Orphan Drug Designation (ODD) Information

An ‘orphan’ drug is a medicinal product intended to diagnose, treat or cure a rare disease. Orphan drug status is granted by a regulatory body, in a process commonly referred to as Orphan Drug Designation (ODD). This follows review of scientific documentation demonstrating the rarity and severity of the medical condition and the potential benefit of the medicinal product in treating this condition. Because of the financial benefits deriving from obtaining ODD this is generally sought during drug development.

The term ‘orphan drug’ was coined in 1983 when the US government passed the Orphan Drug Act (ODA). The ODA established a regulatory framework to encourage the pharmaceutical industry to develop products for rare diseases for which it may not otherwise be financially viable to develop a drug. The ODA makes provisions for financial incentives and regulatory assistance to drug companies who are granted an ODD for a product in development. A framework to encourage the development of orphan drugs has subsequently been established in most other regulatory jurisdictions. In the European Union (EU) the Regulation on Orphan Medicinal Products, introduced in April 2000, stipulates that ODD is granted by EMA (the European Medicines Agency, the centralised regulatory body). The Marketing Authorisation is consequently also requested centrally (using the so called Centralised Procedure), thus allowing simultaneous registration in all 27 EU member states.

In Europe and in the US, more than 55 million people are reported to suffer from a rare disease. Globally is it estimated that there are 5000 to 7000 rare diseases. Five new rare diseases are described each week in the medical literature (about 250 new rare diseases are described every year) and for many rare diseases there are no treatments available. To date, over 350 ‘orphan’ drugs have been approved for sale in the US, with over 50 orphan drugs approved under the centralized procedure in the EU.

What makes a drug an ‘orphan’?

Orphan drug status is granted by regulators following a formal review of an application lodged by a drug development company (a ‘sponsor’). Sponsors are required to present regulators with a formal dossier describing the pharmaceutical’s properties and clinical data as well as the process to date, demonstrating the rarity (and, in some jurisdictions, the severity) of the proposed orphan indication and detailing how the drug may diagnose, prevent or treat the indication. Regulators will then review the dossier and provide formal written notice to the sponsor on the success or failure of the application.

The exact criteria to meet orphan drug status vary between jurisdictions. In the US, for example, a drug is defined as ‘orphan drug’ if is recognised as having the potential to diagnose, treat or prevent a rare disease or condition, one which affects less than 200,000 individuals, or a disease or condition which affects more than 200,000 individuals, but “for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will recovered from sales in the United States of such drug.”

In Europe, orphan medicinal products must be developed for the “diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition” which affects no more than 5 in 10,000 individuals in the EU (approximately 245,000 individuals), or for which it would not be financially viable to produce a medicinal product without financial incentives. The EU further stipulates that no satisfactory method of diagnosis, prevention or treatment of the condition should already exist, or if such method does exist, that the orphan product must be of significant benefit to the patient population over existing products.

A drug designated as an orphan must still undergo the regulatory review process to achieve marketing authorisation, as with any other drug product in development. Sponsors of orphan drugs do, however, receive incentives from regulatory agencies and governments to encourage the development of such drugs.

Incentives for orphan drug developers

Regulatory agencies and governments offer incentives to drug developers to encourage the development of orphan drugs. Following a successful ODD, regulators commonly grant a period of market exclusivity to a drug, waive certain fees associated with the development and approval of a drug, and provide scientific assistance or access to specific grants programs. Below is a breakdown of the incentives provided by the European Medicines Agency (EMA) and Food and Drug Administration (FDA) in the US.





Market exclusivity period*

10 years in all 27 member states

7 years

Review process

Access to centralised review process for all 27 member states

Allows sponsor to apply for accelerated review process


50% waiving of market authorisation application fees.

100% waiving of fees for pre-marketing authorisation inspection

Exemption for sponsor for user fees, selected tax benefits

Scientific Advice (Protocol assistance)

Free scientific advice during the drug development process


Special incentives for SME** sponsors

100% waiving of market authorisation application fees.

100% waiving of fees for post authorisation activities, including annual fees


* Market Exclusivity for an orphan product is only for the indication(s) for which it has received ODD status. Market exclusivity is granted for the period following successful marketing authorisation of a product.

** In February 2009, the EMA announced changes to the orphan program where benefits were given specifically to sponsor organisations with Micro, Small or Medium Enterprise (SME) status. Clinuvel was granted SME status in August 2009.

Online resources



FDA logoEMA Logo orphan drug designation

National Organisation for Rare Diseases (NORD)

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