NCPA - National Center for Policy Analysis

"ORPHAN" RX

November 17, 2005

"Orphan" medications -- treatments for rare diseases -- have become an unlikely source of revenue for pharmaceutical companies, says the Wall Street Journal.

Under the Orphan Drug Act, passed in 1983 to encourage the development of treatments for rare diseases, pharmaceutical and biotechnology companies can exclusively market medications with orphan status for seven years.

  • The law also provides companies with tax and fee incentives and access to federal grants.
  • The Food and Drug Administration (FDA) awards orphan status to treatments for diseases that affect less than 200,000 U.S. residents annually.

According to the Journal,"what was originally envisioned as a modest sideline for drug companies has instead become a multibillion-dollar business."

Some pharmaceutical companies charge as much as $600,000 annually per patient"for drugs that people would need their entire lives," the Journal reports.

About 260 orphan medications currently are on the market, and an additional 1,400 are under development.

Source: Geeta Anand,"A Biotech Drug Extends a Life, But at What Price?" Wall Street Journal, November 16, 2005.

 

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