Orphan Drug Act (1983)
January 1983What Happened
Before 1983, pharmaceutical companies had little financial incentive to develop drugs for diseases affecting small populations—only 38 such drugs existed in the United States. Congressman Henry Waxman shepherded the Orphan Drug Act through Congress, and President Reagan signed it on January 4, 1983, creating tax credits, seven-year market exclusivity, and development grants for drugs targeting diseases affecting fewer than 200,000 Americans.
Outcome
Drug development for rare diseases began immediately. Within a decade, the FDA had granted hundreds of orphan drug designations.
Over four decades, the FDA granted more than 6,300 orphan drug designations and approved treatments covering nearly 400 rare diseases. Japan and the European Union adopted similar laws in 1993 and 2000.
Why It's Relevant Today
The Orphan Drug Act proved that regulatory incentives could redirect pharmaceutical investment toward neglected diseases. The plausible mechanism framework tackles the next barrier the 1983 law could not solve: what happens when the patient population is too small for even a modified clinical trial.
