Since passage of the Orphan Drug Act in the United States in 1983, the number of orphan drug approvals has increased steadily, with most activity occurring in the last three of its four decades of existence. Advances in genomics have provided growing insights into disease mechanisms and enabled identification of novel drug targets for rare diseases.
Convoluted Route to the Orphan Drug Act
The first use of the term orphan in relation to drugs occurred in the United States in the 1960s and referred to drugs approved for use in adults but not children, likely due to their limited profitability in the smaller market.1 A few years later, the term orphan was applied to drug substances developed prior to passage in 1962 of the Kefauver–Harris Amendments to the Food, Drug and Cosmetic Act and for drug products that had been previously marketed but for which manufacturers had not sought approval after 1962, again likely due to their limited profitability.
Patient advocacy groups eventually began to grab the attention of the U.S. Congress in the late 1970s.1 A U.S. Food and Drug Administration (FDA) task force determined that the government should provide financial and organizational support to pharmaceutical companies to offset the higher costs associated with the approval process as a means of encouraging production of “service” drugs. Nothing was done, however, until the failure of a bill that would provide financial assistance to pharmaceutical companies developing treatments for rare diseases to pass was brought to the attention of Maurice and Jack Klugman, who produced several episodes of the television drama series Quincy M.D. exploring the struggles of patients suffering from rare diseases and calling for congressional action.2
The show raised public awareness and support, which ultimately resulted in passage of the Orphan Drug Act (ODA) of 1983.1 The bill sought not only to provide access to existing drugs known to be effective but not submitted to FDA for approval but to encourage the development of new drugs for rare diseases without any available treatments. During debate, the bill’s sponsor Henry Waxman (D) referenced “orphan diseases,” hence establishing the term. Waxman framed the orphan drug problem as one of market failure and proposed tax incentives and marketing exclusivity as incentives.
It is worth noting that, leading up to passage of the ODA, the Pharmaceutical Manufacturers Association (PMA) had decided the orphan drug issue offered an avenue for raising its concerns about the strict approval process for all new drugs.1 The goal was an overhaul of the entire regulatory framework, but with no special solution for orphan drugs.
Waxman received strong support, however, from a coalition of researchers (who eventually became the National Organization for Rare Disorders (NORD)) involved in rare diseases, which monitored the ODA bill and performed public outreach, and the Generic Pharmaceutical Industry Association (GPIA), which was seeking an abbreviated approval pathway for off-patent drugs (the status of many orphaned drugs).1 The PMA was also seeking to extend patent protection in order to minimize generic competition, and the move by the GPIA could have raised publicity issues for the PMA. It thus elected to support the ODA and implicitly the idea that orphan drugs were a special market failure case and not just representative of a wider problem with the drug approval process.
By the mid-1990s, many other countries had adopted approaches similar to the U.S. market-based approach for orphan drugs.1 One of the drivers was the positive impact such an approach was seen to have on the growth of the biopharmaceutical sector, given that a high percentage of orphan drugs under development were biologics.
Slow Start
The ODA provided seven years of exclusive marketing rights for non-patented drugs and tax credits equal to 50% of the cost of clinical trials for orphan drugs.1 In addition, the FDA was required to create the Office of Orphan Products Development (OOPD) and was authorized to provide grants for conducting clinical trials of orphan drugs in the budgets for 1983 through 1985. One of the first actions of the OOPD was to define orphan diseases as those affecting 200,000 people or less in the United States, a definition that was legally established in the 1984 Amendments to the ODA. Over 7,000 known diseases meet the definition.
While some existing orphan drugs with known safety and efficacy were pursued, few pharmaceutical or generic companies sought development of new orphan drugs for rare diseases during the first two years following passage of the ODA, and the budget for FDA grants were not appropriated in 1983 or 1984.1 Thus, additional amendments to the ODA were passed in 1985 that expanded marketing exclusivity to patented drugs and created the National Commission on Orphan Diseases (NCOD) to monitor government agency activities involving rare diseases. In 1987, the group reported that more than half of government funding for rare disease research was focused on cancers, and that researchers found it more difficult to get funding for studies on rare diseases compared with prevalent one.
30+ Years Later: Real Positive Impacts
Despite these challenges, the ODA did eventually encourage drugmakers to invest in the development of novel drugs for rare diseases. In fact, while only 34 had been approved between 1967 and 1983, by August 2018, 503 unique medicines targeting 731 different orphan indications had been approved, and 78% of those were solely for orphan diseases.3 In 2023, more than 370 orphan drugs were actively marketed.4
Overall, between 1983 and 2019, 5099 drugs and biologics received orphan drug designation, with the number of designations more than doubling in the 1980s and 1990s, nearly doubling between the 1990s and 2000s and nearly tripling between the 2000s and 2010s.5
In 2014, 2015, 2016 and 2017, 41%, 47%, 45% and 40%, respectively, of new molecular entities (NMEs) approved by the FDA’s Center for Drug Evaluation and Research (CDER) were orphan drugs.6 Even though the tax credit was reduced from 50% to 25% in 2017, more than half the drugs approved by the FDA in 2017 and 2018 had orphan drug designations.1,5 This trend continues: in 2024, 52% of CDER’s 50 approved drugs treat rare or orphan diseases.7
Other Important Developments
NORD has been very active in advocating for the development of new treatments for rare diseases.2 The organization was involved in introduction of the FDA’s accelerated approval pathway for orphan drugs in 1996, passage of the Rare Diseases Act in 2002, which created the National Institutes of Health’s (NIH) Office of Rare Diseases Research and the NIH Rare Diseases Clinical Research Network, establishment of an Associate Director for Rare Diseases position within CDER in 2010, inclusion of insurance caps for people with rare diseases within the Affordable Care Act, and launch of CDER’s Accelerating Rare Disease Cures (ARC) Program in 2022.
