The Orphan Drug Act to Support Rare Diseases

How Research and Development for Orphan Drugs Is Incentivized

What is an orphan drug and what is the Orphan Drug Act? Why is research and development for these drugs important and what are the barriers?

Researcher in lab
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What Is an Orphan Drug?

An orphan drug is a medication (pharmaceutical) that remains underdeveloped due to the lack of a company to find the drug profitable. Often the reason that the drug is not profitable is that there are relatively few people who will purchase the drug when weighed against the research and development needed to manufacture the drug. In simple words, orphan drugs are those that companies don't expect to make much money from, and instead direct their efforts at drugs which will bring in money.

Why Some Drugs Are "Orphan Drugs"

Pharmaceutical (drug) and biotech companies are constantly researching and developing new medications to treat medical conditions, and new drugs come on the market frequently. People who suffer from rare diseases or disorders, on the other hand, do not see the same drug research attention for their illnesses. This is because their numbers are small and so the potential market for new drugs to treat these rare diseases (commonly referred to as “orphan drugs”) is also small.

A rare disease occurs in less than 200,000 individuals in the United States or less than 5 per 10,000 individuals in the European Union. Government regulatory agencies in the United States and the European Union have thus taken steps to reduce this disparity in drug development

Incentives to Increase the Development of Orphan Drugs

Recognizing that adequate drugs for rare disorders had not been developed in the U.S. and that drug companies would actually incur a financial loss in developing drugs for rare conditions, the U.S. Congress passed the Orphan Drug Act in 1983.

The U.S. Office of Orphan Product Development 

The U.S. Food and Drug Administration (FDA) is responsible for ensuring the safety and effectiveness of medications on the market in the United States. The FDA established the Office of Orphan Product Development (OOPD) to help with the development of orphan drugs (and other medical products for rare disorders), including offering research grants.

Orphan drugs, like other medications, still have to be found safe and effective through research and clinical trials before the FDA will approve them for marketing.

The 1983 U.S. Orphan Drug Act

The Orphan Drug Act offers incentives to induce companies to develop drugs (and other medical products) for the small markets of individuals with rare disorders (in the U.S., 47 percent of rare disorders affect fewer than 25,000 people). These incentives include:

  • Federal tax credits for the research done (up to 50 percent of costs) to develop an orphan drug.
  • A guaranteed 7-year monopoly on drug sales for the first company to obtain FDA marketing approval of a particular drug. This applies only to the approved use of the drug. Another application for a different use could also be approved by the FDA, and the company would have exclusive marketing rights for the drug for that use as well.
  • Waivers of drug approval application fees and annual FDA product fees.

Prior to the passage of the Orphan Drug Act, few orphan drugs were available to treat rare diseases. Since the Act, more than 200 orphan drugs have been approved by the FDA for marketing in the U.S.

Effect of the Orphan Drug Act in U.S. Pharmaceuticals

Since the Orphan Drug Act came into being in 1983, it has been responsible for the development of many drugs. As of 2012, there were at least 378 drugs that have been approved through this process, and the number continues to climb.

Example of Drugs Available Due to the Orphan Drug Act

Among the drugs which have approved include those such as:

International Research and Development for Orphan Drugs

Like the U.S. Congress, the European Union (EU) government has recognized the need to increase research and development of orphan drugs. 

Committee on Orphan Medicinal Products

Established in 1995, the European Medicines Agency (EMEA) is responsible for ensuring the safety and efficacy of medications on the market in the EU. It brings together the scientific resources of the 25 EU Member States. In 2000, the Committee on Orphan Medicinal Products (COMP) was established to oversee the development of orphan drugs in the EU.

Regulation on Orphan Medicinal Products

The Regulation on Orphan Medicinal Products, passed by the European Council, provides incentives for the development of orphan drugs (and other medical products for rare disorders) in the EU, including:

  • Waivers of fees relating to the marketing approval process.
  • A guaranteed 10-year monopoly on drug sales for the first company to obtain EMEA marketing approval of a drug. This applies only to the approved use of the drug.
  • Community marketing authorization – a centralized procedure of marketing authorization that extends to all the member states of the EU.
  • Protocol assistance, meaning the provision of scientific advice to drug companies about the various tests and clinical trials necessary for a drug being developed.

The Regulation on Orphan Medicinal Products has had the same beneficial effect in the EU that the Orphan Drug Act had in the U.S., greatly increasing the development and marketing of orphan drugs for rare disorders.

Bottom Line on the Orphan Drug Act

At the time there is much controversy over the Orphan Drug Act, with the need for treatments for rare diseases on one side of the scale, and questions about sustainability on the other. Thankfully, these acts, in both the United States and Europe have raised awareness for the many rare diseases, which, when added together, aren't all that uncommon.

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By Mary Kugler, RN
Mary Kugler, RN, is a pediatric nurse whose specialty is caring for children with long-term or severe medical problems.