Rare Diseases and the Orphan Drugs

Collectively rare diseases affect more than 25 million Americans. The prevalence of more than 6,000 rare diseases and the absence of available treatments in the United States for these diseases received extensive publicity in 1980. Individuals with rare diseases such as Huntington’s disease, ALS (Lou Gehrig’s disease), sickle cell anemia, and thalassemia had little hope of a cure because patient populations were too small to encourage product development.

This realization identified the need of an incentive to encourage development of treatments for these life-threatening disorders. The US Congress found that some promising new orphan drugs would not be developed unless changes were made in applicable Federal laws to reduce the costs and provide financial incentives to develop such drugs.

As a result, the Orphan Drug Act was passed by the Congress in 1982 and signed into law in 1983. The Act established a public policy that the federal government would assist in the development of treatments for rare diseases. In 1984, an orphan drug was designated as a drug intended to treat a condition affecting fewer than 200,000 persons in the United States. Receiving orphan drug status entitles a drug developer such as EGT to several benefits:

* Seven years of exclusive marketing upon FDA approval

* Tax credit for clinical research expenses, including a 15 year carry forward and a 3 year carryback based on the right to claim 50% of clinical trial costs as a Federal Tax Credit

* Grant support to defray costs of clinical studies of up to $200,000 per year for three years

* Waiver of the Prescription Drug User Fee Act filing – filing fees are $250,000 and greater

In the two decades since the law has passed, nearly 300 orphan drugs have been approved by the FDA.

For more information on The Orphan Drug Act, please visit the U.S. Food and Drug Administration Office of Orphan Products Development website at: http://www.fda.gov/orphan