FDA and Vouchers for Neglected Diseases: A Bad Idea Gone Bad

Are economic incentives necessary to get the private sector to do the right thing? Cities and states offer corporations tax breaks to locate in impoverished areas. Companies get tax breaks to beef up their research and development portfolios. In health care, some physicians get extra pay if they adhere to clinical practice guidelines under the presumption that it will lead to better patient outcomes.

But these thinly-veiled bribery strategies often come with unintended consequences. The companies that get the tax breaks may have located or invested in those areas anyway. Individuals or companies that get the extra payments find ways to meet the criteria without actually delivering the desired result.

The unintended consequences of an ill-conceived incentive scheme will be on full display in early December when Novartis goes before a Food and Drug Administration advisory committee seeking U.S. approval for its anti-malarial combination pill Coartem.

FDA approval is not in doubt. Coartem, a combination of an artemisinin extract and lumefantrine, was approved in Switzerland after decades of extensive clinical trials in the developing world. The World Health Organization placed artemisinin-combination therapy on its preferred therapy list for drug-resistant malaria in 2002. (For the complete story on the development of this new wonder drug, derived from ancient Chinese medicine, see the December 2006 cover story of The Scientist magazine, reprinted here.)

So why is Novartis seeking U.S. approval now? It is not as if the U.S. has suddenly experienced a major malaria outbreak.

The only possible reason is an incentive scheme slipped into the FDA Amendments Act last year by Republican Sen. Sam Brownback of Kansas. The "Tropical Disease Priority Review Voucher" law gives any company that develops a new drug for neglected diseases of the developing world a "priority review" voucher that can be used for any other drug brought before the agency.

Under the Prescription Drug User Fee Act, priority reviews are given to drugs that represent a significant advance in medical therapy. The FDA has only six months to review those priority applications. But under standard reviews, which are given to drugs that replicate the action of drugs already on the market, the agency's short-handed staff can take up to two years to conduct its examination of the clinical trial evidence behind the new drug application.

Novartis' application for the artemether/lumefantrine combination has itself been given a priority review because neither drug has been approved by the FDA. When I called a spokesman for the Swiss-based firm yesterday to inquire about the reasons for submitting its application, he suggested the approval would make the drug available for the travelers market. He admitted, however, that no new clinical trials in this first world population have been conducted, and its documentation would rely on previous trials conducted in the developing world.

Might the priority review voucher be the reason for the company's going to the expense of seeking FDA approval, I asked. "It is our understanding that we are eligible for the priority review voucher," he said.

According to the FDA's draft Guidance for Industry on Tropical Disease Priority Review Vouchers, published in October, companies have the choice of using the voucher for one of its own standard drug applications; or, it could be sold to another firm.

What might it be worth? If a company uses it for a potentially blockbuster me-too drug that replaces a billion dollar seller, the extra 6 to 18 months of patent life won through the priority review could be worth anywhere from $500 million to $1.5 billion.

There are no protections in the draft guidance against abuse of this new incentive. The new drug need only be for a tropical disease like malaria, tuberculosis or leishmaniasis (the full list is in the guideline; the FDA will hold a hearing in December on expanding the list); have no active ingredient that has been previously approved by the FDA; and must itself qualify for a priority review.

So let's tally the costs and benefits of this new incentive scheme as applied to Coartem. The developing world gets nothing, since this combination pill for malaria is already on the market. Meanwhile, first world consumers down the road will be paying from $500 million to $1.5 billion extra for a heavily marketed drug that from the moment it comes on the market will be no better than other available therapies.

A few years ago, the Global Alliance for TB Drug Development estimated the cost of developing a new antibiotic for tuberculosis at $259 million, including the cost of capital and the cost of failures. Let's assume that the figure has since inflated to twice that level. If consumers could directly pay the money this priority review voucher will take out of their pockets into a special fund to finance research in neglected diseases, sick people of the developing world would potentially get one to three new drugs to fight TB.

Of course, R&D is never a given. TB patients might get nothing from another $1.5 billion poured into research. But, with this first use of the priority review voucher system, that's what they'll be getting anyway.

This post originally appeared on GoozNews.com.

Follow Merrill Goozner on Twitter: www.twitter.com/gooznews

Comments

[JasonMatheny]

In a recent review [1] of several existing and proposed incentives for R&D on infectious diseases, we concluded that Priority Review Vouchers (PRVs) are potentially the most efficient. One of the benefits of a PRV is that it brings a product to the market sooner but does not extend its patent life. So both the new product and subsequent generics reach consumers faster. We disagree with Mr. Goozner's claim that "first world consumers down the road will be paying from $500 million to $1.5 billion extra for a heavily marketed drug." This is money that consumers will pay for new products, regardless of the voucher. The cost to society is close to zero; and the benefit to society, in the form of much-needed drugs and vaccines for infectious diseases, is enormous.
[1] http://www.upmc-biosecurity.org/website/resources/publications/2007_orig-articles/2007_article_pdfs/2007-09-15-incentivesbiodefensecountermeasure.pdf

[DRidley]

I'm one of the authors of the paper that motivated the law. You can see the paper at http://content.healthaffairs.org/cgi/content/abstract/25/2/313 I think Mr. Goozner makes several fair points, but I want to add some clarifications.

For readers unfamiliar with the priority review voucher: manufacturers receiving FDA approval for drugs for neglected tropical diseases win prizes: priority review for *different* drugs. Priority review means the paperwork is reviewed by FDA in 6 rather than 12-18 months. So the prize motivates new treatments for neglected tropical diseases, speeds approval of different new drugs, and speeds different drugs' generics.

The prize is new, so no new treatments have been developed in response. Instead, the manufacturer of an existing, though not previously FDA approved, therapy applied. This is not ideal. It is analogous to tax laws that reward people donating to charity, even those that would have donated regardless. It is not, however, all bad. First, it's arguably fair to reward both good deeds. Second, FDA approval of Coartem can benefit U.S. travelers. Third, if the manufacturer uses the voucher prize successfully, it will reassure other manufacturers considering developing new treatments for neglected diseases.

The key proponents of the amendment were Senators Brownback (R-KS) and Brown (D-OH). I sincerely believe both were motivated only by desire to help people suffering from neglected tropical diseases. The voucher has the potential to motivate new treatments at relatively little government cost.