Earlier this year, we noted the Food and Drug Administration (FDA) approved 41 new medicines in 2014, the most since 1996. This jump in approvals can be attributed to many new drugs for orphan diseases, which are rare conditions and disorders that affect fewer than 200,000 people in the U.S.
Recognizing that drug companies would actually incur a financial loss in developing important drugs for rare conditions, Congress passed the Orphan Drug Act in 1983. The Act offers incentives to induce companies to develop drugs and other medical products for the small markets of individuals with rare disorders, including federal tax credits for the research to develop an orphan drug; waivers of drug approval application fees and annual FDA product fees; and 7-year marketing exclusivity on drug sales for the first company to obtain FDA marketing approval of a particular drug (for its approved use).
A recent case, Depomed Inc. v. U.S. Department of Health and Human Services et al., provides an interesting look at the last benefit—market exclusivity—and FDA’s policy regarding whether to deny this exclusivity.