We must stressed out that normal market forces, in other words, the invisible hand of the market as defined by Adam Smith, doesn't work for the orphan drugs. So if the government doesn't interfere, the pharmaceutical companies will choose not to invest in the research & development of orphan drugs. It is clear that an intervention in the normal market dynamics is necessary if we want to solve the problem. There are a couple of measures taken for this problem in some countries. In this section we"ll examine the similar solutions that are proposed by these pioneering countries.
First of all we should not ignore the fact that the pharmaceutical companies were not completely inactive before some measures have been taken. In 1960s and 1970s, companies invested in the research of some drugs of little commercial value. For example, they developed the pharmaceuticals Mithracin for testicular cancer, and the fungicide Flucytosine.[3] But still, things needed to change.
The first initiative started in USA where patient advocacy groups and other rare-disease activists put pressure on the government. This resulted in the legislation of the Orphan Drug Act. This was the first step world-wide which provided the manufacturers with some new incentives for the development of new orphan drugs [10] So we"ll begin with the examination of the Orphan Drug Act and its consequences.
Orphan Drug Act in USA.
General aspects.
The Orphan Drug Act was legislated in January 4, 1983 with the signature of President Ronald Reagan in USA [12] It has defined the orphan drug status. According to the Act, " Orphan drugs are used in diseases or circumstances which occur so infrequently in the USA, that there is no reasonable expectation that the cost of developing and making available in the USA a drug for such disease or condition will be recovered from sales in the USA for such drugs. " [2] The definition became more precise in the amendment of 1984.