Revised Formula Yields a Lower Priority Review Voucher User Fee of $3,559,000; Will That Help Spark Greater Interest in the Program?

By Kurt R. Karst –      

While Congress and The White House debate whether user fees paid pursuant to various UFAs – User Fee Acts – will be sequestered under the terms of the Budget Control Act (see here), FDA continues to move forward with planning for Fiscal Year (“FY”) 2013.  In a notice that will be published in the Federal Register on Thursday, September 13th, FDA announces the FY 2013 user fee rate for redeeming a tropical disease Priority Review Voucher (“PRV”).  And the rate established by FDA might be a surprise to some, given the tendendcy of user fee rates to increase each FY.  Using a new formula, FDA has come up with a fee of just $3,559,000.  That’s a pretty big change from both FYs 2011 and 2012 when the redemption fee was set at $4,582,000 and $5,280,000, respectively, even when factoring in the additional required application fee payment of $1,958,800 in FY 2013, $1,841,500 in FY 2012, and $1,542,000 in FY 2011.  

As we’ve previously reported (here and here), PRVs were established by § 1102 of the 2007 FDA Amendments Act, which created  FDC Act § 524.  Under the statute, sponsors of 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.  There are, however, some restrictions.  FDC Act § 524 allows for only a single actual transfer of a PRV from the original recipient to another sponsor.  In addition, there is a one-year advance notice period that must be provided to FDA before using a PRV (see FDA’s Draft PRV guidance here).  Legislation is pending in Congress (i.e., the Creating Hope Act of 2011) that would remove some PRV restrictions, but it seems unlikely that Congress will act on the bill this year.  (Congress did create, as part of the 2012 FDA Safety and Innovation Act, a new rare pediatric disease PRV program under FDC act § 529.  That PRV program was inspired by the tropical disease PRV program, but the two programs differ in several respects – see our summary here at pages 54-56.)

FDA has granted only a single tropical disease PRV – in connection with the April 2009 approval of Novartis’ NDA No. 022268 for COARTEM (artemether; lumefantrine) for the treatment of acute, uncomplicated malaria infections in adults and children weighing at least five kilograms (see our previous post here).  Novartis redeemed the PRV in connection with the submission of an application for ILARIS (canakinumab) for the treatment of gouty arthritis attacks in certain patients (see our previous post here). 

The fact that a tropical disease PRV is transferable has led to speculation that a market can be created for them.  But that market has not yet formed.  This may be due to the fact that only a single voucher has been granted and it was used by the grantee, but there are also other reasons.  There are the restrictions noted above, as well as a high user fee redemption rate set in past years.  These factors may have dampened interest in the PRV program.  Indeed, an article published last month, titled “The Impact of the US Priority Review Voucher on Private-Sector Investment in Global Health Research and Development,” says that while “there is some recognized value of the PRV . . . the industry perception of the voucher has not normalized and is still clouded by significant uncertainty.”  One reason, according to the article, is that companies view the PRV redemption fee “as demonstrating a lack of support from the FDA for the voucher program.”

With that in mind, we go back to FDA’s notice of the FY 2013 tropical disease PRV redemtion fee.  According to FDA’s notice:

The priority review voucher fee is intended to cover the incremental costs for FDA to do a priority review on a product that would otherwise get a standard review.  The formula used in past years to calculate the priority review user fee was based on the full average cost of a priority review.  After reviewing more recent data and experience with the program, FDA has revised the formula to better approximate the current and ongoing incremental FDA resource costs for a priority review.  The new formula will provide the Agency with the added resources to conduct a priority review while still ensuring a robust priority review voucher program that is consistent with the Agency’s public health goal of encouraging the development of new drug and biological products.

With that preface, FDA jumps into the new formula for calculating the tropical disease PRV redemption rate for FY 2013.  FDA uses FY 2011 standard costs of $5,092,000 for a new molecular entity NDA and $11,203,000 for a BLA for a total of $295,342,000 in FY 2011 (10 BLAs and 36 NDAs).  (A table of FDA’s standard costs for previous FYs is available here).  FDA then uses a formula to separate the costs of a priority and standard review application, which results in the incremental cost of conducting a priority review rather than a standard review of $3,489,000.  After some adjustments for certain costs, the tropical disease PRV redemption user fee figure ends up being $3,559,000 (rounded to the nearest thousand dollars). 

Whether this significant reduction in the tropical disease PRV redemption user fee rate compared to previous years will result in greater interest in the PRV program remains to be seen.  Some may certainly view it as a step in the right direction.