Orphan Drugs

Definition & concept

• Definition — An orphan drug is a pharmaceutical that benefits only a small number of patients — i.e. one developed to treat a rare disease ("orphan disease") for which, under normal free-market conditions, industry has little commercial incentive to develop or market a medicine.
• The economic problem captured — A free market is liable to leave untreated both (i) rare diseases (e.g. some cancers) in all countries, and (ii) some common diseases of poor countries (e.g. malaria, schistosomiasis) — both are economically "orphaned."
• Who funds them — Because investor-owned companies generally cannot afford to develop products for rare diseases, funds to invent such drugs often come from taxpayers or philanthropists rather than private capital.
• EU usage — Medicines intended for these small populations are termed "orphan medicinal products" in European regulatory usage.