For Industry

Orphan Drug Act - Relevant Excerpts

Relevant Excerpts
(Public Law 97-414, as amended)
Last updated August 2013

To view the complete 21CFR Part 316 - Orphan Drugs click heredisclaimer icon

CONGRESSIONAL FINDINGS FOR THE ORPHAN DRUG ACT

The Congress finds that---

(1) there are many diseases and conditions, such as Huntington's disease, myoclonus, ALS (Lou Gehrig's disease), Tourette syndrome, and muscular dystrophy which affect such small numbers of individuals residing in the United States that the diseases and conditions are considered rare in the United States;

(2) adequate drugs for many of such diseases and conditions have not been developed;

(3) drugs for these diseases and conditions are commonly referred to as "orphan drugs";

(4) because so few individuals are affected by any one rare disease or condition, a pharmaceutical company which develops an orphan drug may reasonably expect the drug to generate relatively small sales in comparison to the cost of developing the drug and consequently to incur a financial loss;

(5) there is reason to believe that some promising orphan drugs will not be developed unless changes are made in the applicable Federal laws to reduce the costs of developing such drugs and to provide financial incentives to develop such drugs; and

(6) it is in the public interest to provide such changes and incentives for the development of orphan drugs.

RECOMMENDATIONS FOR INVESTIGATIONS OF DRUGS FOR RARE DISEASES OR CONDITIONS

SEC. 525 OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT [21 USC 360aa].

(a) The sponsor of a drug for a disease or condition which is rare in the States may request the Secretary to provide written recommendations for the nonclinical and clinical investigations which must be conducted with the drug before---

(1) it may be approved for such disease or condition under section 505,
(2) if the drug is a biological product, it may be licensed for such disease or condition under section 351 of the Public Health Service Act.

If the Secretary has reason to believe that a drug for which a request is made under this section is a drug for a disease or condition which is rare in the States, the Secretary shall provide the person making the request written recommendations for the nonclinical and clinical investigations which the Secretary believes, on the basis of information available to the Secretary at the time of the request under this section, would be necessary for approval of such drug for such disease or condition under section 505 or licensing of such drug for such disease or condition under section 351 of the Public Health Service Act.

(b) The Secretary shall by regulation promulgate procedures for the implementation of subsection (a).

DESIGNATION OF DRUGS FOR RARE DISEASES OR CONDITIONS

SEC. 526 OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT [21 USC 360bb].

(a)(1) The manufacturer or the sponsor of a drug may request the Secretary to designate the drug as a drug for a rare disease or condition. A request for designation of a drug shall be made before the submission of an application under section 505(b) for the drug, or the submission of an application for licensing of the drug under section 351 of the Public Health Service Act. If the Secretary finds that a drug for which a request is submitted under this subsection is being or will be investigated for a rare disease or condition and---

(A) if an application for such drug is approved under section 505, or
(B) if a license for such drug is issued under section 351 of the Public Health Service Act,

the approval, certification, or license would be for use for such disease or condition, the Secretary shall designate the drug as a drug for such disease or condition. A request for a designation of a drug under this subsection shall contain the consent of the applicant to notice being given by the Secretary under subsection (b) respecting the designation of the drug.

(2) For purposes of paragraph (1), the term "rare disease or condition'' means any disease or condition which

(A) affects less than 200,000 persons in the United States, or
(B) affects more than 200,000 in the United States and 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. Determinations under the preceding sentence with respect to any drug shall be made on the basis of the facts and circumstances as of the date the request for designation of the drug under this subsection is made.

(b) A designation of a drug under subsection (a) shall be subject to the condition that---

(1) if an application was approved for the drug under section 505(b) or a license was issued for the drug under section 351 of the Public Health Service Act, the manufacturer of the drug will notify the Secretary of any discontinuance of the production of the drug at least one year before discontinuance, and
(2) if an application has not been approved for the drug under section 505(b) or a license has not been issued for the drug under section 351 of the Public Health Service Act and if preclinical investigations or investigations under section 505(i) are being conducted with the drug, the manufacturer or sponsor of the drug will notify the Secretary of any decision to discontinue active pursuit of approval of an application under section 505(b) or approval of a license under section 351 of the Public Health Service Act.

(c) Notice respecting the designation of a drug under subsection (a) shall be made available to the public.

(d) The Secretary shall by regulation promulgate procedures for the implementation of subsection (a).

