Incentives for Drug Development

June 1, 2006

Duke researchers have proposed a system that would give pharmaceutical companies enhanced economic incentives for developing drugs for neglected diseases such as leishmaniasis and dengue fever that primarily affect people in poor countries.

Under the proposal, a drug developer with a treatment for a neglected disease would receive a "priority review voucher" from the Food and Drug Administration (FDA) for expedited review of a second treatment of its choice. The voucher could be sold to another company or acquired as part of a buyout of its owner.

"Tropical and infectious diseases cause enormous suffering, but because the victims are in poor countries, there is little or no profit for pharmaceutical manufacturers," says David Ridley, one of the authors of the proposal and an assistant professor at Duke's Fuqua School of Business. "Our plan makes it commercially viable to develop new therapies for neglected diseases."

Ridley, along with co-authors Jeffrey Moe, an executive-in-residence at Fuqua, and Henry Grabowski, an economics professor at Duke, laid out the proposal in a paper published in the journal Health Affairs. Because priority review could reduce the time required to gain FDA approval of a drug by as much as a year, the researchers estimate that in the year saved, a blockbuster drug could gain more than $300 million in additional market value. By adding existing tax credits for research on conditions that are rare in the U.S., the award's total value could exceed $550 million, they say.