Drug companies need little arm-twisting when it comes to investing their resources into diseases that afflict millions. But what about a disease that affects only a few thousand people?

To stimulate drug development for diseases with few paying customers – whether due to its sheer rarity or its sufferers’ poverty – the National Institutes of Health (NIH) has committed $120 million over five years to a new program called Therapeutics for Rare and Neglected Disease (TRND). The new trans-NIH program aims to support researchers with more money for in-house NIH studies and additional funds for external academic, advocacy and foundation collaborations.

“The federal government may be the only institution that can take the financial risks needed to jumpstart the development of treatments for these diseases,” NIH Acting Director Raynard S. Kington said in a statement.

This is not the first time the government has addressed so-called “orphan diseases.” For more than 25 years, the Orphan Drug Act has given developers of therapies for diseases afflicting less than 200,000 Americans some market exclusivity and a tax credit equal to 50% of all clinical trial expenditures.

But success has been limited. Part of the problem are steep preclinical research costs that often outweigh these incentives: An average of $10 million and 2 to 4 years spent in the preclinical phase with the vast majority of concoctions never reaching human trials, according to the NIH statement. This has led many to describe the gap between theory and application as the “valley of death.”

So will this strategy prove any more effective than Congress’ previous efforts? How far can $24 million really go to reduce the impact of rare diseases, which collectively afflict more than 25 million Americans? To get some perspective, we checked in with Iain M. Cockburn, a professor at Boston University’s School of Management who studies the drug industry.

“To bring a drug to market takes $1 billion or more,” says Cockburn, adding the global R&D budget for biopharmaceuticals is about $100 billion a year. “Against that backdrop, $24 million is rounding error.”

But this drop in the bucket, he notes, may have a relatively significant impact given just how empty the bucket is. Cockburn believes it may be enough to push some “potentially interesting molecules” through the preclinical pipeline and spark other public and private sources to put down the “really big bucks.” 

Stacie Propst, vice president of science policy and outreach at the non-profit health advocacy group, Research!America, in Alexandria, Virginia agrees. “We see this as a down-payment,” she says. “The $24 million is meant as seed money to spark investment by others.”

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