The unintended effect of the Orphan Drug Act on the adoption of open innovation

The Orphan Drug Act (ODA) was an historic attempt to stimulate the development of drugs for rare diseases, intended to help bring to the market drugs for diseases that the pharmaceutical industry might otherwise not have had the financial incentives to pursue. While the intended effects of this regulatory stimulus on innovation are widely analyzed, the unintended ones remain unexplored. Thus, the objective of this paper is to analyze and conceptualize the impact of a relevant regulatory stimulus, such as the ODA, on the adoption of the open innovation paradigm in the pharmaceutical industry. Results show that the ODA made the adoption of this paradigm by large pharmaceutical companies possible, even if it partially inhibited its implementation. Finally, this study develops a framework characterizing the orphan drug development process in terms of drivers, activities, and actors. Future avenues for research are also suggested.