Orphan Drug
A medication developed to treat a rare disease affecting fewer than 200,000 people in the United States, eligible for special incentives including 7 years of market exclusivity.
How It Works
The Orphan Drug Act of 1983 was designed to encourage development of drugs for rare diseases that might not otherwise be profitable. Incentives include 7 years of market exclusivity (longer than the standard 5 years for new chemical entities), tax credits for clinical trial costs, FDA fee waivers, and grants for clinical research. The program has been successful — over 600 orphan drugs have been approved since 1983. However, critics note that some orphan drugs are priced extremely high (sometimes $100,000+ per year per patient) and that the designation is sometimes used for drugs that also treat common conditions, generating blockbuster revenue.
Related Terms
- Exclusivity Period — A period of market protection granted by the FDA (separate from patents) during which generic competitors cannot be approved — even if no patent exists.
- Specialty Drug — A high-cost medication — typically above $1,000 per month — that treats complex or chronic conditions and often requires special handling, storage, or administration.
- FDA Approval — The process by which the U.S. Food and Drug Administration evaluates a drug's safety and efficacy through clinical trial data before allowing it to be marketed.
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About This Definition
This definition is part of the DrugPrice Drug Pricing Glossary — 34 terms explaining how prescription drug pricing works in the United States. All definitions are written in plain language for patients, caregivers, journalists, and healthcare professionals.