Return of the CEO

Drug Price Wars logo-Episode VI

In the sixth episode of the Drug Price Wars, we get to revisit the CEO of Turing Pharmaceuticals who has made news again in the industry. Previously on this blog, we discussed the price increases of pyrimethamine (aka: Daraprim®) and how Shkreli’s exploitation of a niche market should not have been that big of a surprise given the temporary monopoly that was created. Now it appears that Mr. Shkreli has done it again with hypothetical plans to price benzidazole (if approved) similar to the prices seen in the Hepatitis C market [1]. He has started another public battle within the Drug Price Wars, but this time his strategy involves the US Food and Drug Administration (FDA) drug approval process (More specifically, the “priority review voucher” program).

The Illusive Priority Review Voucher (PRV)

Rather than get into the fine print regarding the FDA’s PRV system, I’d like to share this great resource created by Alexander Gaffney and Michael Mezher with the Regulatory Affairs Professionals Society that really breaks down this fascinating topic: “Regulatory Explainer: Everything You Need to Know About FDA’s Priority Review Vouchers.”

For the sake of this post, I will just give you the following PRV cliff notes:

  • FDA drug approval process takes a LONG TIME
  • FDA drug approval process is very EXPENSIVE
  • PRV pathway allows FDA to decrease the approval time
  • The voucher is transferable – in other words, a company can be awarded the voucher for a drug to treat a rare disease and then use it on another drug or sell it to another company altogether
  • Kesselheim et al recently published a cohort study demonstrating that while more drugs have qualified for expedited review, the trend in the use of this system seems to be driven by non-first in class drugs [2]

The PRV as an Asset

One of the most interesting things regarding our infamous CEO’s latest decision to purchase the rights to a drug for the rare Chagas disease is the fact that the market price for the small company may actually be less than the going rate for one of these PRV’s. Dr. Caryn Bern, a Chagas specialist at UCSF, believes Shkreli plans to get the voucher for benzidazole and then sell it [3]. At first, I thought there was no way this was really possible, but then I read about Asklepion Pharma and United Therapeutics both getting rare pediatric drug molecules approved for the PRV only to sell those vouchers to Sanofi and AbbVie ($245M and $350M) respectively [4,5]. I felt like I must have been hiding under a rock not to have noticed that this was a “thing” in the pharmaceutical industry, but honestly it didn’t seem to make any headlines…not until My Favorite Martin showed up on the scene.

A little floundering biotech company called KaloBios (KBIO) was apparently trading around $0.40/share and was “winding down” operations when Shkreli’s group buys 70% of the company and appoints the bad boy CEO without salary [6]. Next thing you know the whole world is talking about Chagas disease, and the stock soars to $39.50/share by November 23rd (appears to have leveled off at $26/share for now). Even with the surge the market cap of KBIO is still less than the potential market value for a fancy PRV.

Can the PRV still be a good thing?

One of the biggest questions I’m struggling with is whether or not this voucher incentive (even if it is just sold as a $300M asset) is still a good thing for rare conditions. On one hand, something feels really wrong about getting a molecule all the way to submission process, only to use the “speedy” review for a non-innovator for a non-rare condition. On the other hand, at least this provides a big carrot for scientist to do the work on these rare conditions up to a certain point. The decision to sell the voucher seems to be a logical step for a new company still unsure as to whether or not they will receive final approval on their drug, as the voucher guarantees a shorter review time but not whether or not they will approve it [7]. I guess a bird in hand is better than two in the bush…or $300M now is better than all those damn birds combined.

shkreli meme

As the Drug Price Wars wage on, I have a feeling Martin Shkreli will continue to appear. He has become the perfect villain and has put a face on an extremely complex situation. Having a bad guy to blame may help push the battle toward new laws and regulations that could change the market forever. For that, I think Shkreli will be hated more by other companies in his market that were doing some of these same things, but were flying well below the media radar.


  1. Pollack A. Martin Shkreli’s Latest Plan to Sharply Raise Drug Price Prompts Outcry. The New York Times. December 11, 2015.
  2. Kesselheim AS, Wang B, Franklin JM, Darrow JJ. Trends in utilization of FDA expedited drug development and approval programs, 1087-2014: cohort study. BMJ. 2015;351:h4633. DOI: 10.1136/bmj.h4633
  3. Worstall T. Martin Shkreli’s KaloBios proves why capitalism makes us all so wonderfully, stinking, rich. Forbes. December 12, 2015.
  4. Garde D. Sanofi splurges $245M on Retrophin’s speedy-review voucher. FierceBiotech. May 27, 2015.
  5. Press Release. United Therapeutics Corporation agrees to sell priority review voucher to AbbVie for $350M. United Therapeutics. August 19, 2015.
  6. Van Velzen B. KaloBios: Martin Shkreli vs. The Rest of the World. Seeking Alpha. November 23, 2015.
  7. Reed T. To sell or not to sell: United Therapeutics faces choice with potential fast-track drug voucher. Washington Business Journal. March 18, 2015.
Digiprove sealCopyright secured by Digiprove © 2015 A & J Consulting, LLC
Joey Mattingly, PharmD, MBA is an assistant professor at the University of Maryland School of Pharmacy located in Baltimore, Maryland. Joey has managed retail and long-term care pharmacy operations in Kentucky, Illinois and Indiana. Leading Over The Counter is a blog of Joey's views and opinions on the topics of pharmacy leadership and management and do not represent the University of Maryland, Baltimore. Joey can be followed on Twitter @joeymattingly.

2 Responses to “Return of the CEO

  • Do you thinking selling the PRV could create an even stronger incentive to pursue research on orphan drugs than using the PRV? It’s doubtful that an orphan drug could create revenue in excess of the price of the PRV during the extra time on the market that the PRV allows. Maybe the FDA’s simply wants to create more incentives, and is indifferent as to how the incentive is monetized?

    • Thanks for the comment Ben. I’m guessing that was the design originally and why making it a transferable voucher was so important. I think Kesselheim et al are now making the argument that these incentives aren’t actually leading to the end outcome of “more innovation” for rare diseases. I think that is why I’m struggling with this policy.

      Maybe we should collaborate and look at innovation in rare diseases before the incentives were created? 🙂

Leave a Reply Text

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload CAPTCHA.

All original content on these pages is fingerprinted and certified by Digiprove