Figure 1. Orphan Drug Designations by category. Figure courtesy of Nice Insight.
Expanding Indications and Many Modalities
Cancer remains the major therapy area, although treatments have been approved for a broad array of other diseases, including cystic fibrosis, inherited eye diseases, hereditary angioedema, hemophilia A and B, Lou Gehrig’s disease, Rett Syndrome, Tourette’s syndrome, inherited blood and metabolic disorders, infectious diseases, and autoimmune diseases.8 Many are rare genetic diseases, and nearly one-third involve pediatric indications.
In the 2010s, the top three therapeutic areas targeted by approved orphan drugs were oncology, neurology, and infectious diseases, with the percentages of treatments for cancer, pediatric-onset diseases, and neurologic disorders noticeably rising.5
While some of the initially approved orphan drugs were more traditional small molecule therapies that had been used before the 1962 FDCA amendments, many of the novel orphan drugs that have received approval over the last two decades have been biologics, including monoclonal antibodies and immunotherapies targeting rare cancers, and more recently gene therapies targeting inherited genetic disorders.
Reaping Many Benefits... and Criticisms
The approval of hundreds of orphan drugs has had a tremendous impact on millions of patients suffering from rare diseases, offering them improved quality of life and representing hope to others awaiting the introduction of new medicines for their conditions.
At the same time, many detractors point to the extremely high price tag carried by many orphan drugs as an important failure of the market-based approach taken in the United States.1 In 2023, the cost of an orphan drug was on average 4.5 times that of a non-orphan drug.4
Concerns were first raised about excessive profits on orphan drugs in the late 1980s and investigated by congress. Shared exclusivity to increase competition and limits on total sales accrued were rejected as defeating the incentives afforded by the ODA, and many drug companies shifted their development focus from blockbusters to potentially lucrative orphan drugs.
Many manufacturers of orphan drugs do offer their therapies for free or at reduced prices to patients that cannot afford them. Unlike the service drugs of the past, however, which were funded by sales of non-orphan drugs, these programs are made possible by the high prices of orphan drugs.1 Similarly, money for the development of other novel rare disease therapies comes from the sale of “billion-dollar orphans.” It is even funding development of drugs for prevalent diseases — a complete turnaround from the initial intention of the ODA.
Not only has this situation highlighted the issue of orphan drug affordability, but also raised an important question about the ability of the current regulatory framework to ensure patients are best served by the pharmaceutical industry.1
Ongoing but Perhaps Slower Growth Anticipated
Despite their high cost, orphan drugs are helping patients, and continued investment by biopharma companies in the development of new rare disease treatments is expected over the coming decade. With just 10% of the more than 7,000 identified rare diseases having available treatments and approximately one in 10 people in the United States having a rare disease,2 there are many opportunities for innovation in this field.
Evaluate Pharma estimates that the global orphan drug market brought in $185 billion in 2024 and projects earnings of $270 billion by 2028.9 The anticipated rate of growth during the period will, however, be slower than in the past. While prices rose at nearly 11% from 2013 to 2023, they are expected to increase near 10% through 2030. The success of some new blockbuster antiobesity, neurologic, immunologic, and oncologic treatments is having an impact. Growing pressure to reduce prices is also playing a role. Insurers are more likely to include treatments for prevalent diseases on their formularies than highly process orphan drugs for rare diseases. The slowdown is only relative, however, and with the overall drug market experiencing healthy growth, the orphan drug sector will remain healthy.
The top orphan drugs in 2028 as predicted by Evaluate Pharma will be Darzalex (multiple myeloma, Johnson & Johnson), Trikafta (cystic fibrosis, Vertex Pharmaceuticals), and Hemlibra (hemophilia A, Roche).9 In that year, the companies projected to have the highest sales of orphan drugs are Johnson & Johnson, Roche, and AstraZeneca.
References
Mikami, Koichi. “Orphans in the Market: The History of Orphan Drug Policy.” Soc Hist. Med. 32: 609–630 (2017).
The Orphan Drug Act Turns 40: NORD Celebrates Its Impact on Rare Diseases. National Organization for Rare Diseases. 4 Jan. 2023.
“Orphan Drugs in the United States: Growth Trends in Rare Disease Treatments.” IQVIA Institute Report. 17 Oct. 2018.
Mikulic, Matej. “Orphan drugs - Statistics & Facts.” Statista. 10 Jan. 2024.
Miller, KL, LJ Fermaglich, and J Maynard. “Using four decades of FDA orphan drug designations to describe trends in rare disease drug development: substantial growth seen in development of drugs for rare oncologic, neurologic, and pediatric-onset diseases.” Orphanet. J. Rare Dis. 16: 265 (2021).
Van Arnum, Patricia. “What is Trending: Orphan Drugs.” DCAT Value Chain Insights. 14 Nov. 2018.
New Drug Therapy Approvals 2024. U.S. Food and Drug Administration. Jan. 2025.
Love, James. “Orphan Drugs Designations and Approvals have Something to Say about Risks.” Harvard Law Bill of Health. 25 Sep. 2017.
Becker, Zoey. “Orphan drug market to reach $270B by 2028, led by J&J, Vertex and Roche.” Evaluate Pharma. 24 Apr. 2024.