PROTECTION FOR UNPATENTED DRUGS FOR RARE DISEASES OR CONDITIONS

SEC. 527 OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT [21 USC 360cc].

(a) Except as provided in subsection (b), if the Secretary---

(1) approves an application filed pursuant to section 505, or
(2) issues a license under section 351 of the Public Health Service Act

for a drug designated under section 526 for a rare disease or condition, the Secretary may not approve another application under section 505 or issue another license under section 351 of the Public Health Service Act for such drug for such disease or condition for a person who is not the holder of such approved application or of such license until the expiration seven years from the date of the approval of the approved application or the issuance of the license. Section 505(c)(2) does not apply to the refusal to approve an application under the preceding sentence.

(b) If an application filed pursuant to section 505(b) is approved for a drug designated under section 526 for a rare disease or condition, or if a license is issued under section 351 of the Public Health Service Act for such a drug, the Secretary may, during the seven-year period beginning on the date of the application approval, or of the issuance of the license, approve another application under section 505(b) or issue a license under section 351 of the Public Health Service Act, for such drug for such disease or condition for a person who is not the holder of such approved application or of such license if---

(1) the Secretary finds, after providing the holder notice and opportunity for the submission of views, that in such period the holder of the approved application, of the certification, or of the license cannot assure the availability of sufficient quantities of the drug to meet the needs of persons with the disease or condition for which the drug was designated; or
(2) such holder provides the Secretary in writing the consent of such holder for the approval of other applications, or the issuance of other licenses before the expiration of such seven-year period.

OPEN PROTOCOLS FOR INVESTIGATIONS OF DRUGS FOR RARE DISEASES OR CONDITIONS

SEC. 528 OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT [21 USC 360dd]. If a drug is designated under section 526 as a drug for a rare disease or condition and if notice of a claimed exemption under section 505(i) or regulations issued thereunder is filed for such drug, the Secretary shall encourage the sponsor of such drug to design protocols for clinical investigations of the drug which may be conducted under the exemption to permit the addition to the investigations of persons with the disease or condition who need the drug to treat the disease or condition and who cannot be satisfactorily treated by available alternative drugs.

GRANTS AND CONTRACTS FOR DEVELOPMENT OF DRUGS FOR RARE DISEASES AND CONDITIONS

SEC. ___ OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT [21 USC 360ee].

(a) The Secretary may make grants to and enter into contracts with public and private entities and individuals to assist in

(1) defraying the costs of qualified clinical testing expenses incurred in connection with the development of drugs for rare diseases and conditions,
(2) defraying the costs of developing medical devices for rare diseases or conditions, and
(3) defraying the costs of developing medical foods for rare diseases or conditions.

(b) For purposes of subsection (a):

(1) The term "qualified testing" means---

(A) human clinical testing---
(i) which is carried out under an exemption for a drug for a rare disease or condition under section 505(i) of the Federal Food, Drug, and Cosmetic Act (or regulations issued under such section);
(ii) which occurs before the date on which an application with respect to such drug is submitted under section 505(b) or under section 351 of the Public Health Service Act; and

(B) preclinical testing involving a drug is designated under section 526 of such Act and before the date on which an application with respect to such drug is submitted under section 505(b) or under section 351 of the Public Health Service Act.

(2) The term "rare disease or condition" means (1) in the case of a drug, any disease or conditions which (A) affects less than 200,000 persons in the United States, or (B) affects more than 200,000 in the United States and 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 be recovered from sales in the United States of such drug, (2) in the case of a medical device, any disease or condition that occurs so infrequently in the United States that there is no reasonable expectation that a medical device for such disease or condition will be developed without assistance under subsection (a), and (3) in the case of a medical food, any disease or condition that occurs so infrequently in the United States that there is no reasonable expectation that a medical food for such disease or condition will be developed without assistance under subsection (a). Determinations under the preceding sentence with respect to any drug shall be made on the basis of the facts and circumstances as of the date the request for designation of the drug under section 526 is made.

(3) The term "medical food" means a food which is formulated to be consumed or administered enterally under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation.

(c) For grants and contracts under subsection (a), there is authorized to be appropriated $30,000,000 for each of fiscal years 2013 through 2017.

