The Value of Priority Review Vouchers – GAO’s Two Cents

Congress enacted several priority review voucher (“PRV”) programs in the past fifteen or so years with the goal of incentivizing drug companies to develop new drugs for diseases that ordinarily may not be attractive because the potential market is small or otherwise unlikely to produce the desired rate of return.  These programs are the Neglected Tropical Disease Voucher Program, the Rare Pediatric Disease Voucher Program, and the Medical Countermeasures Program.  We have blogged on these programs multiple times since they each were enacted (e.g., here, here, and here) and won’t describe program details in this blogpost.  Of course, as it was before these programs, a significant incentive for drug companies to develop drugs for less prevalent diseases remains the seven years of marketing exclusivity available under the Orphan Drug Act.

What we will talk about today is the January 2020 report issued by the Government Accountability Office (“GAO”) entitled, “Drug Development – FDA’s Priority Review Voucher Programs”.  This isn’t the first time GAO has taken a look at these programs.  Five years ago, GAO issued a report in which it concluded that it was too early to gauge the effectiveness of the pediatric voucher program (see our blog here).

The current report was required under the provisions of the 21^st Century Cures Act and provides an update on the number of PRVs awarded by FDA to date (31).  Most were for drugs to treat Rare Pediatric Diseases (19).  Of the remainder, 10 PRVs were awarded for drugs to treat eligible tropical diseases and two were for medical countermeasures.  Based on the data available to GAO, 17 of the awarded PRVs were subsequently sold to another drug sponsor.  The prices for 14 of the 17 transferred PRVs were available, and ranged from $67.5 million for one sold in fiscal year (“FY”) 2014 to $350 million for one sold in FY 2015.  The reported range has narrowed considerably for those sold since February 2017 to $80 to $130 million.  The GAO report includes details on the PRV awards and transfers in Appendix I and Appendix II, respectively.

As of September 30, 2019, 16 of the 31 PRVs awarded had been redeemed – i.e., used to obtain priority review of a drug application for a drug that would not otherwise be eligible for priority review.  This number, too, is based on available data and it is possible others have been redeemed.  GAO noted that almost half of the PRVs awarded had not yet been redeemed as of the end of FY 2019 which it says FDA has noted “may affect FDA’s ability to forecast resources needed,” even though FDA receives at least 90 days’ notice of a PRV redemption.  Others GAO interviewed noted that uncertainty exists for every year and FDA receives additional user fees from the redemption of the PRVs to fund additional positions (almost $44 million for the 16 PRVs redeemed so far).  FDA has also noted that the demands of the PRV program may require it to shift priorities away from other public health priorities.

In order to assess the effect of the PRV programs on drug development, GAO performed a literature review and interviewed seven drug sponsors, seven academic researchers with expertise in drug development, drug pricing, or the PRV programs, and seven other stakeholder groups, including trade associations, patient advocates, and organizations that partner with or provide funding to drug sponsors.

The relevant literature available was limited.  For each of the three programs, GAO found one study that examined and drew conclusions about how the PRV programs affect drug development.  A 2019 study that looked at the rare pediatric disease voucher program found that the program was not associated with an increase in the number or rate of new pediatric disease drugs that started or completed clinical trials.  It did find, however, that after initiation of the program, drugs that the authors could identify as eligible for a rare pediatric disease PRV were “more likely to advance from phase I to phase II” compared to rare adult disease drugs (which are not eligible for this PRV program).  The study also found that the time it took for drugs to progress to the next stage of development was shorter among drugs eligible for this PRV compared to drugs for rare adult diseases.

For the tropical disease PRV program, the GAO identified a 2017 study that found that the PRV program was not associated with an increase in tropical disease drugs starting clinical testing.  The study found that the proportion of drugs in development for tropical diseases among all drugs decreased slightly after the program was created.  The authors suggested the small number of tropical disease products approved in the last decade indicates the program did not serve as a stimulus for completing late stage drug development.

For medical countermeasures, a 2018 study identified by the GAO reported that 25 of 26 medical countermeasures in clinical trials received direct or indirect public support such as funding by the Department of Defense.  The authors stated that the extent of federal funding for these programs suggests that alternatives other than a PRV program would better stimulate drug development in this area.

The drug sponsors GAO spoke with all reported that the PRV programs were an incentive and factor in their decision making.  The researchers and stakeholders had mixed views on the programs as incentives.  The drug sponsors, researchers and stakeholders contacted were mixed on whether the rare pediatric disease and medical countermeasures programs (due to expire in 2022 and 2023, respectively) should be reauthorized.  As of April 2019, FDA did not have a position of reauthorization of the programs.

Finally, GAO solicited thoughts about ways to improve the programs or other ways to incentivize drug development in these areas from the fairly small number of companies and individuals (7 drug companies, 7 researchers and 7 stakeholders).  The proposals for improvement included requiring innovation for PRV award (e.g., not awarding a voucher for drug that was already available outside the U.S.), requiring a plan to provide access to the drug if PRV was awarded in connection with its approval, limiting companies eligible for award to nonprofits or other sponsors that financially require it to develop their drug, and to making administrative changes to the program.  Potential alternatives identified included tax credits, direct federal funding or grants, and patent extensions.

Does this lackluster report foreshadow one or both of the rare pediatric disease and medical countermeasures programs expiring without reauthorization over the next several years?  Stay tuned.