US incentive scheme for neglected diseases: a good idea gone wrong?

Bill Gates believes—or at least believed—that government led market incentives could solve the fundamental conundrum in developing drugs for neglected diseases. For-profit companies see little economic justification to invest in treating diseases that affect the poor, but “creative capitalism,” as Gates put it, could lure companies into solving some of the world’s most pressing problems by bringing to market new treatments for endemic tropical diseases.

At the 2008 World Economic Forum in Davos, Gates highlighted a new US Food and Drug Administration (FDA) law that rewards sponsors of drugs for tropical diseases with a voucher that entitles the bearer to a “priority review” of another new drug application. “If you develop a new drug for malaria your profitable, say, cholesterol lowering drug could go on the market up to a year earlier,” Gates explained. And under the law, the voucher can be sold. “This priority review could be worth hundreds of millions of dollars.”

Gates was not the only one to be excited about the idea. Originally proposed by Duke University economist David Ridley and colleagues in the health policy journal Health Affairs,1 the concept was quickly championed by a republican senator from Kansas who, along with two democrat senators, successfully introduced the priority review voucher program into US law. The vouchers are fully transferable between companies and might be worth around $300m (£175m; €220m).