Study Questions the Value of Priority Review Vouchers as Incentives

In 2007, the U.S. Food and Drug Administration established its priority review voucher program to stimulate the developing of drugs for neglected tropical diseases. In 2012, Congress expanded the program to make drugs developed for rare pediatric diseases eligible for a voucher.

Photo: Thomas Hwang, researcher in the Program on Regulation, Therapeutics, and Law in the Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital and Harvard Medical School.

The vouchers require the FDA to shorten the review time for a new drug application to six months from ten. What makes these vouchers particularly valuable is that they are transferrable. A company that earns one can sell it to the highest bidder, who can then use it to get a drug to market earlier than it otherwise would have been able to do. That can give it four extra months of revenue and potentially an advantage over a competitor.

Since the program began in 2012, the FDA has granted a total of 13 rare pediatric disease vouchers, seven of which were sold for a combined value of $1.2 billion—an average of $171.4 million. The most recent one sold for $80.6 million. Now researchers in the February issue of Health Affairs have taken a look to see if there’s evidence that these incentives do what they are supposed to do and actually stimulate the development of new drugs for rare pediatric diseases.

The authors, in short, say “no.”

While they found that drugs for rare pediatric diseases advanced through clinical testing faster than drugs for rare adult diseases and were more likely to be first-in-class therapies, the voucher program was not associated with a change in the number or rate of new pediatric drugs starting or completing clinical testing.

“Given the large number of rare pediatric diseases still without treatment options, our data suggest that the voucher program could be insufficient to meet this goal and that additional policies may be needed to bolster the development of new therapies,” Thomas Hwang and his colleagues from Brigham and Women’s Hospital and Harvard Medical School write.

The study, financed by the Laura and John Arnold Foundation, as well as the Harvard-MIT Center for Regulatory Science and the Engelberg Foundation, will likely catch the eye of policymakers. In 2016, Congress reauthorized the pediatric priority review voucher program. It will need to be reauthorized again if it is to continue to live beyond 2020.

While the authors note there have been some efforts to expand the program—in 2016 Congress extended it to include medical countermeasure products and there have been calls to add drugs for neonatal conditions—the program has had its detractors.

In a Government Accountability Office report in 2016, the FDA expressed its opposition to renewing the Pediatric Rare Disease program because of concerns that it could undermine its ability to best address public health needs by forcing it to shift the limited resources it has to accelerate the review of drugs that might not merit the priority conferred on them by the vouchers.

Two expert working groups that the World Health Organization organized found “major flaws” in the use of priority review vouchers as a policy tool for pharmaceutical development.   

One problem with the priority review voucher is that the more successful it is an incentive, the weaker it becomes. That’s because its value is in part tied to its scarcity. The value for these vouchers falls with an increase in their supply.

The authors note that policymakers generally have focused on improving the pediatric study of drugs developed for adult conditions. They suggest supplementary incentives could be designed to stimulate the development of drugs specifically for children. As an example, they suggest one approach could be providing funding for a new public-private drug development partnership for rare pediatric diseases directed by the National Institutes of Health.

“Our analysis suggests that other policies are needed to expand the pipeline of drug for rare pediatric disease,” the authors wrote, “particularly by stimulating the entry of new therapies developed specifically for children.”