In June 1989 Amgen, a small biotechnology company in Thousand
Oaks, Calif., gained U.S. Food and Drug Administration approval
to market its first product, epoetin alfa (Epogen), to treat the
anemia that accompanies end-stage kidney failure. Because the
number of patients with this condition was not large--only
around 78,000 at the time--it seemed unlikely that Amgen could
make a profit or even recover the development costs of the drug.
But it sought FDA approval for the agent anyway, in part because
of incentives it was deemed eligible to receive under a law
called the Orphan Drug Act. The act, which encompasses a set of
laws that went into effect in 1983, provides benefits to
encourage private industry to develop treatments for rare
diseases. Treatments with such modest markets would otherwise
remain "orphans," with no one to sponsor them through FDA
scrutiny. Once on the market, Epogen proved useful for other,
more common purposes: restoring red blood cells in people
suffering from bone marrow suppression a