The Orphan Drug Act is a Win for Patients and Innovation

Here’s a statistic that might surprise you: approximately 7,000 rare disorders are known to exist, and new ones are discovered each year. It’s not something we think about often, in fact, the media almost never cover it. However, in recognition of Rare Disease Day, it’s important to acknowledge that these rare conditions – often referred to as orphan diseases – impact the lives of one in 10 Americans each day. And while it might be true that each rare disease only affects a small number of patients – 200,000 or fewer in the United States – collectively, it is estimated that 25 to 30 million Americans suffer from a rare condition.

 Thankfully, the Orphan Drug Act (ODA) has given families and individuals suffering from rare diseases reason for hope:

•  Duchenne Muscular Dystrophy, a genetic disorder that causes progressive weakness and loss of muscle, for example, now has an FDA approved treatment on the market.
•  Batten Disease, which is an inherited disorder impacting the nervous system, is another area in which great progress has been made. While scientists are still searching for a cure, patients can now access an FDA approved therapy that didn’t exist before 2017 to treat symptoms associated with Batten Disease.
•  Or look to X-Linked Hypophosphatemia, characterized by low levels of phosphate in the blood, that researchers are working diligently to learn more about each day. Promising advances in science, made possible by incentives afforded by passage of the ODA, have led to the development of an FDA approved treatment to help patients manage their symptoms.
•  Spinal Muscular Atrophy (SMA), a devastating condition that affects the motor nerve cells in the spinal cord. Thanks to the Orphan Drug Act, innovative companies have had the resources to develop the first FDA approved treatment for SMA -- and there is additional work underway.

The truth is, incentives provided by the ODA have dramatically changed the number and types of therapies that are available to patients with rare diseases like these. Since the law’s passage in 1983, more than 400 new therapies have been approved by the Food and Drug Administration (FDA) to treat these orphan diseases — compared to just 34 approvals before enactment.

Yet even with this success, 95 percent of rare diseases currently have no treatment available. That’s why maintaining the incentives of the Orphan Drug Act remains as critical as ever, and protecting the Orphan Drug Tax Credit (ODTC), for example, is vitally important for companies looking to raise funds from investors to engage in R&D work in this space.

In simple terms, the ODTC allows orphan drug developers to receive a tax credit for qualified clinical trial costs for new orphan drugs – a helpful incentive to promote rare disease research and development that would otherwise not be commercially feasible. However, during the 2017 tax reform debate, the tax credit was almost eliminated – and was ultimately halved from 50 to 25 percent – making it harder for companies to raise the capital required to develop an innovative drug to treat a disease with a small patient population. While it will take years to fully understand the economic and social impact of this reduction, it’s clear that in order to continue to incentivize rare disease drug development, the current ODTC must be maintained.

To put the importance of preserving incentives for the development of orphan drugs in perspective, a study conducted by BIO, the National Organization for Rare Disorders, and Ernst & Young concluded that one-third fewer new orphan drugs would have been developed to treat rare diseases in the last 30 years if Congress hadn’t passed the tax credit included in the Orphan Drug Act. Furthermore, the study estimates that one-third fewer orphan drugs would be approved over the next 10 years absent the ODTC. And if the ODTC were repealed, drug manufacturers would see higher costs for orphan drug development, resulting in diminished R&D. 

Outstanding scientists, savvy entrepreneurs and business leaders, a committed investment community and world-class universities and research institutions can help develop breakthrough medicines and cures. But that alone is not enough to succeed in getting new drugs across the finish line—and it is not enough to sustain long-term medical innovation. 

As more rare diseases are identified, it is critical that we ensure incentives provided by the Orphan Drug Act are sustained to encourage the development of therapies for rare diseases. To learn more about the positive impact this legislation has had on patients and innovation over the years, view BIO’s new infographics (here and here) for key facts, figures, and patient success stories.