Orphan Drug Development and Regulation

According to the FDA, an orphan drug is defined as a pharmaceutical agent developed to treat a rare disease or condition. The development of an orphan drug is usually supported by public and charitable funding. It is estimated that there are 5,000-8,000 rare diseases for which orphan drugs could be developed globally. At present, the U.S. dominated the development of orphan drugs, followed by Europe. The Orphan Drug Act (ODA) was first passed in 1983 to encourage the development of drugs for rare diseases. As of 2019, a total of 564 new orphan therapies had been approved following the passage of the ODA. The number of approvals for orphan drugs and rare disease indications has increased dramatically.

FDA Orphan Drug Designations and Approvals Fig.1 FDA Orphan Drug Designations and Approvals (IQVIA Institute, 2020)

Challenges in Orphan Drug Development

Currently, there are about 7,000 rare diseases in the USA affecting 25 million people and 250 new rare diseases are described annually. The orphan drug development process faces a range of clinical, regulatory, and commercial challenges. Due to the small number of patient populations, patient recruitment and retention are the biggest challenges in clinical trials. Many orphan diseases have complex phenotypes and may be poorly understood, making it difficult to set clinical endpoints, biomarkers, or outcome measures. In addition, the small market for orphan drugs may also limit the ability of pharmaceutical companies to recover their high cost.

Regulatory schematic of orphan drug development in the United States Fig.2 Regulatory schematic of orphan drug development in the United States (Alice, 2017)

Orphan Drug Regulation

Because orphan diseases are not a public health priority with a small target population size, little drug development are performed for these diseases. In response to this, the ODA was signed into law to stimulate the pharmaceutical industry, which provides a set of incentives and conditions to the pharmaceutical company to develop medicines for the treatment of rare diseases. Some of the incentives include 7-year marketing exclusivity to sponsors of approved orphan products, the eligibility to receive regulatory assistance and guidance from the FDA, the ability to qualify to compete for research grants from the Office of Orphan Products Development (OOPD), waiver of Prescription Drug User Fee Act (PDUFA) fees for orphan drugs, and federal tax credit for expenses incurred in conducting clinical research within the United States. In December 1999, the European Parliament and Council adopted the regulation on Orphan Medicinal Products, and the Legislation was adopted by the European Commission in April 2000.

FDA incentives versus EMA Incentives for Orphan Medicines Fig.3 FDA incentives versus EMA Incentives for Orphan Medicines (Maria, 2020)


  1. Cheng, A. and Xie, Z., 2017. Challenges in orphan drug development and regulatory policy in China. Orphanet Journal of Rare Diseases, 12(1).
  2. Bouwman, M., Sousa, J. and Pina, M., 2020. Regulatory issues for orphan medicines: A review. Health Policy and Technology, 9(1), pp.115-121.
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