Orphan Drugs are Forerunners of Personalised Medicine

Marketing exclusivity in EU and U.S.A provided a monopolistic market for orphan drugs without “me-too”/generics competitors, to pharma companies.

Orphan drug laws and the pharma industry made great contributions towards the cure of millions of people offering from uncommon and frequently life-threatening diseases. However, it is necessary to strike a new balance between incentives and competition.

There is no single, widely accepted definition for rare diseases: 

  • U.S.A defines according to prevalence – affecting less than 200.000 persons or about 1 in 1.500 people
  • Japan - affectsfewer than 50.000 patients (tropical diseases not included)
  • EU -"life-threatening or chronically debilitating disease” affecting fewer than 5 in 10.000 patients,concomitantly with absence of existing treatment, covers some tropical diseases
  • There are other countries with legislation/incentives for orphan diseases

Paradox of Rarity

Even though the “diseases are rare, rare diseases patients are many”.

Rare Diseases have low prevalence/heterogeneity, patients are a minority,and the market is too small for pharma investment in orphan drugs R&D; the relentless work of patient advocates and parent’s organizations, urged governments to enact legislation with incentives to encourage the pharmaceutical industry to search for treatments for orphan diseases. 

Ultra Orphan Diseases are extremely rare chronically debilitating or life threatening conditions; neglected diseases are common and transmissible primarily affecting patients in developing countries- their market is unprofitable – they are not rare diseases, but are orphan diseases because pharmaceutical companies neglect them.

Orphan diseases have a wide range of disorders and symptoms, varying between and within each condition, 80% have genetic origins, and collectively, affect 350 million people worldwide.

Current Legislation:

US – The Orphan Drug Act (ODA) 1983


  • FDA grants and financial assistance
  • 50% of clinical trials’ costs defrayed in tax credits
  • Waived PDUFA fee (more than $1 million/application)
  • Seven Years of Market Exclusivity (FDA does not approve another company’s version of the “same drug for the same disease or condition “/ Generics)
  • Accelerated Approval (for serious and life-threatening illnesses (using surrogate endpoints – open trials) –of an NDA-(the company can sell drugs to patients that are not part of clinical trials, while the testing is still going on)
  • Regulatory Fee Waivers

The Rare Disease Act (2002)- disorders affecting fewer than 200.000 people or about 1 in 1.500 people

The Creating Hope Act of 2011(U.S. Senator Bob Casey (D-PA)), not yet passed

  • Bipartisan billto encourage pharmaceutical companies to work on ultra-orphan drugs (pediatric/neglected tropical diseases)
  • Incentive -  decreased period (up to 5 months)  before marketing one( more profitable)drug of the company’s portfolio 

EU - Regulation (EC) No 141/2000; Commission Regulation (EC) No 847/2000


  • Fee Reductions; Funds For Examination Fees
  • Protocol Assistance (scientific advice/clinical trials)
  • Access To The Centralized Authorization Procedure 
  • Ten Years Of Market Exclusivity (may be reduced to 6 years if there is not enough production/market demand; if another company has a “safer, more effective or otherwise clinically superior” drug)

FDA & EMEA agreed to utilize a common application process in 2007

The caveat here is monopolistic advantages raise questions over touting health benefits in absence of good proof. The assertion that orphan drugs target few patients does not apply to all cases, and distorts the purpose of orphan drug laws. Strategies that paid off huge profits:


  • Some orphan drugs targeted large numbers of patients because they were efficient for several rare diseases (e.g. “Gleevec/Glivec”, Novartis)
  • An orphan drug can also be used to treat a common disease(e.g.“Tracleer”,  Actelion Pharmaceuticals)
  • A drug for a common disease may develop an indication for a rare disease (e.g. “Viagra/Revatio”, Pfizer) 

Searching For That Pot of Gold

“Piecemeal Strategy”

  • Attempt to define a phase/severity of a certain disease as a differentiated condition allowing orphan drug status, provided there is prevalence threshold. This practice takes advantagefrom the fact that the FDA permits sponsors to parse diseases into therapeuticallyreasonable subsections.
  • The goal is to obtain market exclusivity/statutory benefits/for multiple indications, which, jointly, surpass the 200.000 people limit

“Orphan Blockbusters”

Market exclusivity-monopoly and orphan drugs intended for the 200.000 people limit:

  • That later on surpassed that limit and became extremely profitable – the leading example is AIDS

Sponsors not only reaped considerable benefits as recovered all development costs two years after access to the market:

  • Drugs for chronic diseases (administered to patients during a prolonged time)as Genzyme’s “Ceredase” for “Glaucher´s” disease
  • Use of orphan drugs for off-label indications,acknowledged in the FDA approval, which increases market size and raises profit margins 

Provisions of “The Patient Protection and Affordable Care Act” (PPAC Act) Of 2010

  • Drug Discount Program
  • Provision For An Annual Fee (section 9008(a) of the PPAC Act))
  • These Provisions Do Not Apply To Orphan Drugs

However, “All Good Things Must Come To an End”

  • The Treasury Department is now considering whether to limit the exclusions for orphan drugs (1)
  • The Office of Pharmacy Affairs of the U.S. Health Resources Services Administration (HRSA) is currently addressing the drug discounting component, and the corresponding orphan drug exclusion of the PPAC Act (1)

Sometimes, a Song Says it Better: “I Want It All” (2) 

  1. http://www.lexisnexis.com/community/taxlaw/blogs/lexistaxstaffanalyses/archive/2011/06/30/potential-quot-orphan-drug-quot-exclusions-under-the-patient-protection-and-affordable-health-care-act.aspx
  2. “I want It All” (Queen)


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