Department of Health and Human Services, OFFICE OF INSPECTOR GENERAL  MAY 2001

PURPOSE:  The purpose of this inspection was to assess the implementation of the Orphan Drug Act of 1983 and its impact on industry and patients.

Congress passed the Orphan Drug Act of 1983 to stimulate the development of drugs for rare diseases. A rare disease is defined as a disease that affects fewer than 200,000 people in the United States. Prior to passage of this historic legislation, private industry had little incentive to invest money in the development of treatments for small patient populations, because the drugs were expected to be unprofitable. The law provides 7-year marketing exclusivity to sponsors of approved orphan products, a tax credit of 50 percent of the cost of conducting human clinical testing, and research grants for clinical testing of new therapies to treat orphan diseases. Exclusive marketing rights limit competition by preventing other companies from marketing the same version of the drug, unless they can prove clinical superiority.

The Food and Drug Administration administers the Orphan Drug Act and reviews applications for orphan designations. The Office of Orphan Products Development awards designations and administers the small grants program. The Center for Drug Evaluation and Research and the Center for Biologics Evaluation and Research review applications for marketing approval.

We reviewed FDA’s database that contains information on all designations and approvals from 1983 to 2000. We interviewed regulatory affairs staff and other representatives from a purposeful sample of 36 biotechnology and pharmaceutical companies. We also interviewed representatives from 37 patient advocacy groups. We conducted a focus group with Food and Drug Administration staff and consulted with drug policy experts and representatives from trade groups. We also reviewed relevant literature.

The Orphan Drug Act’s incentives and the Office of Orphan Products Development’s clinical superiority criteria motivate drug companies to develop orphan products. Since Congress passed the Orphan Drug Act of 1983, the Food and Drug Administration has
awarded more than 1,000 designations and approved more than 200 products.

The Orphan Drug Act – Implementation and Impact 1 OEI-09-00-00380 Advocates report that orphan products are usually accessible to patients. Orphan products are usually accessible, although they can be costly and in limited supply. Insurance typically pays for the treatments, and companies offer patient assistance programs to help patients obtain their products.

The Office of Orphan Products Development provides a valuable service to both companies and patients. Companies report an excellent relationship with this office, which awards orphan product designations and disseminates public information about orphan

Orphan products meet the legal prevalence limit, and most fall well below the threshold of 200,000 patients. Average patient population has climbed since 1983 but remains well below the legal limit.

Based on our survey of patient groups and sponsors and our review of the FDA database on designations and approvals, we conclude that no regulatory or legislative changes are needed at this time. Although, in some instances, companies have questioned the Office of Orphan Products Development’s decisions, they generally praised the Orphan Drug Act and its implementation.