Orphan Drug Act

Thirty-four years ago (in 1980), Abbey Meyers was at her wit's end. Her young son, who had Tourette's syndrome, had been cut off from the drug pimozide, which had begun to show promise in treating his debilitating condition. The doctor running the clinical trial told her the study was halted when McNeil Laboratories pulled out of producing the drug because it proved ineffective against schizophrenia, its primary (and more common) target. He told Meyers that pimozide would now be considered an "orphan drug," the term for products that target too few patients to bring in big bucks.

Now, her son's rare disorder was essentially untreatable. There was no recourse for the Connecticut housewife. "I was devastated," she says.

Drug research needed to be done on this disease, but the number of patients with Tourette's syndrome were so few that research was very cost prohibitive. With this and concerns over other rare diseases the Orphan Drug Act was enacted on January of 1983

An orphan drug is any drug developed under the Orphan Drug Act of January 1983 ("ODA"), a federal law concerning rare diseases ("orphan diseases"), defined as diseases affecting fewer than 200,000 people in the United States or low prevalence is taken as prevalence of less than 5 per 10,000 in the community.

Because medical research and development of drugs to treat such diseases is financially disadvantageous, companies that do so are rewarded with tax reductions and marketing exclusivity, or a monopoly, on that drug for an extended time (seven years post-approval). The concept behind the ODA is that the longer period of exclusivity will encourage more companies to invest money in research. Under the act many drugs have been developed, including drugs to treat glioma, multiple myeloma, cystic fibrosis, and snake venom. In the US, from January 1983 to October 2008, a total of 1,800 different orphan drug designations have been granted by the Office of Orphan Products Development (OOPD) and 325 orphan drugs have received marketing authorization in the US. In contrast, the decade prior to 1983 saw fewer than ten such products come to market.

Since few markets would naturally exist to create these goods, as the costs of developing, researching and producing these drugs would likely exceed any revenues, government intervention is required, usually to establish such a market or to produce the goods itself. Critics of the free market often cite this as a market failure in free market economic systems. Free market advocates often respond that without government intervention development costs would be considerably lower.

The intervention by government can take a variety of forms:
 * Tax benefits to companies who produce or research these drugs.
 * Granting of additional rights above and beyond those granted by the regular patent laws.
 * Subsidizing and funding clinical research by universities and industry sponsors to develop medical products (including drugs, biological products, devices, and medical foods) for rare diseases.
 * Creating a government-run company to research and produce drugs.