Volume 73 Number 2, 1995

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Rare Diseases, Drug Development, and AIDS: The Impact of the Orphan Drug Act

Peter S. Arno, Karen Bonuck, and Michael Davis

The Orphan Drug Act provides public subsidies and incentives to spur the development of drugs for rare diseases---drugs that the private sector might otherwise consider unprofitable to produce. Although the act has achieved numerous successes, the high prices and extraordinary sales generated by some orphan drugs lead to a pivotal policy question: how can the act be used to meet the legislative goal of stimulating drug development for small patient populations without resulting in prices that make drugs inaccessible? This question is explored using the example of AIDS drugs, many of which received subsidies under the act, to illustrate central points. The history of the act, its weaknesses, and strategies for reform are described as well.

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