Orphan Drug Act: Background and Proposed Legislation in the 107th Congress

Congressional Research Service (CRS) Report for Congress, July 2001

The Orphan Drug Act (P.L. 97-414) was signed into law on January 4, 1983. The Act provides incentives for pharmaceutical manufacturers to develop drugs, biotechnology products, and medical devices for the treatment of rare diseases and conditions. These products are commonly referred to as orphan products. Incentives for orphan product development include marketing exclusivity for orphan drug sponsors, tax incentives, and research grants. Since the Act was passed in 1983, the Food and Drug Administration (FDA) has approved 183 new orphan products. Critics of the Act argue that, because the Act relies on market-oriented strategies to promote orphan drug development, overpricing of drugs can limit patient access to orphan drug treatment, especially among those who lack health insurance. Others argue that the Act has been very successful in finding new treatments for rare diseases and conditions, and that any changes to the incentives provided in the law would suppress research and development.  Legislation has been introduced in the 107th Congress to modify marketing exclusivity provisions, and to accelerate and expand tax benefits for orphan drug manufacturers.