[Ip-health] Priority Review Voucher

Aidan Hollis ahollis at ucalgary.ca
Tue Aug 5 11:02:38 PDT 2014

One of the mechanisms that was promoted to get drugs developed for tropical diseases was the priority review voucher, which was predicted to have a value of up to $300m. The first product to generate a PRV was the approval in the US of Coartem. Novartis kept the voucher so there was no market value established. A survey of willingness to pay was undertaken in 2012, with a mean value of $94m. 

Now a PRV has been sold, for $67.5m. This is a more credible estimate of the true value.

How important was the voucher? 
Since BioMarin expects revenues of approximately $1bn over the next few years for Vimizim, the addition of $67.5m in pure profit is not insignificant. 

One of the contentious issues in PRVs is the possibility that they might either slow down the approval of other products; or result in a mistaken approval for the product which gets through the FDA review on an expedited basis. There is some evidence to suggest that trying to accelerate approval may have real costs. 
See http://content.healthaffairs.org/content/33/8/1453.abstract?=right

A good question is whether the value of the PRV in terms of encouraging neglected disease R&D (or in this case paediatric product R&D) is enough to overcome these costs. Note that if the “value” of the PRV had been $300m, there would have been evidence of a stronger incentive effect. Now it turns out that the incentive effect is at the low end of the estimated range, but there is no reason to think that the costs will be at the low end. 

Overall, one has to conclude that the incentive value of the PRV is not insignificant, and the system should help to increase R&D in targeted areas. What is not clear is whether these benefits are large enough to make the system worthwhile. There must be some threshold market value of a PRV below which the system is simply not an attractive proposition for society. 

Aidan Hollis
Professor of Economics
University of Calgary
ahollis at ucalgary.ca
+1 403 220 5861


Incentives for Global Health

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