In 1982, the U.S. Food and Drug Administration (FDA) recognized the lack of incentive for pharmaceutical companies to develop cures for rare diseases and established the Office of Orphan Product Development. This branch of the FDA provides incentives to companies that work toward curing rare diseases by encouraging them to exercise the rights provided under the Orphan Drug Act of 1983. One type of incentive is the orphan drug status, which gives companies researching cures for rare diseases a seven-year window of tax reductions and the exclusive right to develop the cure for a specific condition.

Developing drugs to treat the vast number of diseases in the world is a line of business that can lead to massive fortunes, but unfortunately not all developed drugs turn silver bullets into golden tickets. In the world of pharmaceuticals, the greatest fortunes are often made by developing drugs that become the standard for curing common diseases.

From a business perspective, having a large market ensures that a company can quickly recuperate the cost of development, realizing the largest possible gain. For this reason, there is little incentive for pharmaceutical companies to develop cures for rare diseases, i.e. those that affect fewer than 200,000 people in the United States, because the small market and high cost associated with finding these types of cures discourages these companies from entering this market.

For related reading, check out Measuring The Medicine Makers.