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What is Orphan Drug Status?


Question: What is Orphan Drug Status?

Orphan Drug Status is given to certain drugs undergoing development in the pharmaceutical industry. Find out what Orphan Drug Status is and what incentives are available to biotech companies obtaining this designation from the US FDA.


In 1982, the FDA established the Office of Orphan Product Development, which gives incentives to encourage biotech companies to work on cures for rare diseases. The incentives are given under the Orphan Drug Act (ODA) of January 1983 and include the designation of orphan drug status to drugs that are in the process of development for the treatment of rare diseases. This status provides tax reductions and the exclusive rights to the cure for a specific condition for a period of seven years post-approval.

The proverbial "brass ring" of the pharmaceutical industry is to develop a drug that becomes the standard treatment to a common ailment, such as hepatitis, the flu, diabetes, or certain forms of cancer. Incentives such as the Orphan Drug Status, encourage companies to enter a market where high costs of drug development are less likely to be recouped quickly, due to the smaller pool of individuals needing the cure. By definition, an orphan drug is one for a disease which affects less than 200,000 Americans, or less than 5 per 10,000 people in a community.

Another concession made by the FDA, during approval of an orphan drug, is recognition than Phase III clinical trials on 1000 people might not always be possible, due to a lack of individuals with the condition in question.

A pharmaceutical company that is in the process of developing a drug for a disease for which no other treatment exists, might obtain Orphan Drug Status from the US FDA, even if the drug is currently failing to meet the standards for approval. At this stage, the FDA still requires further testing of the drug and collection of data. However, the goal of Orphan Drug Status is to provide incentive to continue the research, even when a drug doesn't turn out to be the miracle cure it was initially thought, and obtaining funding for research becomes difficult.

The success of the ODA is apparent in the number of drugs and biological products for rare diseases - more than 200 - brought to market since 1983. In contrast, fewer than ten such products came to market in the prior decade.

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