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Week-in-Review Editorial: 28 September to 4 October 2007.

Recordati's decision this week to buy Orphan Europe was an unusual one for a major drug company, as most others are trying to develop treatments for end-user heavy therapy areas to gain large profits

Recordati's decision this week to buy Orphan Europe (OE) was an unusual one for a major drug company, as most others are trying to develop treatments for end-user heavy therapy areas, such as heart disease, diabetes and obesity. Large therapy areas usually mean large profits.

Orphan drugs generally follow the same regulatory development path as any other pharmaceutical treatment. However, some statistical burdens are reduced. For example, the regulations generally reflect the fact that it is not possible to test 1,000 patients in a phase III clinical trial when fewer than 1,000 patients have the disease in question.

Since few markets would normally exist to create these goods, as the costs of developing, researching and producing this drug would likely exceed any revenues, government intervention is required, usually to establish such a market or to produce the goods itself. Also, the company receives more intellectual property protection for any orphan product produced.

Critics of the free market see this as a failure in free market economic systems. Free market advocates often say that, without government intervention in the form of extensive safety and efficacy testing, the development costs would be considerably lower.

A report published on 26 June 2006 shows, however, that the EU policy for orphan drugs is working. Between April 2000 and April 2005, the incentive programme triggered more than 450 applications for orphan designation.

The first 22 new orphan medicines for the treatment of 20 different life-threatening or chronically debilitating rare diseases have already received a marketing authorisation. In addition, some 270 further medicines have already been designated as orphan medicinal products, but are still undergoing clinical tests.

The OE acquisition includes the Orphan Europe Academy, which provides healthcare professionals with the opportunity to share and increase knowledge, develop new ideas, and strengthen scientific collaboration in the area of rare diseases.

Long-term, Recordati may be able to develop novel treatments from their orphan portfolio and apply them to larger therapy areas, such as cancer, the treatments of which, as we all know, tend to be very expensive indeed.

30th September 2008

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