Skip to content

Educational content only. Not investment advice: no price targets or buy and sell recommendations of our own.

Learn / Orphan drug designation

Orphan drug designation

Orphan drug designation is the status given to a drug intended for a rare disease or condition, with the exact criteria set by each regulator[1][2][3]. In the US and the EU it is easier to gain marketing approval for an orphan drug, and there may be other financial incentives, such as an extended period of exclusivity[4].

In the US, the FDA defines an orphan drug as one intended for the treatment, prevention or diagnosis of a rare disease or condition, meaning one that affects fewer than 200,000 persons in the US or that meets cost recovery provisions of the act[1]. In the European Union, the European Medicines Agency defines a drug as orphan if it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically and seriously debilitating condition affecting not more than 5 in 10,000 EU people[2]. The EMA also qualifies a drug as orphan if, without incentives, it would be unlikely that marketing the drug in the EU would generate sufficient benefit for the affected people and for the manufacturer to justify the investment[2]. In Japan, a drug is designated as an orphan drug if it is intended for use in fewer than 50,000 patients in Japan and there is a high medical need[3].

Under the US Orphan Drug Act, sponsors of orphan drugs qualify for seven years of FDA-administered market exclusivity, tax credits of up to 50% of R&D costs, R&D grants, waived FDA fees and protocol assistance[5]. Orphan drug status granted by the European Commission gives marketing exclusivity in the EU for 10 years after approval[6].

In late 2007 the FDA and EMA agreed to use a common application process for orphan drug status, while continuing two separate approval processes[7].

Why it matters to investors

The incentives attached to orphan status are intended to encourage development of drugs that would otherwise lack sufficient profit motive to attract corporate research budgets and personnel[4]. Even where the EMA grants market access in all member states, in practice an orphan drug reaches the market only when a member state decides that its national health system will reimburse it[8].

Related: Breakthrough therapy designation, Fast track designation, EMA marketing authorisation, New Drug Application (NDA)

Sources

  1. "Developing Products for Rare Diseases & Conditions" . US Food and Drug Administration. 20 December 2018 . Retrieved 28 December 2019 . fda.gov; Hall, Anthony K; Carlson, Marilyn R (2014). "The current status of orphan drug development in Europe and the US" . Intractable & Rare Diseases Research . 3 (1): 1– 7. doi : 10.5582/irdr.3.1 . ISSN 2186-3644 . PMC 4204542 . PMID 25343119 . ncbi.nlm.nih.gov (via Wikipedia: Orphan drug)
  2. Giannuzzi, Viviana; Conte, Rosa; Landi, Annalisa; Ottomano, Serena Antonella; Bonifazi, Donato; Baiardi, Paola; Bonifazi, Fedele; Ceci, Adriana (3 April 2017). "Orphan medicinal products in Europe and United States to cover needs of patients with rare diseases: an increased common effort is to be foreseen" . Orphanet Journal of Rare Diseases . 12 (1): 64. doi : 10.1186/s13023-017-0617-1 . ISSN 175 ncbi.nlm.nih.gov (via Wikipedia: Orphan drug)
  3. "Ministry of Health, Labour and Welfare: Pharmaceuticals and Medical Devices" . www.mhlw.go.jp . Retrieved 2023-01-11 . mhlw.go.jp (via Wikipedia: Orphan drug)
  4. Hadjivasiliou, Andreas (October 2014), "Orphan Drug Report 2014" (PDF) , EvaluatePharma , archived from the original (PDF) on 10 October 2015 , retrieved 28 June 2015 web.archive.org; Daly, Rich (5 September 2002). "House Offers Incentives For Development of 'Orphan' Drugs". Congressional Quarterly Daily Monitor . (via Wikipedia: Orphan drug)
  5. Meeking, Kiran N.; Williams, Cory S. M.; Arrowsmith, John E. (15 August 2012), "Orphan drug development: an economically viable strategy for biopharma R&D" , Drug Discovery Today , 17 ( 13– 14): 660– 664, doi : 10.1016/j.drudis.2012.02.005 , PMID 22366309 , retrieved 29 June 2015 drugdiscoverytoday.com (via Wikipedia: Orphan drug)
  6. Gerke, Sara; Pattinson, Shaun D. (2017-02-09). "EU Marketing Authorisation of Orphan Medicinal Products and Its Impact on Related Research" (PDF) . European Journal of Health Law . 24 (5): 541– 564. doi : 10.1163/15718093-12341439 . dro.dur.ac.uk (via Wikipedia: Orphan drug)
  7. Donna Young (2007-11-28). "U.S., EU Will Use Same Orphan Drug Application" . BioWorld News . Washington . Retrieved 2008-01-06 . In an attempt to simplify the process for obtaining orphan status for medications targeting rare diseases, the FDA and the European Medicines Agency (EMA) have created a common application. ... U.S. and European regulators still will conduct independent reviews of applic bioworld.com (via Wikipedia: Orphan drug)
  8. Denis, Alain; Mergaert, Lut; Fostier, Christel; et al. (2010). "Issues Surrounding Orphan Disease and Orphan Drug Policies in Europe". Applied Health Economics and Health Policy . 8 (5): 343– 350. doi : 10.2165/11536990-000000000-00000 . PMID 20804226 . S2CID 27388954 . doi.org (via Wikipedia: Orphan drug)

Checked 8 October 2026. How we check sources