Spending Law Shows How Orphan Drug Designation and Exclusivity Work

President Trump signed the Consolidated Appropriations Act, 2026, on February 3, and among its health provisions is a short rewrite of the Orphan Drug Act's exclusivity clause. The law's best-known health measure is the Mikaela Naylon Give Kids a Chance Act, which reauthorizes the rare pediatric disease priority review voucher program, according to a February 3 release from Rep. Michael McCaul and a February 6 statement from House Energy and Commerce Chairman Brett Guthrie. A separate section, 6605, changes what seven years of orphan drug exclusivity protects. Endpoints News reported on February 6 that the change lets FDA keep granting seven years of exclusivity to orphan drugs approved for new indications.

Designation first, approval later

Orphan drug designation and approval are separate steps. FDA's designation page says the agency can grant designation to a drug or biological product to prevent, diagnose or treat a rare disease or condition, and that drugs for rare diseases still go through the same scientific review as any other drug for approval. The page lists the incentives designation qualifies a sponsor for: tax credits for qualified clinical trials, exemption from user fees and "Potential seven years of market exclusivity after approval."

The Orphan Drug Act, as excerpted on FDA's website, defines a rare disease or condition for drugs as one that affects fewer than 200,000 people in the United States, or more than 200,000 where there is no reasonable expectation that the cost of developing the drug will be recovered from US sales. During the seven years, FDA may not approve another company's application for the same drug, with some exceptions in the statute.

The dispute the law settles

The question was what exclusivity for the same drug and the same disease means once a drug is approved for only part of a disease. FDA's overview of Catalyst Pharms., Inc. v. Becerra explains that in September 2021 the Eleventh Circuit held that exclusivity blocks approval of the same drug for the entire designated disease, even if the first drug was approved for a narrower use.

FDA's page gives an example. If a drug is designated for "treatment of cystic fibrosis" and then approved for adults with a particular gene mutation, the court's reading would block another company's version of the same drug for any indication within cystic fibrosis, including children. FDA said it reads the statute to block approval "for only the same approved use or indication," and that because it generally designates for an entire disease but approves only indications supported by data, the designated disease can be much broader than the approved indication. In a January 2023 update, FDA said it would comply with the court's order in that case while continuing to apply its regulations, which tie exclusivity to approved uses, to other matters.

What section 6605 changes

The enrolled text of H.R. 7148 strikes "same disease or condition" from section 527 of the Federal Food, Drug, and Cosmetic Act and inserts "same approved use or indication within such rare disease or condition." It makes parallel edits to the exceptions that let FDA approve a second version when the first holder cannot supply enough drug, and adds a definition: the use or indication approved under the drug or biologics approval provisions for a designated drug.

The amendments apply to any designated drug "regardless of the date on which the drug was so designated," and regardless of when it was approved or licensed. The law does not change the seven-year length of exclusivity or the definition of a rare disease.