David Ridley, faculty director of the Health Sector Management program at Duke University’s Fuqua School of Business, talks to David Woods about the need to enhance the priority review voucher system and accelerate the pace of medical breakthroughs
Ebola: a disease that had, at the time of publishing, killed more than 8,000 people in West Africa and sickened more than 21,000 people in eight countries, during an outbreak that first occurred in December 2013. It has sent panic ricocheting through the developed world, and left the planet’s leading medical experts scrambling to control the epidemic, as occurrences are now being recorded in the US, Spain and, the UK.
But according to David Ridley, faculty director of the Health Sector Management program at Duke University’s Fuqua School of Business, Ebola is a disease that has been largely ignored by drug companies, when it comes to developing treatments, vaccinations – or even a cure – because there’s little profit potential for a drug that primarily treats people in poor countries.
In spite of this, hope of a break- through could be in sight after US president Barack Obama signed a bill into law allowing any pharmaceutical or biotechnology company that successfully develops a product to treat the Ebola virus to obtain a special voucher worth hundreds of millions of dollars.
This comes as a result of a law that offers financial incentives to drug makers to develop treatments for 16 other neglected diseases.
In 2006, Ridley, along with his colleagues Jeff Moe and Henry Grabowski proposed, in a paper for the Journal of Health Affairs, that a voucher incentive be created to encourage investment in neglected diseases. After Health Affairs published the paper, Ridley presented the idea at the National Press Club and a reporter for Congressional Quarterly told him that Senator Brownback (R-KS) would be interested. A follow- up meeting was held with Senator Brownback, who partnered with Senator Brown (D-OH) to draft an amendment; this passed through Congress and was made into law by the then US president George W Bush.
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The law created the priority review voucher which is awarded by the Food and Drug Administration (FDA). The developer of a drug for a neglected disease will receive faster review for that drug, as well as a bonus priority review voucher (PRV) that they can sell. These changes provide a greater reward for developing drugs for diseases such as dengue and leishmaniasis.
Ebola was not initially on this list because it was not a public health emergency when the law passed in 2007, but as Obama’s December 2014 signature shows, things have changed and the bill has been passed accordingly.
Ridley tells Dialogue: “Under the voucher programme, the developer of a novel drug for a neglected disease receives an expedited, six- month review at the FDA, as well as a bonus priority review voucher that can be sold to another company for use on a different drug. Vouchers were sold in 2014, one for $67.5 million and another for $125 million.”
In 2008, business magnate Bill Gates even discussed the programme in his keynote to the World Economic Forum, saying: “Some of the highest-leverage work that government can do is to set policy and disburse funds in ways that create market incentives for business activity that improves the lives of the poor. Any drug
company that develops a new treatment for a neglected disease like malaria or tuberculosis can get priority review from the Food and Drug Administration for another product they’ve made. If you develop a new drug for malaria, your profitable cholesterol-lowering drug could go on the market a year earlier. This priority review could be worth hundreds of millions of dollars.”
And Congress’s change to the programme in December 2014 means multiple transfers of the voucher are now allowed and the time required for notifying the FDA of the intention to use a voucher has been reduced from one year in advance to 90 days.
But despite the breakthrough last year, as well as an extension of the voucher scheme to incentivize pharmaceutical companies to develop drugs for rare paediatric diseases in 2010, Ridley explains he would like to see more done to develop the programme.
He adds: “Members of Congress are currently considering the 21st Century Cures Initiative, which aims to accelerate the pace of medical breakthroughs. Fixes to the voucher law could – and should – be a major component of the initiative.
“To improve on the voucher programme, Congress should add other infectious diseases for which the burden of disease is great and the profit potential small. Chagas disease is one example, which killed an estimated 8,000 people in 2012, mostly in Central and South America. However, the voucher should not be extended to treatments for diseases with large commercial potential.
“There was much debate about whether HIV and AIDS should be added to the list because the burden is so high,” says Ridley. “But there are many people in rich countries suffering from HIV/ AIDS, so the sales potential is high. Furthermore, too many vouchers for too many diseases will reduce their value, and in turn, reduce the incentives for drug companies.”
“Another improvement would be to refund the voucher if the drug wins priority review on its own merits. This would encourage drug companies to apply the voucher to their novel therapies without the concern of wasting a voucher.”
“Also, Congress should increase patient access to drugs for neglected diseases. For example, Congress could require the company earning the voucher to report on affordability of its neglected- disease drug. And manufacturers should consider licensing the drug to generic manufacturers in poorer countries.”
Ridley is clear on his reasoning for pushing for these changes and amends to the current legislation, believing the “global village” should be working together on healthcare technology and public health improvements.
The Lancet even argued for a similar programme to be extended to the European Union. Ridley and Alfonso Calles Sánchez proposed an EU voucher that would provide priority regulatory review through the European Medicines Agency, as well as accelerated pricing and reimbursement decisions by EU member states.
Ridley admits that an EU voucher might still be years away. Europe adopted the Orphan Drug Act only 15 years after its introduction to the US.
So is it true, then, that the only way to incentivize pharmaceutical companies to work to develop medicines to save lives, and potentially prevent global epidemics, is with financial incentives that generate profits for them?
Ridley takes a pragmatic view.
“People in drug companies fundamentally want to improve the health of the world,” he says. “But they have shareholders to satisfy. I think it’s unlikely that they will “get rich” from the PRV programme – they would have to be able to generate billions of dollars from this. But the PRV programme could give those companies millions of dollars that would cover a chunk of the research and development invested in these drugs. This would give pharma firms the opportunity to do good in the world without having to justify a significant cost to shareholders.”
But from a business perspective, Ridley is confident about the knock on benefits that these schemes could have, for both small pharmaceutical companies that could sell the PRVs and also pharmaceutical companies operating in the developing world.
“I’m optimistic about healthcare in emerging and developing markets in the short-to-medium term,” he tells Dialogue. “Countries like India, China, and South Africa are growing richer and as people get richer they invest more in their own health. Major drug companies see emerging markets as an opportunity for growth, especially since the US’, Europe’s and Japan’s pharmaceutical markets are stagnating.
“Growth in emerging markets is good for us in richer countries, because knowledge and innovation spill across markets and borders. India, for example, has imaging technologies that are high quality and low cost and could be used around the world.
“Even innovations like drugs for neglected diseases could benefit people in richer countries. The world is becoming flatter as tourists and business people carry knowledge, but also infectious diseases. Furthermore, with global warming, the southern US and Europe could become more vulnerable to neglected tropical diseases.
● David Ridley is the Dr and Mrs Frank A Riddick Associate Professor of the Practice of Business and Economics. He is also the faculty director of the Health Sector Management program at Duke University’s Fuqua School of Business. In his research, David examines innovation, location, and pricing, especially in healthcare. To encourage innovation in medicines for neglected diseases, David, with Henry Grabowski and Jeffrey Moe, proposed a priority review voucher prize. The prize became law in 2007. David teaches courses on health care, economics, and strategy.