International legislative problem

In 1983, the American parliament approved the Orphan Drug Act, the first law with the goal of R&S (Research and Development) promotion in the field of orphan drugs.

The main points of this law are:

1. the epidemiological definition of rare disease, i.e. a condition that involves less than 200,000 Americans;
   
   
2. the market exclusivity, i.e. a seven years' product exclusivity, without competition for the same drug or for the same use;
   
   
3. the tax credit, i.e. the 50% de-taxation on clinical trials on patients;
   
   
4. the placement of economical reinforcements at researchers' disposal by the Government, for the realisation of clinical studies;
   
   
5. the procedures' re-regulation of marketing and above all their acceleration, without breaking drug safety guarantees.

    

The law represents both a scientific and an economic success. In fact, in the 17 years preceding this law, the industries sponsored 34 drugs, 24 of which were experimental orphan drugs.

In seven years of law pursuance, 39 out of 42 sponsored drugs were experimental orphan drugs.
From 1983 up until now, more than 900 drugs and biological products like orphan drugs have been designated, 743 will be soon used and 182 have completed their procedure receiving the Food and Drug Administration's approval.

Amazingly, the ones that studied and produced orphan drugs were not the big American industries, but the small companies that specialised in this production. The attention on orphan drugs has opened a new paradigm, i.e. the evidence that market niches can be interesting not only for industry, but also as a strategy element on which founding the development plans.

In 1993, Japan modified the Pharmaceutical Affairs Law in the direction of Orphan Drug Act.

After the Japanese law, in Australia a new program for orphan drugs' development was launched and Food and Drug Administration followed it. The Orphan Drug Act was useful as a model for other Countries: although the contribution is undoubted, the American law presented so many contradictions that in 1994 it was reviewed. Above all, the law's controversial points were:

• market exclusivity
• disincentives

Before 1994, the drug company, would have the complete drug monopoly, due to the seven years' market exclusivity: in this way those companies had the opportunity to increase their profit, but decreasing the product's quality level.
With the 1994's review, the market exclusivity was reduced to a three years' period, including the possibility of researching on the same drug by two companies.
The disincentives were mainly constituted of:

1. the small market, that leads to investment feedback smaller than investment costs. This problem could be solved taking into account the potentiality of some drugs to be used also to treat common diseases;
   
   
2. a gap in the registered products, some of which, even if very common, have made the total turnover fall from 39% to 29% (1960-1970).
   
   
3. The product liability: orphan drug use leads to bigger risk of collateral effects.
   
   

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