The Value of Orphan Drug Designation

The Value of Orphan Drug Designation

Orphan drug

This year marked the 14th annual Rare Disease Day, which highlighted the reality that more than 90% of rare diseases still have no FDA-approved treatment.

The orphan drug market is dedicated to treating diseases that are considered rare and life-threatening to a small patient population. In the U.S., a rare disease is one that affects fewer than 200,000 people; approximately 7,000 rare diseases have been identified. While a rare disease affects a small number of people, in totality, rare diseases affect more than 25 million Americans, according to the National Organization for Rare Disorders.1


A Rise in Orphan Drug Designation (ODD) Approvals

Despite the opportunities in the orphan drug market, there are challenges that may act as barriers to entry. For instance, the cost of development is typically much higher than therapeutics for more common diseases due to less availability of clinical trial participants. Additionally, the lack of prevalence of a particular disease can limit investment in the research and development required as evidence of the safety and efficacy of the treatment.

Fortunately, there are drug developers who have not been dissuaded by these obstacles. In 2020, the FDA approved 32 novel drugs and biologics with orphan drug designation, up from 22 in 2019. In the Center for Drug Evaluation and Research (CDER), 31 of the 53 novel drug approvals, or 58% (up from 44% in 2019), were orphan-designated products. And in the Center for Biologics Evaluation and Research (CBER), one of five novel biologic approvals, 20%, was an orphan-designated product and another of these five approvals, although not orphan designated, was for use in a rare disease.2

The increase in approvals is leading industry experts to value the global orphan drug market at $300 billion by 2026, more than 20% of global prescription drug sales3, up from $132 billion in 2019.4 This growing orphan drug market will beget a rise in research and development, and in competition. So, it is important that sponsors – especially those applying for orphan drug designation for the first time – understand how to prepare for and request an FDA orphan drug designation, and what entitles a drug to receive that eligibility status.

Orphan drug

The History of Orphan Drug Designation

Before progress can be made in developing treatments for unmet medical needs, one must understand the history of orphan drug designation. The 1983 Orphan Drug Act (ODA), signed into law by President Ronald Reagan, completely changed the face of therapeutics for rare disorders.

The ODA provides:

  • Tax credits up to 50% for research and clinical drug testing expenses;
  • Eligibility for market exclusivity for seven years post-approval for the first orphan drug approved for a given indication; one drug may receive multiple exclusivities under one ODD;
  • Waiver of new drug application (NDA)/ biologics license application (BLA) application fee (approximately worth $2.2 million); and
  •  Pediatric Research Equity Act exemption.

In addition, the ODA authorizes FDA to designate drugs and biologics for orphan status (the first step to getting orphan development incentives) and provide grants for clinical testing of orphan products and offer assistance in how to frame protocols for investigations. A subsequent amendment defined a rare disease as one affecting under 200,000, however, a disease with more patients could qualify for ODD, if the firm could not recover the costs of developing the drug. Before the ODA, only 38 orphan products existed.

Orphan drug

Sponsors Drive Orphan Drug Designation

The ODA grants special status to a drug or biological product to treat a rare disease or condition upon request of a sponsor. For a drug to qualify for orphan designation, both the drug and the disease or condition must meet certain criteria specified in the ODA and FDA’s regulations at 21 CFR Part 316. A sponsor seeking orphan designation for a drug must submit a request for designation to the FDA Office of Orphan Products Development (OOPD) with the information required in 21 CFR 316.20 and 316.21. Each designation request must stand on its own merit. Sponsors requesting designation of the same drug for the same rare disease or condition as a previously designated product must submit their own data and information in support of their designation request. Granting an orphan designation request does not alter the standard regulatory requirements and process for obtaining marketing approval. Safety and effectiveness of a drug must be established through well-controlled studies.

OOPD programs include:

  • The Orphan Drug Designation program provides orphan status to drugs and biologics defined as those intended for the treatment, prevention or diagnosis of a rare disease or condition, which is one that affects less than 200,000 persons in the US or meets cost recovery provisions of the act.
  • The Rare Pediatric Disease Priority Review Voucher Program states that a sponsor who receives an approval for a drug or biologic for a rare pediatric disease may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product.
  • The Orphan Products Grants Program provides funding for clinical trials and natural history studies that advance rare disease medical product development.

FDA also established a Rare Disease Cures Accelerator to facilitate a cooperative approach and common standardized platforms to better characterize rare diseases, incorporate the patient’s perspective in clinical outcome assessment measures, and build clinical trial readiness in the pre-competitive space. This program includes a data analytical platform, led by the Critical Path Institute, to promote secure data collection and information sharing aimed at characterizing rare diseases and clinical trial design.

In 2020, CDER’s Office of New Drugs created a disease hub to support rare disease drug development. Many of orphan NMEs meet requirements for, and are granted use of, FDA’s expedited program pathways, which allows the agency to prioritize resources and timelines to aid in development and review. Expedited programs accelerate development and shorten timelines for review of qualifying applications, often resulting treatment reaching patients sooner than if reviewed via standard procedures. In 2020, 29 of 31 novel orphan approvals, 94%, used one or more expedited program.

As the orphan drug market continues to rise, so too will the need for partners and supply chains, to include Contract Development and Manufacturing Organizations (CDMOs), experienced in navigating the path toward orphan drug designation. Partners should have an interest in smaller volume projects, be experienced in developing and commercializing orphan drugs, have regulatory knowledge, and have the agility and flexibility to adjust to shortened timelines.


  1. Orphan Drugs in the United States: An Examination of Patents and Orphan Drug Exclusivity, National Organization for Rare Disorders, March 2021
  2. Rare Disease Day 2021: FDA Shows Sustained Support of Rare Disease Product Development During the Public Health Emergency, Janet Woodcock, M.D. and Janet Maynard, M.D., M.H.S., Office of Orphan Development, FDA, March 5, 2021,
  3. Global Orphan Drug Clinical Trials, Patent & Guidelines Insight 2026, Kuick Research, February 4, 2021,
  4. Orphan Drugs Market Global Report 2020-30, ResearchandMarkets, April 22, 2020,

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