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A federal law passed in 1983 that provides financial incentives to encourage pharmaceutical companies to develop treatments for rare diseases — conditions affecting fewer than 200,000 people in the United States. Before the ODA, only 38 rare disease therapies had been approved by FDA. The law's incentives include a 25% tax credit on qualified clinical trial costs, waiver of FDA user fees, and seven years of market exclusivity for approved orphan drugs. Since the ODA's passage, more than 600 orphan drugs have been approved to treat over 1,100 rare disease indications.

A status granted by the FDA to a drug or biologic intended to treat, prevent, or diagnose a rare disease or condition (one affecting fewer than 200,000 people in the U.S.). Designation does not mean the drug is approved — it means the sponsor has demonstrated a scientific rationale and is eligible for development incentives under the Orphan Drug Act, including tax credits, fee waivers, and potential market exclusivity upon approval. Multiple companies can hold orphan designation for the same drug-disease combination, but only the first to receive marketing approval earns the seven-year exclusivity period.

A program established by the Inflation Reduction Act of 2022 that requires the Centers for Medicare & Medicaid Services (CMS) to negotiate prices for certain high-spending, single-source drugs covered under Medicare Part B and Part D. The program began with 10 drugs for 2026 and will expand to 20 drugs per year by 2029. Orphan drugs are excluded from negotiation eligibility under the Orphan Drug Exclusion, which was broadened through the ORPHAN Cures Act to ensure that drugs that are only approved to treat rare diseases are protected from negotiation for the period where they are only serving rare populations.

A bipartisan law signed on July 4, 2025, that fixed an unintended consequence of the Medicare Drug Price Negotiation Program created by the Inflation Reduction Act (IRA). The original IRA provision excluded orphan drugs from government price negotiation, but only if the drug treated a single rare disease. This narrow exclusion discouraged companies from researching whether an existing orphan drug could treat additional rare diseases, because doing so would make the drug eligible for price negotiation. The ORPHAN Cures Act broadened the exclusion so that drugs used to treat one or more rare diseases are protected from negotiation, restoring incentives for companies to pursue multiple rare disease indications.

A drug pricing approach in which U.S. payments for a given drug are benchmarked to the lowest or average price paid for that drug in a set of comparable international markets. The premise is that Americans should not pay significantly more than patients in other developed countries for the same medication. While the concept can have appeal as a cost reduction strategy, it also risks unintended consequences when orphan drugs are included, undermining innovation and access to treatment options. Many reference countries use reimbursement systems that systematically restrict access to or undervalue treatments for small patient populations, meaning an international benchmark may not reflect the true cost of developing and sustaining therapies for rare diseases.

An FDA incentive program designed to encourage development of treatments for rare diseases that primarily affect children. When a company wins approval of a drug for a qualifying rare pediatric disease, FDA awards it a voucher entitling the holder to a Priority Review — a six-month FDA review timeline instead of the standard ten months — on a future drug application of its choice. The vouchers are transferable: because a faster review can accelerate a product's time to market, they carry significant financial value and are often sold to other companies, giving small developers a way to fund further research. The program was reauthorized in February 2026 through the Mikaela Naylon Give Kids a Chance Act, extending eligibility through September 2029.

A mandatory Medicare Part B drug pricing model proposed by CMS on December 19, 2025 (Federal Register: CMS-5545-P). The GLOBE Model would replace the current inflation-based rebate calculation for certain high-cost, single-source Part B drugs with a rebate derived from international price benchmarks. The benchmark would be based on prices in 19 economically comparable countries. If the U.S. price exceeds the international benchmark, the manufacturer would owe a rebate to the Medicare Trust Fund. The model would apply to approximately 25% of Medicare beneficiaries in randomly selected geographic areas and run from October 2026 through September 2031. As proposed, the GLOBE Model does not include a specific exclusion for orphan drugs.

A mandatory Medicare Part D drug pricing model proposed by CMS alongside GLOBE on December 19, 2025 (Federal Register: CMS-5546- P). The GUARD Model would similarly replace the inflation-based rebate calculation for certain sole-source Part D drugs with a rebate tied to international price benchmarks using the same 19 reference countries as GLOBE. The model would run from January 2027 through December 2031 and apply to approximately 25% of Part D beneficiaries. Like GLOBE, the GUARD Model as proposed does not include a specific exclusion for orphan drugs. Together, GLOBE and GUARD represent the federal government's most direct effort to implement international reference pricing across both Medicare drug benefits.

An office within CMS established by the Affordable Care Act to test innovative payment and service delivery models aimed at reducing Medicare and Medicaid spending while preserving or improving quality of care. CMMI operates under Section 1115A authority of the Social Security Act, which gives it broad power to design, implement, and mandate participation in new payment models — including waiving certain existing statutory requirements. Both the GLOBE and GUARD Models are proposed under this authority. If a model is found to reduce spending without harming quality, the HHS Secretary can expand it nationwide without additional legislation from Congress.

The legal provision (Section 1115A of the Social Security Act) that grants CMMI the authority to test new Medicare and Medicaid payment models. This authority allows CMS to waive specific requirements of existing law for purposes of the model test and, if results are favorable, to expand the model nationally. Both the GLOBE and GUARD Models invoke Section 1115A to waive the standard inflation-based rebate calculations established by the Inflation Reduction Act and replace them with international reference pricing benchmarks. This authority is significant because it allows CMS to implement major policy changes through rulemaking rather than legislation.

A drug pricing methodology in which a country sets or benchmarks its drug prices based on the prices of the same drug in other countries. Under the GLOBE and GUARD Models, CMS proposes to use prices from 19 reference countries — including Australia, Canada, France, Germany, Japan, and the United Kingdom, among others — to calculate rebate benchmarks. The concern for the rare disease community is that many of these countries employ health technology assessment (HTA) frameworks that can restrict access to or undervalue orphan drugs, meaning their prices may reflect artificially constrained markets rather than the actual cost of innovation.

A measure used in health economics to assess the value of a medical treatment. One QALY equals one year of life in perfect health. Health technology assessment bodies in many countries use cost-per-QALYthresholds to determine whether a treatment represents good value for money relative to its price. This metric can disadvantage rare disease therapies because treatments for small patient populations often have higher per-patient costs, and the clinical evidence base may be limited due to small trial sizes. As a result, orphan drugs frequently exceed standard cost-per-QALY thresholds, even when they represent the only available treatment for a life-threatening condition.

A systematic process used by governments and payers to evaluate the clinical effectiveness, cost-effectiveness, and broader impact of medical treatments to inform coverage and reimbursement decisions. Many of the 19 countries proposed as reference markets in the GLOBE and GUARD Models use HTA frameworks — such as NICE in the United Kingdom and PBAC in Australia — to set drug prices. These frameworks often apply cost-per-QALY thresholds and comparative effectiveness standards that can restrict reimbursement for orphan drugs, particularly for ultra-rare conditions where clinical trial data is inherently limited. Benchmarking U.S. prices to countries that use HTAs to constrain orphan drug pricing could import those access restrictions into the U.S. Medicare system.