The 1983 Orphan Drug Act provides drug manufacturers a period of exclusivity and financial incentives to produce drugs to treat diseases that affect fewer than 200,000 people. Many have speculated that an increase of FDA approved orphan drugs in recent years could be partially responsible for the rapidly increasing prescription drug spending. A recently published study conducted by IMS Health, a health care analytics firm, and drugmaker Celgene Corp. however found that orphan drug spending increased 4.8% from 2007 to 2013, compared with an 8.9% increase of total pharmaceutical spending.
Celgene has benefited handsomely from the Orphan Drug Act though and is predicted to be the number 1 orphan drug manufacturer in the world by sales in 2020. Because some orphan drugs are used to treat multiple conditions, some of which could be common, there may be incentives for drug companies to apply for orphan status even though the drug has the potential to be used by many more than 200,000 people.