[Ip-health] IP-Watch: New US Voucher Prize System For Neglected Diseases Launches Amid Doubts

[Thiru Balasubramaniam]

http://www.ip-watch.org/weblog/index.php?p=3D1192

6 August 2008

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=92s 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. =93The more people competing for the
voucher, the higher the price, the greater the incentive for research
into neglected diseases,=94 he said.

Ridley=92s 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=92s 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.

=93The 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,=94
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. =93There are discussions ongoing
to really tweak it a little bit or clarify to make sure that as with
any legislation it does what it=92s intended to.=94

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. =93That has its implications as to the
value,=94 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.

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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org


Tel: +41 22 791 6727
Mobile: +41 76 508 0997