Orphan Drug
A medicine developed to treat a rare disease, defined in the United States as a condition affecting fewer than 200,000 people. Special FDA incentives, including extended market exclusivity and tax credits, encourage manufacturers to pursue these otherwise commercially unattractive therapies.
What is an orphan drug?
An orphan drug is a medicine developed to treat a rare disease, defined in the United States as a condition affecting fewer than 200,000 people. Because the patient population is small, these therapies would often be commercially unattractive to develop without support.
To encourage their development, the FDA offers incentives such as extended market exclusivity and tax credits tied to orphan drug designation.
Why do orphan drugs matter?
Orphan drugs address serious conditions that might otherwise be neglected because they affect too few people to justify ordinary commercial investment. The incentive structure has spurred development of many therapies for rare diseases.
Within the pharmaceutical industry, orphan drug status carries significant strategic and financial implications, shaping development decisions, pricing, and the exclusivity period a manufacturer can expect to enjoy.
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