Until the Orphan Drug Act of 1983, the pharmaceutical industry was rarely interested in rare diseases. Defined as affecting fewer than 200,000 patients, rare diseases are estimated to number approximately 6,000 in the United States. Enacted to stimulate development of therapies for rare diseases, The Orphan Drug Act provides expedited regulatory approval and patent exclusivity for 7 years for development of orphan drugs.
Since its inception, more than 350 drugs and biologic products for rare diseases have been developed and marketed. In 2006–2008, 16 orphan products were among the 200 best-selling medications in the United States and had annual sales ranging from $200 million to nearly $2 billion each. The successes have not gone unnoticed.
While initial development of orphan drugs was driven by small biotechnology companies and funding from patient advocacy groups, large pharmaceutical companies and venture capitalists have entered the space. Several aspects of orphan drug development make it attractive to potential investors: focused indications, open market space, premium pricing, support from patient advocacy groups, and lower development costs. These features are underscored by forecasts of the global market potential for orphan drugs, which is estimated to reach $6 billion in 2018.