The granting of the orphan drug status is designed to encourage the development of drugs which are necessary but would be prohibitively expensive/un-profitable to develop under normal circumstances.In the
United States, 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. This has been adopted as a subclause of the
Food and Drug Administration (FDA) regulations. 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 (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 June 2004, a total of 1,129 different orphan drug designations have been granted by the Office of Orphan Products Development (OOPD) and 249 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.
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