL

The EU General Pharmaceutical Legislation (GPL) is undergoing its largest overhaul in over 20 years, including significant changes to the current EU orphan regime. The near-final texts were published in March 2026 with final adoption expected by September 2026, followed by a two-year transition period (with some exceptions for earlier implementation). 

Structurally, the current standalone orphan legal framework will be absorbed into the broader GPL, and the European Medicines Agency (EMA) Committee on Orphan Medicinal Products will be removed. Under the GPL, the EMA (supported by an orphan working party), not the European Commission, will adopt decisions granting or refusing orphan designation. 

There will continue to be two distinct phases to the orphan regime under the GPL: orphan designation and marketing authorization (MA). Sponsors must apply for orphan designation at an early stage, before the MA application, demonstrating (i) that the product is intended for the diagnosis, prevention, or treatment of a life-threatening or chronically debilitating condition affecting not more than 5 in 10,000 persons in the EU⁷ and (ii) there is no satisfactory method of diagnosis, prevention, or treatment or (iii), if such method exists, that the medicinal product will be of significant benefit to those affected by that condition⁸. 

Orphan designation must be maintained at the time of the grant of the MA to obtain orphan market exclusivity (OME), the key regulatory incentive driving the development of medicines for rare disease. OME prevents the competent authorities from granting or extending an MA for the same therapeutic indication, in respect of a similar medicinal product.⁹ OME is regarded as a “strong” exclusivity, second only to patent protection, but competitor products that are not similar, are not for the same indication, or that can satisfy one of three potential derogations including “clinical superiority” will not be blocked by OME. 

Under the GPL, the duration of OME is being reduced from a baseline of 10 years¹⁰ to nine years, and the possibility of extending OME by two years as a reward for completing pediatric studies is being removed (although a six-month supplementary protection certificate extension may still be available for completing pediatric studies in accordance with an agreed pediatric investigation plan). Furthermore, under the GPL, during the last two years of OME, the submission, validation, and assessment of a similar medicine will become possible — including the adoption but not the implementation of the MA for the similar product — effectively rendering the last two years as “orphan market protection” rather than orphan exclusivity. 

Perhaps most significant, the GPL introduces the concept of a Global Orphan Marketing Authorization (GOMA), meaning that products with the same active substance could no longer benefit from separate OME periods for each new indication (which in practice could lead to periods of protection of OME well beyond 10 years). For orphan products based on bibliographic data, the period of protection will be four years.

The silver lining for developers of orphan drugs is that those that can obtain a “breakthrough” designation in the EU will increase the baseline protection to 11 years.¹¹ “Breakthrough” status would be available only where (i) no medicinal product is authorized in the EU for the orphan condition and (ii) the new product delivers a clinically relevant reduction in morbidity or mortality, with that assessment made by the EMA at the time of marketing authorization.¹²  Furthermore, one-year extensions could be earned for additional orphan indications on up to two occasions. Taken together, orphan drug developers could obtain 13 years OME for their orphan drug within a single GOMA.

United Kingdom

The UK’s orphan drug framework is based on current EU law, with certain post-Brexit adaptations. The changes to the EU system include a single-phase orphan procedure, meaning there is no prior orphan designation step before the marketing authorization application. As the UK is not adopting the GPL, UK orphan drugs continue to benefit from the core incentive of 10 years OME (calculated from first approval in Great Britain or from January 1, 2025) and may still be eligible for an additional two years of market exclusivity as a pediatric reward.

In addition to the existing incentives-based orphan framework, the UK Government is consulting on a new rare disease therapies regulatory framework to address the scientific, evidentiary, and lifecycle challenges of rare disease therapies, particularly individualized or very small population treatments. The central innovative feature of the proposed rare disease framework is the introduction of an Investigational Marketing Authorization, which would combine clinical trial approval with a continuously reviewed marketing authorization, granted on the basis of “compelling but limited evidence.” 

The rare disease framework would be founded on a patient-centered benefit-risk-prognosis balance, with flexibilities as to the level, type, and timing of evidence, which rare drug developers are likely to welcome. For example, this evidence may include platform data, predictive knowledge, data from innovative trial designs, real-world evidence, alternative evidence sources, use of new approach methodologies, and other novel sources of data where proportionate to the therapy’s risks, uncertainties, and the practical constraints of the rare disease setting. 

The new framework based on a “rare disease designation” would be distinct from, and would operate in parallel to, “orphan designation” but with more restrictive prevalence criteria, requiring the condition to affect fewer than 1 in 50,000 patients in the UK (in comparison with 5 in 10,000 people under the existing orphan framework) and requiring the applicant to demonstrate “quantifiable barriers” to conducting an existing clinical development program or obtaining a standard regulatory approval.

The consultation is accessible here and is open until July 30, 2026.

 

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For sponsors navigating a complex global environment, changes to the availability of orphan drug exclusivity for their product indications add another important strategic factor to be incorporated in product planning and global launch strategies. In particular, the potential for orphan drug exclusivity in China is an important development, while the U.S. and EU continue to offer robust exclusivity incentives, notwithstanding certain recent clarifications and recalibrations, with new rare disease programs, such as that proposed in the UK, are also garnering increased attention.   

 

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¹ The exclusivity is available to both drugs and biological products, though the law and the regulation use the term “drug.”

² See 21 CFR § 316.31(a). The agency may “approve a sponsor’s marketing application for a designated orphan drug for use in the rare disease or conditions for which the drug was designated, or for select indication(s) or use(s) within the rare disease or condition for which the drug was designated”; 78 Fed. Reg. 35123-24 (2013), available at https://www.federalregister.gov/documents/2013/06/12/2013-13930/orphan-drug-regulations. See also 76 Fed. Reg. 64870 (2011), available at https://www.federalregister.gov/documents/2011/10/19/2011-27037/orphan-drug-regulations

³ Catalyst Pharms., Inc. v. Becerra, 14 F.4th 1299 (11th Cir. 2021).

⁴ U.S. Food & Drug Administration, FDA's Overview of Catalyst Pharms., Inc. v. Becerra, https://www.fda.gov/industry/medical-products-rare-diseases-and-conditions/fdas-overview-catalyst-pharms-inc-v-becerra (last updated Jan. 23, 2023).

⁵ FDA, FDA’s Overview of Catalyst Pharms., Inc. v. Becerra (Jan. 23, 2023), available at https://www.fda.gov/industry/medical-products-rare-diseases-and-conditions/fdas-overview-catalyst-pharms-inc-v-becerra. 

⁶  The Consolidated Appropriations Act of 2026 (PL 119-75) legislative package contained HR 1262 — Mikaela Naylon Give Kids a Chance Act, which included the RARE Act as an amendment; HR 7383, 118th Cong. (2023) (RARE Act), available at https://www.congress.gov/bill/118th-congress/house-bill/7383 (describing the bill as “provides statutory authority for the FDA’s regulations”).

 ⁷ Article 63(1)(a) of the Proposed Regulation dated February 24, 2026.

⁸ Article 63(1)(b) of the Proposed Regulation dated February 24, 2026.

⁹ Article 71 of the Proposed Regulation dated February 24, 2026.

¹⁰ In practice, the current baseline is approximately 11 years as OME prevents applications for new marketing authorizations or extensions to existing marketing authorizations that would fall in scope of the exclusivity for the full 10-year period, and the regulatory process takes approximately one year thereafter. 

¹¹ Article 71(2)(b) of the Proposed Regulation dated February 24, 2026.

¹² Article 70 of the Proposed Regulation dated February 24, 2026.