Role Of The Orphan Drug

Business strategies used by biotechnology companies are (1) concentrating initially on the most obvious candidates with proven biologic activities using natural products such as human insulin, growth hormone, or interferons and (2) focusing on treating individuals with rare medical conditions so that the NME in development can be qualified for grant and tax benefits under the 1983 Orphan Drug Act. Factors influencing the choice of which indication of an NME to develop first include consideration of (1) market potential, (2) competition, (3) patents and proprietary advantages, (4) qualification as an orphan drug, and (5) reimbursement by third-party payers (i.e., Medicare, Medicaid, and insurance companies). By targeting the indications of a new drug candidate to diseases that affect fewer than 200,000 individuals in the United States, a company also receives seven years of market exclusivity. The market exclusivity discourages other companies from developing any product for the target indication. In the first seven years after enactment, more than 375 medical products received orphan designation from the FDA, and 40 orphan drugs were approved under the Orphan Drug Act. By the end of 1999, about 200 products were approved under the Orphan Drug classification (FDA data 2001) (Box 3.3).

With the Orphan Drug Act in place, it became extremely important for a pharmaceutical company to be the first to reach the market for a given orphan indication to reap the maximum financial returns on their investment. Both Neupogen (granulocyte colony-stimulating factor, G-CSF) and Leukine (granulocyte-monocyte colony-stimulating factor, GM-CSF) are capable of stimulating neutrophils and reducing neu-tropenia in different medical conditions (see Table 3.3). However, being approved under the Orphan Drug classification

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