PharmacoEconomics
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This review of the US Orphan Drug Act (ODA) 1983 outlines how the ODA is intended to stimulate orphan drug research and development of drugs for rare diseases. We also evaluate the effectiveness of the ODA in the past decade and provide recommendations for ODA improvements in the future. The economic incentives embedded in the ODA are presented in a simple economic model, in which a guarantee of market exclusivity plays a central role in encouraging firms to pursue the development of orphan products. ⋯ In the future, exceptionally high profits could be limited by more precise evaluation of disease prevalence, elasticity of demand, and the other uses of orphan compounds. We further recommend an expansion of the ODA tax credits and research grants programme and targeting of 'priority' diseases. We conclude that the ODA has been a valuable legislative initiative, but it can be strengthened with some simple extensions of the current incentives that it contains.