[Ip-health] Priority Review Voucher

Outterson, Kevin mko at bu.edu
Wed Aug 6 06:40:36 PDT 2014

It is good to ask these questions about the cost of incentives like PRVs. If it just lengthens the queue for everyone else, the costs are hidden and very significant. If the PRV fees shortens the queue overall, then why not just raise the user fees in any event?

Do we have estimates on the "efficiency" of PRVs? By that, I mean the gap between the net payments to the company awarded the PRV (here, $67.5m less the costs of applying and selling the voucher, which might have been significant) and the actual realized value to the company purchasing the voucher (unknown at present, but perhaps closer to the original estimates of $300m?). Assuming these numbers, the PRV is not very efficient in that most of the value didn't flow to the company with the qualifying registration. 

Kevin Outterson
Professor of Law & N. Neal Pike Scholar in Health and Disability Law - Boston University
Visiting Fellow, Chatham House
Editor in Chief, Journal of Law, Medicine & Ethics
Blogging health law at The Incidental Economist
Research papers at SSRN & Google Scholar

On Aug 5, 2014, at 2:02 PM, Aidan Hollis <ahollis at ucalgary.ca> wrote:

> 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. 
> http://www.plosntds.org/article/info%3Adoi%2F10.1371%2Fjournal.pntd.0001750
> Now a PRV has been sold, for $67.5m. This is a more credible estimate of the true value.
> http://online.wsj.com/articles/sanofi-regenerons-alirocumab-shows-promise-in-phase-iii-trials-1406738434
> 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
> http://econ.ucalgary.ca/profiles/aidan-hollis
> Incentives for Global Health
> http://www.healthimpactfund.org
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