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This article is written by Aman Kumar Singh, a student of Gujarat National Law University.


The drugs which are used to diagnose or treat rare medical conditions such as cystic fibrosis, multiple sclerosis, narcolepsy etc. are called Orphan drugs. These drugs are called orphan drugs because pharmaceutical companies do not put enough efforts in developing a drug which is intended for only a small number of patients because the amount of money invested by the pharmaceutical company to develop the drug would not be recovered by the sale of the drug.

They are not economically profitable to produce without government aid. The rare medical diseases, which are treated by orphan drugs, can also be called as orphan diseases. It is a matter of public policy for a nation to decide to grant orphan status to a disease and work for development for a drug to cure it. Due to the efforts of the governments of different nations various medical breakthroughs have been achieved which would have not been possible otherwise due to the economical factors related to the development and research of a drug. In United States of America and in the region of European Union it is much easier to get approval for the marketing of orphan drugs. There are many incentives given by the government such as financial aid and extended exclusivity period during which only the producer company has the right to market the drug. These are all done to attract big pharmaceutical companies to invest in the development of an orphan drug. 

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Global statics related to orphan drugs 

Till the year 2014 there were 281 orphan drugs which were being marketed and there were 400 drugs in clinical trial which were aimed to be orphan drugs. More than 60 percent of the total number of orphan drugs was biologics i.e. they were developed from any living organism or contains the components of a living organism. The research and development of orphan drugs is dominated by the United States of America, which have more than three hundred orphan drugs in clinical trial. It is followed by the European Union. Treatment of cancer is the principal indication of more than 30 percent of orphan drugs in clinical trial. According to a report released by KuicK Research named “Global Orphan Drug Market Outlook 2018,” there are 600 orphan drugs which are under clinical trial and about 231 drugs are in phase-2 of clinical trial. The key market for orphan drugs is U.S.A which has market of more than 40 billion U.S. dollar.

Legislation related to orphan drugs around the world

In the 1980s, particularly in the USA, orphan diseases gained considerable attention for the first time. The unfolding of the case of a young boy with Tourette’s syndrome was able to produce a great deal of attention to the pitiful condition of the orphan disease patients. ‘The first set of laws and regulations devoted to orphan diseases and orphan drugs, in the form of the Orphan Drugs Act (ODA), was passed in the USA on January 28, 1983, in the wake of the enormous outcry and public pressure created by the Tourette’s syndrome case. Its key goal was to support orphan disease research and development and to check the effective development and authorization of orphan drugs. After that, several other nations around the world took inspiration out of the book of the United States and drafted their own laws, adapted according to their own countries’ needs and requirements. There are certain form and types of incentive given by the government of different countries in the development of Orphan drugs:

  • Tax incentives provided by the government.
  • Exclusivity provided in marketing rights and patent protection.
  • Subsidies for research and development work.
  • Forming a government owned institution or organisation for the research and development of drugs.

We intend to focus on the current rules and policies in this section and to provide a comparison between the laws in different countries.

Legislation in U.S.A

The large number of people suffering from rare diseases became an important public issue for U.S in late 1970s and early 1980s. Therefore, there was pressure rising on the U.S. government from non-governmental organisation like National Organisation for Rare Disorders (NORD). The Orphan Drug Act (hereinafter ODA) of 1983 was passed by the U.S. government, with lobbying from the NORD and many other different organisations. It was passed to encourage the pharmaceutical companies to invest in development and research of drugs for diseases with small number of patients. According to the ODA, drugs, vaccines and other treating agent are granted status of orphan if they were invented for the purpose of treatment of a disease with less than 200,000 patients among American citizens. Under ODA there are many incentives given to encourage the development of new drugs for orphan diseases. Including: 

  1. Seven year FDA administered ODE (Open Drug Exclusivity) in market for the pharmaceutical company that invented the drug.
  2. Tax credits up to 50 percent of the research and development cost. 
  3. Grants for research and development of drug. 
  4. Fees of FDA are waived
  5. There are protocol assistance which helps in fast development and approval of the drug etc. 

Before the enactment of the ODA in 1983 only 10 products in U.S.A. were approved to be used for the treatment of rare disease. The increase in the drug research and development after the enactment of ODA has benefited a large number of people who were suffering from rare diseases by developing drugs which have improved the daily life of the patients and by increasing the life expectancy. It has also benefited the medical sector by reducing the cost of treatment by avoiding expensive operations and surgeries. 

Cystic fibrosis is a good example of an orphan disease. In early 1980s people suffering from cystic fibrosis rarely lived beyond their teenage years due to their lung infections. But drugs like Pulmozyme and Tobramycin, which were developed by the aid of ODA, have sufficiently increased the life expectancy of a person suffering from cystic fibrosis. Now people suffering from the disease live up to 30 years and in some cases even to fifty years. In the year 2002, the President of America, George W. Bush signed the Rare Disease Act (RDA) into a law. This Public Health Service Act was amended by this bill and an official office of Rare Diseases having federal power was established. Funding for the treatment of people suffering from rare disease was also increased by this bill. This was an important step taken by the American government to tackle the issue of orphan disease. 

Legislation in European Union

In the 1990s, the European commission, which is the legislative body of the European Union, showed increased interest in the issues related to orphan drugs and diseases because of mounting pressure by orphan diseases advocacy groups such as Eurordis. Prior to the EU’s legislation on the orphan drugs in 1999, no other member countries of the EU had any legislation regarding the orphan drugs. However countries like United Kingdom, Sweden and France had very broad national drug policies which encouraged the development of orphan drugs. 

