Vouching for Vouchers

Legislators are advancing a bill to restore the just expired Rare Pediatric Disease Priority Review voucher program, which was set to end September 30, 2020. Congress provided a short-term extension to the program until December 11, 2020

Companies developing therapies that had been granted Rare Pediatric Disease designation will still be able to win coveted priority review vouchers if they secure approval prior to December 11, 2022.

The extension provided a short-term fix as legislators moved to extend the program. On September 29, the House passed a bill sponsored by North Carolina Democrat George Butterfield Jr. that would amend the Federal Food, Drug, and Cosmetic Act to make permanent the authority of the Secretary of Health and Human Services to issue priority review vouchers to encourage treatments for rare pediatric diseases. It now heads to the Senate.

One reason why the designation is prized is because if a therapy with the designation wins approval, the sponsor can be awarded a priority review voucher. The vouchers can be used to reduce the time of an FDA new drug approval review to six months from ten months. The vouchers are transferrable and can be sold. That makes them prized because they are potentially lucrative.

Under the 21^st Century Cures Act, the General Account Office was instructed to make a review of the FDA’s Priority Review Voucher program. In January, the GAO reported that there had been a few studies that examined the PRV programs, but those that did found they had little or no effect on drug development.

The GAO, however, said all seven drug sponsors that it spoke with stated that vouchers were a factor in drug development decisions. Six sponsors said they were one of several factors, while one sponsor said they were pivotal in its decision to develop a drug. The GAO also noted that some academic researchers and stakeholders expressed concerns about the vouchers as incentives for drug development, including the potential for the expected revenue from the sale of a PRV to decline as more are awarded and available for sale.

Congress created the Rare Pediatric Disease Voucher program in 2012. It followed a similar program intended to incentivize companies to develop therapies for tropical diseases. An additional voucher program was later created to encourage the development of medical countermeasures.

Companies that have earned a voucher have been able to sell them at a wide range of prices from a high of $350 million to a low of $67.5 million. Though there is no obligation to report the price of a sale, many companies do so, particularly if they are publicly held.

The vouchers are also a source of revenue for the FDA as it collected user fees for priority reviews. From 2011 through 2018, the GAO reported the agency collected $44 million in priority review voucher user fees.

While there may be debate about how powerful an incentive the vouchers provide for encouraging the development of therapies for rare pediatric diseases, they have been an undeniable source of non-dilutive funding for rare disease drug developers. Of the 11 voucher sales by rare pediatric disease developers for which the GAO recorded known voucher sale prices between February 2014 and May of 2019, these companies generated nearly $1.6 billion.

Even if that’s not seen as a powerful incentive, it does represent a good bit of funding to advance future development of rare disease therapies.

Editor’s note: This story was updated to reflect the passage of a short-term extension of the designation.