Twenty-five years ago, Congress formally recognized the lack of available treatments for rare and neglected diseases and the difficulty of finding companies to develop them. Congress reasoned that if adequate financial incentives were created, companies might be more willing to assume the large risks associated with developing drugs for these conditions. Accordingly, in 1983 Congress passed the Orphan Drug Act,2 which allows FDA to provide incentives for companies to bring such drugs to market. Recently, Congress introduced additional incentives in the 2007 Food and Drug Administration Amendments Act. Current incentives include grants, tax credits, a waiver of the $1 million Prescription Drug User Fee Act filing fee, FDA assistance with protocol development, priority review of new drug applications (a 6-month review rather than the standard 10-month review), and a 7-year U.S. market exclusivity following approval of a designated orphan product.3

Patient groups, disease foundations, and philanthropic organizations have long recognized that the conventional drug development model is less effective in yielding treatments for rare and neglected diseases, and have therefore devised a range of financial and operational strategies for filling this gap. As a result, the outlook for the development of drugs for rare and neglected diseases is arguably far better today than was the case a decade ago.

The riskiest period of drug development, and the one most difficult to fund, is that between basic discovery, generally funded by government, and late-stage development, generally funded by large pharmaceutical companies. This period, often referred to as the “valley of death,” includes expensive preclinical animal safety testing, pilot manufacturing, and early-stage safety and proof-of-concept efficacy clinical trials. Many not-for-profit organizations are advancing the development of drugs for rare and neglected diseases through a broad array of financial and operational strategies aimed at decreasing the risk of investment during this period. Some organizations, such as the Cystic Fibrosis Foundation, have launched entire virtual companies to manage all aspects of the development of new therapies for a single


The FDA Orphan Drug Program is discussed further in Chapter 3.


Therapies for rare and neglected diseases may be designated as orphan products if one of the following conditions is met: (1) the disease or condition for which the drug is intended affects fewer than 200,000 people in the United States or, if the drug is a vaccine, diagnostic drug, or preventive drug, the persons to whom the drug will be administered in the United States are fewer than 200,000 per year as specified in 21 CFR § 316.21(b); or (2) for a drug intended for diseases or conditions affecting 200,000 or more people, or for a vaccine, diagnostic drug, or preventive drug to be administered to 200,000 or more persons per year in the United States, there is no reasonable expectation that costs of research and development of the drug for the indication can be recovered by sales of the drug in the United States as specified in 21 CFR § 316.21(c).

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