An orphan drug is a pharmaceutical agent developed to treat medical conditions which, because they are so rare, would not be profitable to produce without government assistance. The conditions are referred to as orphan diseases.
The assignment of orphan status to a disease and to drugs developed to treat it is a matter of public policy in many countries and has yielded medical breakthroughs that might not otherwise have been achieved, due to the economics of drug research and development. In the U.S. and the EU, it is easier to gain marketing approval for an orphan drug. There may be other financial incentives, such as an extended period of exclusivity, during which the producer has sole rights to market the drug. All are intended to encourage development of drugs which would otherwise lack sufficient profit motive to attract corporate research budgets and personnel.
According to the FDA, an orphan drug is defined as one intended for the treatment, prevention or diagnosis of a rare disease or condition, which is one that affects less than 200,000 persons in the United States (which equates to roughly 6 in 10,000 people). In the European Union (EU), the European Medicines Agency (EMA) defined a drug as “orphan” if it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically and seriously debilitating condition affecting not more than 5 in 10,000 EU people. EMA also qualified an orphan drug that – without incentives – it would be unlikely that marketing the drug in the EU would generate sufficient benefit for the affected people and for the drug manufacturer to justify the investment.
Via an Orphan approval pathway, you can attain the FDA rebates, eligibility for market exclusivity for 7 years post approval and 10 years data exclusivity for the EMA