The Food and Drug Administration recently approved a new drug for leishmaniasis, an extremely rare disease which is spread by sand flies in poor countries. Why would a for-profit company invest in inventing a drug for which there is no way to make a profit?
The FDA offers a prize to any firm that invents a therapy for one of sixteen rare diseases: a priority review voucher (PRV). A company that wins a license for a neglected drug wins a PRV that it can use to get priority review for another drug — perhaps a new treatment for depression or cancer that will bring in billions of dollars of revenue. In that case, the PRV will be worth between $150 million to $300 million.
Read the entire column at The Independent Institute's Beacon blog or John Goodman's Health Policy Blog