New US Voucher Prize System For Neglected Diseases Launches Amid Doubts

By Tatum Anderson for Intellectual Property Watch
As a novel prize system to encourage the development of treatments for diseases that disproportionately affect patients in developing countries launches in the United States next month, concerns are already being voiced as to whether it will provide the right incentives for desperately-needed drugs.

Under system, drug developers that register a vaccine or medicine combating a tropical disease could be eligible for a so-called Priority Review voucher. The voucher would entitle them to a shorter drug approval time for other, more lucrative drugs at a later date.

In other words, companies with vouchers are able to submit applications for these other drugs using the US Federal Drug Administration’s Priority Review Process, which is normally reserved for particular drugs that satisfy a strict set of conditions. The Priority Review process takes approximately six months, compared with typical review time of around 10 months.

The Priority Review voucher initiative is a type of prize system because faster approvals time mean drugs can reach the market quickly and are, therefore, potentially more lucrative. Estimates vary but vouchers could be worth $300 million, according to David Ridley of Duke University, who helped design the system with colleagues.

And, the prize might become larger because vouchers can be transferred or sold on to other companies that might want their own drugs to be approved more quickly he said. “The more people competing for the voucher, the higher the price, the greater the incentive for research into neglected diseases,” he said.

Ridley’s team proposed its system to two US Senators who eventually succeeded in enshrining the concept of a priority review voucher into a law that governs the operations of the Federal Drug Administration (FDA) in the United States. Section 1102, which refers to the voucher, was one of several provisions included in this FDA Amendments Act which came into force on 27 September, 2007 (although vouchers cannot legally be issued until a year later).

Companies that successfully register treatments or vaccines for any of the 16 particularly problematic diseases listed by the statute could qualify for vouchers. The diseases include sleeping sickness, malaria, tuberculosis, leprosy and cholera.

Those companies might also receive even more incentives under another US law. They could be entitled to provisions under the Orphan Drugs Act, an existing law which applies to drugs for diseases affecting fewer than 200,000 US citizens, or can be shown to have no economic viability (over 99 percent of all orphan drug approvals are for those drugs that treat diseases affecting fewer than 200,000 patients, according to the FDA).

Under the Orphan Drugs Act, drug developers receive research and development (R&D) tax credits and a waiver of the FDA’s user fee, and seven years of marketing exclusivity once approved, compared with five years of exclusivity for other drugs. That amounts to funds worth half their R&D costs and extended exclusivity, say experts.
Correct Incentives?

But speculation has begun to grow as to whether the wording of the law on the voucher will provide the correct incentives to increase the number of drugs for diseases.

“The way the law was written could be improved upon. There are areas that [are] a little bit grey in the way that the law is interpreted,” says Dr Mel Spigelman of Global Alliance for TB, a non-profit organisation that is developing drugs for tuberculosis in partnership with several pharmaceutical companies. “There are discussions ongoing to really tweak it a little bit or clarify to make sure that as with any legislation it does what it’s intended to.”

It is unclear where these discussions are taking place.

The law is not clear if vouchers can be sold on several times or just once, according to Spigelman. “That has its implications as to the value,” he said.

Ridley said the original design enabled vouchers to be sold several times because this would create a market in such vouchers that would end up increasing their value.

Other parts of the law have drawn attention too. The act states that a drug which is the subject of a Priority Review voucher application must contain no active ingredient (including any ester or salt of the active ingredient) that has been approved in any other application.

That means a company which may have already registered a drug for one use in the developed world, but discovers this drug might also used for a tropical disease, could not apply for a voucher. Similarly, companies with new combination therapies – grouping several drugs together in a single tablet – which are often desperately needed to combat some infectious diseases – may not apply either. Thus, the incentive to get such drugs to the market is not written into the law, say observers.

Other activists suggest that slight changes made while the law was being drafted may have ramifications for middle-income countries.

Contrary to proposals made in the original academic papers, politicians decided to allow pharmaceutical companies to hang on to the intellectual property from the treatments against tropical diseases. The intention, say experts, was to enable companies to apply for patents on new indications that might sell better in richer countries.

However, some have suggested that although it is unlikely that patent-holders would ever charge higher prices for such drugs in developing countries, they may use the patents to raise prices for these drugs in middle-income countries – which typically have both rich and poor populations.

The FDA says it is currently developing guidance on how the law might work in practice, but cannot say when this will be completed.

It is unclear how many companies have applied to register drugs under the new voucher system so far. The first voucher, if any company has been successful enough to qualify for one, can legally be issued for the first time next month.

Tatum Anderson may be reached at info@ip-watch.ch.