Orphan Drugs Impact More Than Just Disease
Posted: Sep 15 2015


In the U.S. a rare disease is a disease that affects fewer than 200,000 people. Currently there are approximately 7,000 identified rare diseases. Collectively these diseases affect nearly 30 million Americans. Some conditions considered rare are very recognizable such as cystic fibrosis, Lou Gehrig’s disease, and Tourette’s. Many others are unfamiliar. Approximately 80% are genetic conditions of which many are inherited. New rare diseases are discovered annually and it is estimated that almost 50% of rare diseases affect children. Often it takes years to diagnose a rare disease because symptoms may be absent in the early stages or mimic other conditions.

Information regarding rare diseases is limited and treatment options have historically been few or nonexistent. Research can be challenging because of the high costs involved in developing new medications and the small populations available for testing. To address these complications, the Food and Drug Administration (FDA) developed an incentive program in 1983 known as the Orphan Drug Act. An orphan drug is one used for the treatment of a rare disease or one that will not generate enough revenue to justify the cost of research and development. The purpose of the Orphan Drug Act is to encourage manufacturers to develop products with limited potential for profit. Many of these agents may be given a high review priority or fast-tracked during the new drug application process (NDA). Manufacturers must continue to provide the same safety and efficacy data as other drugs evaluated by the FDA, but an orphan drug designation provides several incentives to drug companies.

  • Tax incentives: The manufacturer is eligible to receive a tax credit for money spent on research and development of an orphan drug.
  • Protocol assistance: If a manufacturer can show that a drug will be used for a rare disease, the FDA will provide assistance developing the preclinical and clinical plan for the product. For example, exceptions may be made for the number of patients participating in a trial based on the low number of patients with the disease.
  • Grants and contracts: The FDA budget may allot money for grants and contracts to be used in developing orphan drugs.
  • Marketing exclusivity: The first manufacturer to obtain marketing approval for a designated orphan drug is allowed seven years of marketing exclusivity for that indication.

According to the Pharmaceutical Research and Manufacturers of America (PhRMA), the FDA has approved nearly 500 orphan drugs since the passage of the Orphan Drug Act. In the last five years, one-third of all drug approvals were for rare diseases and there are more than 450 medications in development for rare diseases. In 2014, 41% (17 of 41) of novel new drugs were for rare diseases. Before the passage of the Orphan Drug Act, fewer than 10 orphan drug products were approved and marketed.

The added focus to orphan drug development offers promise to many who are afflicted with rare diseases at a premium price. The costs associated with treatments are substantial. Many of the recently approved medication have price tags of over $100,000 per year.

Orphan Drugs Approved in 2014*
Orphan Drug Rare Disease Number Affected in U.S. Estimated Yearly Cost of Drug
Vimizim Mucopolysaccharidosis Type IVA 1,500 $1,850,000
Sylvant Multicentric Castleman’s Disease 30,000 $100,000
Cerdelga Gaucher Disease 6,000 $380,000
Ofev Idiopathic Pulmonary Fibrosis 7,000-90,000 $120,000

*This list is not all-inclusive. Costs are based on AWP pricing obtained September 15, 2015 and approximation based on a 70 kg patient.

MedTrak Programs:

MedTrak’s clinical pharmacists apply stringent, evidence based criteria during the prior authorization review process. Benefit determinations are multi-faceted and include assessments of diagnoses, laboratory finds, clinical screening results from genetic tests and other variables to eliminate off-label uses. All coverage decisions utilize specific methodology derived from a group’s Summary Plan Description (SPD). Approvals are directed to MedTrak’s Best-In-Class specialty pharmacies for participating groups. Partial fills and quantity limits may be employed when appropriate.


  1. Frequently asked questions about rare diseases. National Human Genome Research Institute. http://www.genome.gov/27531963. Accessed September 15, 2015.
  2. A Decade of Innovation in Rare Diseases. Pharmaceutical Researchers and Manufacturers of America. http://www.phrma.org/sites/default/files/pdf/PhRMA-Decade-of-Innovation-Rare-Diseases.pdf. Accessed September 15, 2015.
  3. Novel New Drugs 2014 Summary. U.S. Food and Drug Administration. http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/DrugInnovation/UCM430299.pdf. Accessed September 15, 2015.

Back to all Clinical Notes