Labour has pledged to create a publicly-owned company to make cheap versions of medicines the NHS needs but cannot afford, such as Orkambi, which is denied to thousands of children and young people with life-shortening cystic fibrosis.

Jeremy Corbyn told the Labour party conference that he had met nine-year-old Luis Walker, who suffers from the disease which clogs his lungs and makes breathing a struggle. “Every day he needs four hours of treatment and is often in hospital, which keeps him from school and his friends,” said Corbyn.

Corbyn said Orkambi could transform his life, “but Luis is denied the medicine he needs because its American manufacturer refuses to sell the drug to the NHS for an affordable price”.

People with hepatitis C and some forms of breast cancer were also “being denied lifesaving medicines by a system that puts profits for shareholders before lives”.

In February, the Guardian revealed that campaigners were calling on the government to bypass the patent on Orkambi, submitting a dossier detailing how that could be done legally, under the World Trade Organization rules, through a device called crown use.

Essentially, the UK would decree that the needs of the people outweighed the interests of the company. The company would get compensation, but nothing like the profits they want.

Corbyn outlined a radical new medicines policy with the emphasis on public ownership. “We will redesign the system to serve public health, not private wealth,” he told the conference. A publicly-owned company will make cheap generic versions of medicines deemed prohibitively expensive, which will necessitate setting a review of drug patents.

The US drugs company Vertex priced Orkambi at over £100,000 per patient per year. In England about 5,000 young patients could benefit, but the NHS said it could not afford to pay the bill.

Labour’s new policy document, Medicines for the Many, recommends this option, which elsewhere is called compulsory licensing, for Orkambi.

It says the UK should follow the examples of Argentina, Brazil and India, which already challenge patents and make affordable versions of some medicines in the public interest.

Corbyn made it clear he would put pressure on the drugs companies to comply. “We will tell the drugs companies that if they want public research funding, then they will have to make their drugs affordable for all,” he said.

Orkambi campaigners welcomed Corbyn’s speech. Christina Walker, Luis’s mother, said: “My child’s future is being put in jeopardy by the behaviour of one pharmaceutical company: Vertex.

“But it’s not the first or the last time that excessive profits have been put above patients’ health, and with 7,000 rare diseases currently without an effective treatment or cure, our situation could be replicated many times over in the future if the government doesn’t intervene now.

“Across the NHS, the high price of new medicines is causing huge strain, affecting the lives of patients with conditions ranging from cancer to hepatitis. Most people recognise that major reforms are needed.

“Quite clearly drugs don’t work if patients can’t take them. I’m pleased to see that Labour are willing to explore every alternative to tackle this access to medicine crisis. I call on the government and other parties to do the same.”

Prof Mariana Mazzucato, director of the University College London Institute for Innovation and Public Purpose, said: “It is welcome that the Labour party is addressing key failures of the pharmaceutical sector.

“When the government funds the development of new medicines, it must do so in a systematic way to make sure that the benefits reach the patients who need them.

“Instead, we currently have a system where the risks of innovation are socialised, while the benefits are privatised through dysfunctional uses of intellectual property rights, a financialised business model and a pricing system that does not recognise taxpayer investment.”