CLINICAL TESTING EXPENSES FOR CERTAIN DRUGS FOR RARE DISEASES OR CONDITIONS

26 USC 45C 
(a) General rule
For purposes of section 38, the credit determined under this section for the taxable year is an amount equal to 50 percent of the qualified clinical testing expenses for the taxable year.

(b) Qualified clinical testing expenses For purposes of this section --

(1) Qualified clinical testing expenses 

(A) In general
Except as otherwise provided in this paragraph, the term “qualified clinical testing expenses” means the amounts which are paid or incurred by the taxpayer during the taxable year which would be described in subsection (b) of section 41 if such subsection were applied with the modifications set forth in subparagraph (B). 

(B) Modifications For purposes of subparagraph (A), subsection (b) of section 41 shall be applied— 

( i )  by substituting “clinical testing” for “qualified research” each place it appears in paragraphs (2) and (3) of such subsection, and 
( ii ) by substituting “100 percent” for “65 percent” in paragraph (3)(A) of such subsection.

(C) Exclusion for amounts funded by grants, etc.
The term “qualified clinical testing expenses” shall not include any amount to the extent such amount is funded by any grant, contract, or otherwise by another person (or any governmental entity). 

(2) Clinical testing 

(A) In general  The term “clinical testing” means any human clinical testing— 
( I )  which is carried out under an exemption for a drug being tested for a rare disease or condition under section 505(i) of the Federal Food, Drug, and Cosmetic Act (or regulations issued under such section), 

( ii ) which occurs—

          ( I )  after the date such drug is designated under section 526 of such Act, and 

( ii )  before the date on which an application with respect to such drug is approved under section 505(b) of such Act or, if the drug is a biological product, before the date on which a license for such drug is issued under section 351 of the Public Health Service Act; [1] and
(iii) which is conducted by or on behalf of the taxpayer to whom the designation under such section 526 applies.

(B) Testing must be related to use for rare disease or condition
Human clinical testing shall be taken into account under subparagraph (A) only to the extent such testing is related to the use of a drug for the rare disease or condition for which it was designated under section 526 of the Federal Food, Drug, and Cosmetic Act.

(c) Coordination with credit for increasing research expenditures

(1)  In General
Except as provided in paragraph (2), any qualified clinical testing expenses for a taxable year to which an election under this section applies shall not be taken into account for purposes of determining the credit allowable under section 41 for such taxable year.

(2) Expenses Included in Determining Base Period Research expenses
Any qualified clinical testing expenses for any taxable year which are qualified research expenses (within the meaning of section 41(b)) shall be taken into account in determining base period research expenses for purposes of applying section 41 to subsequent taxable years.


(d) Definition and Special Rules

(1) Rare disease or condition  For purposes of this section, the term “rare disease or condition” means any disease or condition which—

(A) affects less than 200,000 persons in the United States, or

(B) affects more than 200,000 persons in the United States 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 be recovered from sales in the United States of such drug.

Determinations under the preceding sentence with respect to any drug shall be made on the basis of the facts and circumstances as of the date such drug is designated under section 526 of the Federal Food, Drug, and Cosmetic Act.

(2) Special Limitations on Foreign Testing

(A) In general No credit shall be allowed under this section with respect to any clinical testing conducted outside the United States unless—

( i ) such testing is conducted outside the United States because there is an insufficient testing population in the United States, and
( ii ) such testing is conducted by a United States person or by any other person who is not related to the taxpayer to whom the designation under section 526 of the Federal Food, Drug, and Cosmetic Act applies.

(B) Special limitation for corporations to which section 936 applies
No credit shall be allowed under this section with respect to any clinical testing conducted by a corporation to which an election under section 936 applies.

(3) Certain rules made applicable
Rules similar to the rules of paragraphs (1) and (2) of section 41(f) shall apply for purposes of this section.

(4) Election
This section shall apply to any taxpayer for any taxable year only if such taxpayer elects (at such time and in such manner as the Secretary may by regulations prescribe) to have this section apply for such taxable year. 

 

To view 21 CFR Part 316 Subpart C – Designation of an Orphan Drug – Click here.disclaimer icon 

 

Page Last Updated: 09/29/2016
Note: If you need help accessing information in different file formats, see Instructions for Downloading Viewers and Players.
Language Assistance Available: Español | 繁體中文 | Tiếng Việt | 한국어 | Tagalog | Русский | العربية | Kreyòl Ayisyen | Français | Polski | Português | Italiano | Deutsch | 日本語 | فارسی | English