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An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition, the condition itself being referred to as an orphan disease.or example, orphan drug regulations generally acknowledge the fact that it may not be possible to test 1,000 patients in a phase III clinical trial, as fewer than that number may be afflicted with the disease in question.
The major and most controversial incentive, created by the Orphan Drug Act is the protection offered through the seven year marketing exclusivity provision. During this seven year period, the FDA will not grant the necessary approval to another company for a drug for the same use.he Orphan Drug Act (Act) was passed in 1982 and went into effect in 1983. The Act was designed to encourage the development of orphan drugs through economic incentives and by providing special assistance with the FDA drug approval process.