As Congress looks to further expand current priority review voucher (PRV) programs (and even create entirely new ones), researchers are now cautioning that the worth of the vouchers could decline significantly and diminish incentives to develop drugs for neglected diseases.
Since 2007, the US Food and Drug Administration (FDA) has issued a handful of special "priority review" vouchers to pharmaceutical and biotech companies developing drugs and biologics for rare pediatric and tropical diseases. A PRV is a major incentive for industry as it allows its recipient to expedite the review of any one of its new drugs by four months, or the voucher can be sold on the open market.
Vouchers have already garnered hefty price tags as companies look to speed new drugs that they think might be more lucrative if approved more quickly. So far, PRVs have been bought for prices ranging from $67.5 million in July 2014 to $350 million in August 2015.
Most recently, Congress has amended the tropical disease PRV program to incentivize the development of treatments addressing the Zika virus outbreak, and senators and representatvies are considering creating other PRV programs for generics, medical countermeasures and new neonate treatments.
A Senate committee also recently advanced a bill that would re-authorize the rare pediatric PRV program, despite objections by FDA, which has said the programs are not effective, though the Government Accountability Office said it’s still too early to gauge.
However, researchers are calling on Congress to be cautious about expanding the voucher program because increasing the number of vouchers sharply could decrease the expected price, and lower voucher prices “could undermine the incentive to develop new medicines for neglected diseases,” David Ridley, faculty director of the Health Sector Management Program at the Fuqua School of Business at Duke University and Stephane Régnier, global director of health economics outcomes research for Novartis Pharma, warned in May’s Health Affairs.
The researchers note that variations in PRV price suggests uncertainty about the market price for a voucher.
For instance, AbbVie paid United Therapeutics $350 million for its voucher, which will be used in the future on the expedited approval of an unspecified drug, though the researchers calculated that a $320 million voucher price is associated with fifth-year US drug sales of $1.25 billion.
“So clearly AbbVie expected the voucher to be used for a blockbuster drug. Moreover, because only one voucher was available at the time, the price suggests that the voucher had a high value to both AbbVie and another bidder,” they write.
Regeneron, meanwhile, paid $67.5 million for a voucher to speed the approval of its cholesterol drug Praluent (alirocumab), which the researchers say “suggests that Regeneron expected sales of the drug to exceed $250 million. Indeed, before alirocumab’s launch, analysts projected fifth-year sales of more than $1 billion in the United States. Thus, the value of the voucher would be more than $256 million — well in excess of the price of $67.5 million paid by Regeneron.”
Put more simply, the researchers calculated that a PRV will provide a positive return for the drugmaker if the expected value exceeds the cost of conducting a Phase III clinical trial.
But if PRV prices fall below $100 million, as the researchers expect with four or more vouchers issued by FDA per year, then the expected value of the voucher would fall below the cost of a Phase III clinical trial.
“Hence, the voucher (even with orphan drug tax credits) would not provide sufficient incentive for drug development, and additional incentives would be needed—such as an advance market commitment or a profitable commercial market,” they say.
The pair also reiterate criticisms about the social value of the PRV programs, particularly as vouchers have already been awarded for drugs that would have been developed without an incentive, and that the PRV programs do not ensure access to the drugs developed as a result of the incentive.
They propose a possible regulatory mechanism to require a minimum investment in research and development by voucher recipients to ensure the system cannot be gamed, and other “mechanisms for encouraging drug development for neglected diseases include direct government or foundation subsidies of clinical trials and advance commitments to purchase the drugs.”
The Commercial Market For Priority Review Vouchers