FDA Orphan Drug Designation for Rare Diseases

An estimated 30 million people in the United States are afflicted with rare (orphan) diseases or conditions; however, the availability of novel treatments for these diseases and conditions has been historically low compared to conditions with a higher prevalence. This is mostly due to the financial risks of recouping the costs of drug development. In 1983, Congress passed the Orphan Drug Act to incentivize development of orphan drugs to meet unmet needs. Since then, many companies have taken advantage of the orphan drug designation and its incentive programs for rare disease drug development.

Orphan Drug Act

The Orphan Drug Act of 1983 was designed to promote the development of drugs, biologics, devices, or medical foods that demonstrate promise for the diagnosis and/or treatment of rare diseases or conditions. By definition, a disease or condition is classified as “rare” if it affects fewer than 200,000 people total in the United States, or if the cost of developing a drug and making it available in the United States for such diseases or conditions will exceed any potential profits from its sale. Since the inception of the Orphan Drug Act, more than 4,500 orphan designation requests have been granted, and over 730 drugs and biologic products have been developed and approved for more than 250 rare diseases. To put that into context, less than 10 orphan drug products were brought to market between a ten-year period from 1973 and 1983.

Incentives of Orphan Drug Designation

One of the biggest challenges for companies developing drugs for rare diseases is that due to the small target population size, sponsors are unlikely to recoup the cost of research, development, and approval from the orphan drug product. In response to this, the FDA has created multiple incentives to make orphan drug development more financially possible for companies to pursue. Some of the incentives include:

  • 7-year marketing exclusivity to sponsors of approved orphan products
  • 25% federal tax credit for expenses incurred in conducting clinical research within the United States
    • Tax credits may be applied to prior year or applied over as many as 20 years to future taxes
  • Waiver of Prescription Drug User Fee Act (PDUFA) fees for orphan drugs
    • A value of approximately $2.9 million in 2021
  • Ability to qualify to compete for research grants from the Office of Orphan Products Development (OOPD) to support clinical studies for orphan drugs
  • Eligibility to receive regulatory assistance and guidance from the FDA in the design of an overall drug development plan

Product Eligibility for Orphan Drug Designation

Orphan drug designations may be requested by sponsors for a previously unapproved drug or for a new orphan indication for an already marketed drug. More than one sponsor may receive orphan drug designation for the same drug that addresses the same rare disease or condition, but each sponsor seeking orphan drug designation must file a complete/separate request for designation. Sponsors may not apply for orphan drug designation for products which marketing applications have already been filed or that already have approval under a New Drug application (NDA) or Biologic License application (BLA) for the disease or condition for which orphan status is requested. However, a sponsor of a drug that is otherwise the same drug as an already approved orphan drug may seek and obtain orphan drug designation for the same rare disease or condition if the sponsor can present a plausible hypothesis as to why its drug may be clinically superior to the first drug.

Orphan Drug Designation Application

Requests for an orphan drug designation can be submitted through the FDA Form 4035. The FDA will complete a review of the orphan drug designation request within 90 days of its receipt. The components required for submission of Form 4035 include:

  • Information about the sponsor and drug product
  • A description of the rare disease or condition of interest along with reasons why such therapy is needed
  • Scientific rationale for the use of the drug for the rare disease or condition
  • A summary of the regulatory status and marketing history of the drug in the United States and in other countries
  • Documentation to demonstrate that the disease or condition meets qualifications to be a rare disease

Orphan Drug Product Designation and Grant Programs

To assist with the development of orphan drug products, the OOPD has established multiple grant programs including the clinical trial grants program and the natural history studies grants program. The clinical trial grants program provides funds to help offset the costs of clinical trials that will test the safety and efficacy of products intended to treat a rare disease. At any one time, there are typically 60 to 85 ongoing funded projects under this grant program. The natural history grants program funds well-designed, protocol-driven natural history studies that address knowledge gaps, support clinical trials, and advance rare disease medical product development. The FDA defines a natural history study as one that “describes the course of a disease over time, identifying demographic, genetic, environmental, and other variables that correlate with its development and outcomes.”

Hints, Advice, & Precautions for Requesting an Orphan Drug Designation

The FDA has indicated that the most critically reviewed areas of the application are surrounding the scientific rationale and the population prevalence. These sections should be well-researched and key information should be concisely summarized, presented, and referenced in full so the reviewers can easily follow and check the points being made. Providing a thorough and objective listing of prevalence estimates for the orphan condition is critical for a successful application. While the FDA does not spell out how the prevalence argument should be structured, the EMA has provided a very helpful guidance outlining points that should be addressed in this section of the application. The research into prevalence estimates should be systematic and efforts should be made to show that all available data and relevant databases have been reviewed and considered. The methods used to evaluate and combine all the available references should be clearly stated, as well as any calculations used. If certain references are thought to be inaccurate or skewed, evidence must be presented to support your position (the reference should not be ignored!). An increasingly complicated issue embedded within the prevalence estimate concerns the “medical plausibility” of the subset of the population being treated/diagnosed by the potential orphan product (now referred to as the “orphan subset”). The recommendations below highlight the FDA’s current thinking on the topic. The FDA recommends that the following practical questions be asked when assessing whether a subset of a non-rare disease or condition is an appropriate orphan subset:

  1. Is the intended subset artificially restricted in any way with respect to the use of the drug to treat the disease or condition?
  2. Given that the drug may potentially benefit this particular subset of persons, is there a reasonable scientific or medical basis for believing that the drug would also potentially benefit the remaining population with the non-rare disease or condition or a larger subset of that population? If not, why not?

The FDA also has suggestions for clinical trial grants and timing of discussion/submission requests. For clinical trial grants, the FDA is encouraging methods such as adaptive trial designs, modeling and simulation, and basket and umbrella trials by giving priority review to applications with these methods. It is recommended to engage in early discussions with the FDA to discuss these innovative tools prior to submitting a grant application. The FDA also encourages sponsors to submit their requests for orphan drug designation early in the development process as this enables sponsors to become eligible earlier for tax credits for qualifying clinical trials as well as other expedited pathways.


The Orphan Drug Designation program offers incentives for sponsors to develop therapeutic options for rare diseases or medical conditions that affect 200,000 people or less. Early engagement with the FDA for discussions and requests regarding orphan drug designation during the drug development process is encouraged as it can be beneficial to the sponsor in the form of tax credits and various expedited pathways. As with any drug development program, expert guidance can help navigate through uncertainty at any stage of development. Allucent’s team of experts can help advise, prepare, or assist with your orphan drug program. Contact us today to see how we can help.

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