FDA Approves COARTEM with Priority Review Voucher; Voucher Market is Untested and Unclear

By Kurt R. Karst –      

Earlier today, FDA announced the approval of Novartis’ combination drug product COARTEM (artemether; lumefantrine) for the treatment of acute, uncomplicated malaria infections in adults and children weighing at least five kilograms.  Accompanying the approval is the first Priority Review Voucher (“PRV”) granted by FDA.  There has been significant debate about the value of a PRV, and any decision by Novartis to sell the PRV will be closely watched.

The FDA Amendments Act of 2007 (“FDAAA”), amended the FDC Act to add § 524 – “Priority Review to Encourage Treatments for Tropical Diseases.”  FDC Act § 524 provides for a transferable priority review program – the so-called “treat and trade” program – in which applicants for certain new drugs and biologics for “tropical diseases” that have received priority review may receive a PRV entitling the holder to a 6-month priority FDA review of another application that would otherwise be reviewed under FDA’s standard 10-month review clock.  The priority review voucher may be used or sold by the company granted the voucher for an application “submitted after the date of the approval of the tropical disease product application.”  FDA recently clarified in a draft guidance document that although FDC Act § 524 allows for only a single actual transfer of a PRV from the original recipient to another sponsor, “contractual arrangements such as the use of an option or transfer of the right to designate the voucher’s recipient could comply with the terms of the statute.” 

The tropical diseases that can qualify an applicant are enumerated in FDC Act § 524(a)(3) and include malaria.  Applicants that use a priority review voucher are required to pay FDA a priority review user fee in addition to other required user fees, and no such fee may be waived, reduced, or refunded.  FDA must establish the amount of the PRV user fee before the beginning of each fiscal year.  FDA may not collect user fees in connection with a PRV for a particular fiscal year until Congress has passed a law appropriating funds for such fees.  Congress has not yet done so for Fiscal Year 2009.

The idea to stimulate tropical disease drug development by offering a voucher system was first proposed in a 2006 Health Affairs article authored by three Duke University professors as an alternative to promoting tropical disease drug development through other incentive mechanisms, such as a patent term extension.  The PRV concept was adopted by Senator Sam Brownback (R-KS), who, along with Senators Sherrod Brown (D-OH) and Joseph Lieberman (I-CT), successfully amended a bill that would eventually become FDAAA. 

In order for a drug product to be eligible for a PRV, four requirements must be met:

(1) The application must be for a listed tropical disease;

(2) The application must be submitted either as a 505(b)(1) NDA or a 505(b)(2) application;

(3) The drug that is the subject of the application must not contain a previously-approved active moiety; and

(4) The application must qualify for a 6-month priority review under FDA’s policies.

FDA’s draft PRV guidance appears to limit PRV availability (and use) to a 505(b)(1) NDA.  According to the draft guidance, to be eligible for a PRV, “[t]he application must be submitted under section 505(b)(1) of the Act” (emphasis added).  However, FDC Act § 524(a)(4) refers more broadly to a “human drug application as defined in [FDC Act] section 735(1)” (emphasis added).  FDC Act § 735(1) identifies 505(b)(1) NDAs and 505(b)(2) applications as “human drug applications.”  Moreover, a 505(b)(2) application is an application submitted under FDC Act § 505(b)(1).  As such, a 505(b)(2) application that otherwise meets the requirements of FDC Act § 524 should also qualify for a PRV.  Indeed, during a December 2008 public hearing concerning additions to the list of tropical diseases identified at FDC Act § 524, FDA noted that 505(b)(2) applications are eligible for PRVs. 

Once an applicant receives a PRV, FDC Act § 524 places certain limitations on its use for another drug product submission, including: 

(1) The application using the PRV must be a 505(b)(1) NDA or a 505(b)(2) application, and is not limited to products for tropical diseases;

(2) At least one year in advance, the sponsor planning to use the PRV must notify FDA of its intent to use the voucher and the date on which the sponsor intends to submit the application;

(3) A sponsor using the PRV must pay an additional user fee to support the review of the application; and

(4) The PRV sponsor may make a one-time transfer of the voucher to another human drug application sponsor; however, “contractual arrangements such as the use of an option or transfer of the right to designate the voucher’s recipient could comply with the terms of the statute.” 

The value of a PRV is untested and unclear.  When the idea of a PRV was first introduced in Congress, it was thought that it “would be worth hundreds of millions of dollars.”  This estimate was presumably based on the 2006 Health Affairs article noted above in which the authors estimated that a PRV may be worth several million dollars.  More recently, BIO Ventures for Global Health, a non-profit organization that has created a website to track the PRV program and to help build a market for the vouchers, stated that “[e]stimates from different sources vary, but many experts place the value of a PRV somewhere between US$50 million and US$500 million.”   

Ultimately, the value of a PRV must be based on two considerations: (1) the prospect of saved approval time; and (2) the anticipated sales of a new drug.  It is difficult  to predict either with any certainty, although some have attempted to do so.