In the year 2000, the European Union enacted similar legislation, Regulation (EC) No 141/2000(Orphan Drug Regulation ‘ODR’), as that of Orphan Drug Act (ODA) in U.S.A, which refers the drugs and other medical products developed for the treatment of rare disease as orphan medical products. It has undergone only one amendment which was done in year 2009. According to this amendment an orphan drug will be stripped of its orphan status in 5 years if it proved to be extraordinarily profitable to the pharmaceutical companies.

The European Union’s definition of orphan drugs and disease is broader than that of the U.S.A. because it covers some of the tropical diseases which are generally found in the developing countries. Orphan status is granted to a drug, vaccine and other medical apparatus if it is invented for the treatment of a disease which affects not more than 5 in 10,000 people in the European Community. According to ODR, 10 years of market exclusivity is provided by the European Commission after approval of the drug. The European Union’s legislation related to orphan drugs and diseases is regulated by the Committee on Orphan Medicinal Products (COMP) of the European Medicines Agency (EMA). In the year 2007 EMA and FDA (Food and Drug Administration) agreed to use a common application procedure for the pharmaceutical companies for the grant of orphan status to a drug but they continued to use two separate approval process.

Legislation in Japan

About 10 years after the creation of the US-ODA, Japan framed its own set of orphan drug regulations on 1 October 1993 by adopting a few unique provisions aimed at encouraging R&D in the area of orphan drugs.

The new rules of the Japanese Guidelines have proposed that the status of orphan drugs can be given only to those that meet the 2 requirements mentioned below:

  1. Either an untreatable condition with no current cure would have to be the target disease or the anticipated effectiveness and safety of the new medication would have to exceed those already available.
  2. The number of patients affected will need to be below 50,000, which translates into an average of 4 per 10,000.

The grant of orphan drug status is executed by the ministry of health, labour and welfare on the ground of application summarising the approximate patient population numbers, development protocol, pre-clinical, and early clinical studies.

The Japanese government’s incentivization of the R&D into orphan drugs occurs at two levels:

Administrative Advantages – Prioritised evaluation of applications related to rare diseases, conveying into fast-track marketing authorisation and ratification, is required by Japanese regulations. The prolonged validity of the registration period of 10 years also provides the sponsors with additional incentives.

Monetary Advantages – This provides reimbursements of up to 50 percent of the cost of growth in addition to a 6 percent tax waiver for rare disease research and development. In addition to these initiatives, the necessary encouragement in orphan illness and drug research is provided by separate government funds.

Legislation in Singapore and Australia

The legislative body of Singapore which came into existence in 1991 have given a definition of orphan drugs and had set up a legal framework which regulates the import of orphan drugs in Singapore. Australia adopted the orphan drug legislation in the year 1997 with the help and assistance of the FDA of US. Its legislative framework is mostly based on the US model and legislations. The incentives provided by the Australian government are priority evaluation and fees waivers. It does not provide tax credits, exclusivity period and other grants.

Legislation in Canada 

Canada has no policy or legislation related to orphan drugs probably because of relatively low level of drug research, its dependency on the US market and small population.

Indian perspective on Orphan drugs

Unfortunately, the growing knowledge of orphan diseases and medicines has not flowed into the consciousness of the population of developed countries like India. A witness to this slipshod approach to orphan diseases is the pervasive ignorance that exists in the Indian medical community. Furthermore a lack of affected victims cannot be linked to this ignorance. So far there has been about 450 rare diseases have been identified in India. According to the census of 2011 there were about 72,611,605 people in India affected by rare diseases. Scenarios for many rare diseases in India are changing. Earlier cystic fibrosis was considered to be non prevalent in India but latest genetic analysis shows that it is prevalent in India but was undiagnosed earlier. India has a very high population of person affected by rare diseases as compared to the world average but there are no initiatives taken by the government. India still lacks a policy or legislation ob orphan drugs.

Millions of Indians continue to suffer from crippling orphan diseases every day due to the absence of any regulatory guidance on orphan diseases. A multiple effect is created by the lack of any viable mechanism or related regulations; the most critical of which is the non-affordability and inaccessibility of most of the 400 rare orphan drugs authorized by the US-FDA. The large population suffering from orphan diseases in India poses very tremendous opportunities for pharmaceutical companies to grow their businesses. However the mindset of the concerned authority, combined with the absence of any legislation aimed at encouraging orphan drug research and development, frequently deters the pharmaceutical industry from showing any interest. Given the reasons for the fundamental change in the pharmaceutical industry towards orphan drugs, as well as the potential profitability of this untapped sector, it is absolutely imperative for the Indian authorities to wake up and deal promptly with the problem in our country.


It can be said that government of many countries around the world has taken essential steps for tackling the issue of rare diseases by making required legislations. United States of America has played a very major role in development of the field of orphan drugs. Its Orphan Drugs Act (ODA) of 1983 has proved to be revolutionary step in the field of medicines which resulted in many medical breakthroughs. But many developed countries around the world, for example- Canada, still lack any policy or legislation on orphan drugs. Many developing countries with very high number of rare disease patients, for example- India, also lacks legislation on orphan drugs. As the number of people suffering from rare diseases is rising around the world day by day, it is high time for countries like India and Canada to take necessary steps to tackle the growing problem of orphan disease.


  2. Ibid.
  4. file:///C:/Users/hp/Downloads/CHEUNG-COHEN-ILLINGWORTH.pdf
  5. Ibid.
  9. Ibid.
  10. European Union, Scientific and Technical Options Assessment, Orphan Drugs (March 1999), online: European Parliament.
  11. Austl., Commonwealth, Department of Health and Aged Care, the Orphan Drug Program and Improving Community Access to Effective Drugs for Rare Diseases, (Canberra: Australian Government Publishing Service, December 2001) at 38.

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