The Orphan Drug Act (ODA) of January 1983, passed in the United States, with lobbying from the National Organization for Rare Disorders and many other organizations, is meant to encourage pharmaceutical companies to develop drugs for diseases that have a small market. Under the ODA drugs, vaccines, and diagnostic agents would qualify for orphan status if they were intended to treat a disease affecting fewer than 200,000 American citizens. Under the ODA orphan drug sponsors qualify for seven-year FDA-administered market Orphan Drug Exclusivity (ODE), "tax credits of up to 50% of R&D costs, R&D grants, waived FDA fees, protocol assistance and may get clinical trial tax incentives.
In the U.S., orphan drug designation means that the sponsor qualifies for certain benefits, but it does not mean the drug is safe, effective or legal.
In 2002, the Rare Diseases Act was signed into law. It amended the Public Health Service Act to establish the Office of Rare Diseases. It also increased funding for the development of treatments for people with rare diseases.