An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition, the condition itself being referred to as an orphan disease.
The assignment of orphan status to a disease and to any drugs developed to treat it is a matter of public policy in many countries, and has resulted in medical breakthroughs that may not have otherwise been achieved due to the economics of drug research and development. In the case of the rarest diseases that afflict fewer than 10,000 people, biotech companies who own the only approved drugs to treat those diseases “can charge pretty much whatever they want”.
In the US and the EU it is easier to gain marketing approval for an orphan drug, and there may be other financial incentives, such as an extended period of exclusivity, a time during which that company is the only one allowed to market the orphan drug—all intended to encourage the development of those drugs which might otherwise lack a sufficient profit motive and market to attract companies’ research budgets and personnel