President Bush vetoed legislation Friday designed to boost wider development of drugs that treat rare diseases and dilute monopoly opportunities for drug firms.

Bush said in a statement that he had "serious concerns" the measure actually would remove incentives for drug companies to develop new treatments against diseases affecting fewer than 200,000 people.The amendments would water down the exclusive marketing rights that the Orphan Drug Act gave the drug producers. Currently, the law gives manufacturers a seven-year exclusivity benefit.

"I believe we must not endanger the success of this program, which is due in large measure to the existence of the `market exclusivity' provision in the Orphan Drug Act," Bush said. "Weakening the current seven-year period is the basis of the economic incentive to attract drug firms to invest in orphan drugs."

The White House contends that taking away that benefit actually would decrease the willingness of firms to develop orphan drugs, because of the expense involved in the research and development.

But supporters of the vetoed legislation contend some drug manufactureres have misused its provisions, particularly in regard to drugs used to treat AIDS and associated infections. They say drug firms have used the law to keep drug costs artificially high.

Bush said, "I am extremely concerned, however, that individuals with rare disease may suffer because of changes that this bill would make in the incentives to develop new drug treatments."

The legislation, backed by Rep. Henry Waxman, D-Calif., was supported by AIDS activists and other advocacy groups.