Economic incentives for developing drugs for fewer than 200,000 patients are part of which act?

The Orphan Drug Act is designed to encourage the development of medications for rare diseases, which affects fewer than 200,000 patients in the United States. Under this act, pharmaceutical companies are provided with various economic incentives, such as tax credits for clinical testing and seven years of market exclusivity after approval, to incentivize research and development of drugs targeted at these smaller patient populations. This framework aims to address the market failure where the potential financial return on investment for drugs serving such limited patient groups is often not sufficient to justify the costs of development. The Orphan Drug Act thus plays a crucial role in ensuring that patients with rare diseases have access to necessary therapeutics that may otherwise be neglected by the pharmaceutical industry.