The FDA has issued priority review vouchers (PRV) to incentivize drug development for rare or neglected diseases since 2007 – and such a voucher is a valuable prize since it allows a company to expedite the review of any one of its new drugs by four months. The voucher can also be sold on the open market for millions of US dollars.
Many argue that the scheme has been a success – so much so that US Congress is looking to expand it to other areas. But is expansion necessarily a good thing? David Ridley, a professor at Duke University’s Fuqua School of Business urges caution, as increasing the supply of diseases eligible for vouchers will increase the number of vouchers and decrease the price. “Lower voucher prices will mean lower incentives for innovation for diseases that are currently eligible for vouchers,” he says. The PRV program was developed based on a 2006 paper written by Ridley and his colleagues Jeff Moe and Henry Grabowski (1). “We had good luck in several ways, including timing. Congress passes major FDA legislation every 5 years (when FDA user fees are renewed), and 2007 was one of those years,” says Ridley. “Potential voucher buyers were initially cautious because they didn’t want to pay hundreds of millions of dollars based on an unproven voucher mechanism, but now there are many developers with funding and drugs in the pipeline thanks to the voucher incentive.” According to Ridley, the voucher price has risen from $67.5 million to $350 million – which is certainly a good incentive for a drug developer. The scheme has also been well received by both the industry and sponsors in Congress (particularly as the vouchers do not require the allocation of additional government funding). The list of diseases eligible for the PRV program was expanded earlier this year to incentivize the development of treatments addressing the Zika virus outbreak. Senators and representatives are also considering creating other PRV programs for generics and neonatal treatments. Ripley hopes that members of Congress will be cautious about expanding the program. As an example, he has estimated that if only one priority review voucher is available in a year, it will be worth in excess of $200 million. If four vouchers are available, however, then the value could drop to below $100 million.
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References
- DB Ridley, HG Grabowski and JL Moe, “Developing drugs for developing countries”, Health Aff, 25, 313-324 (2006). DB Ridley and SA Regnier, “The commercial market for priority review vouchers”, Health Aff, 35, 776-783 (2016). PMID: 27140982.
