NCPA - National Center for Policy Analysis


June 24, 2008

The Orphan Drug Act celebrates its 25th year of making it possible for companies to invest hundreds of millions of dollars in the development of potential treatments for rare diseases, says Ed Rensi, former president and CEO of McDonald's USA. 


  • A rare, or orphan, disease is defined as one that affects fewer than 200,000 Americans.
  • By offering tax incentives for clinical trials of these treatments and granting seven years of patent exclusivity once the drug is approved, the Orphan Drug Act gives hope to the millions of Americans living with these horrible diseases.
  • The act has also made it easier for many nonprofit organizations to partner with companies to find treatments for rare diseases.
  • One of its most notable achievements has been to make the capital markets less risky for biotechnology investors.
  • It has allowed companies to secure financing for research and development, and created opportunities for scientists and entrepreneurs to make important advancements in treating these rare diseases.

Prior to this legislation, says Rensi, it was prohibitively expensive for a company to develop a drug for a disease that affects so few people:

  • In fact, in the decade before the law was passed, only 10 new drugs for rare diseases were developed.
  • In the 25 years since, more than 1,100 new treatments for orphan diseases have entered the research pipeline, and over 300 new orphan drugs have been approved by the Food and Drug Administration.

Source: Ed Rensi, "The Orphan Drug Act Has Been a Huge Success," the Wall Street Journal, June 23, 2008.

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