Definition
Orphan Drug Designation (ODD) is an FDA status granted to drugs intended to treat, diagnose, or prevent rare diseases affecting fewer than 200,000 people in the United States. The Orphan Drug Act of 1983 created incentives to encourage development of treatments for rare conditions.
How Orphan Drug Designation Works
Sponsors request ODD from FDA’s Office of Orphan Products Development. The request must demonstrate the disease meets the rare disease definition and provide scientific rationale for the drug’s potential benefit.
Eligibility Criteria
- Disease affects fewer than 200,000 US patients
- OR development costs exceed expected US revenues
- Drug shows promise for treating the condition
- Can be requested at any development stage
Orphan Drug Benefits
| Benefit | Value |
|---|---|
| Tax Credit | 25% of qualified clinical trial costs |
| PDUFA Fee Waiver | ~$4 million savings |
| Market Exclusivity | 7 years from approval |
| FDA Grants | Up to $600,000/year for clinical trials |
| Protocol Assistance | FDA guidance on development |
Orphan Drug Statistics
- 7,000+ rare diseases exist
- 600+ orphan drugs approved since 1983
- 4,500+ orphan designations granted
- Orphan drugs represent ~50% of FDA novel approvals
Why BD Teams Track Orphan Designation
For business development professionals, ODD signals rare disease focus:
- Deal Implication: 7-year exclusivity provides commercial protection; premium pricing is common
- Due Diligence Focus: Verify disease prevalence assumptions and competitive landscape
- Opportunity Signal: Orphan programs often seek partners for commercial reach in specialized markets