In the May issue of Health Affairs, two papers examine the potential for voucher systems to incentivize drug development in areas of unmet medical need. Co-authors Kevin Outterson and Anthony McDonnelltake a look at potential exclusivity voucher programs designed to encourage development of new antibiotics, while David Ridley and Stephane Régnier analyze the effects that expansion of existing priority review voucher (PRV) programs may have on the value of PRVs as a development incentive.
Ridley and Régnier’s work is of particular importance as both houses of Congress pursue a spate of legislative proposals that do make extensions to the PRV system for the Zika virus, pediatric diseases, and generics among other areas of unmet need (Table 1). While these proposals are based on the potential promise of PRVs to spur innovation, it is unclear whether or not the program as currently established has actually delivered on that potential to date.
As noted in both articles, there are a number of challenges that could result from over-expanding the application of voucher incentive programs, and without careful consideration of the impact increased PRVs could have on regulatory review and broader drug development incentives, policymakers’ well-intentioned efforts may not ultimately achieve their desired aims and could actually create unintended negative consequences.
Recent Experience With PRV Programs
The PRV program was first proposed by David Ridley, Henry Grabowski, and Jeffrey Moe in 2006 inHealth Affairs and included in the Food and Drug Administration Amendment Act (FDAAA) in 2007 as a means for encouraging the development of therapies for neglected tropical diseases (NTDs). These diseases disproportionately affect poor populations in developing countries, and as such lack the conventional market incentives that lead innovators to invest significant time and resources into developing treatments. For similar reasons, the PRV program was expanded to rare pediatric diseases in 2012’s Food and Drug Administration Safety and Innovation Act.
The PRV incentive was designed as a way to reward innovators for developing a novel treatment by providing them with a redeemable voucher for expediting the review of another product in development. Redeemed in conjunction with a New Drug Application (NDA), the voucher confers priority review status on the second drug and reduces the target timeline for FDA review of the NDA from 10 to six months.
Since vouchers can either be used by the same company or sold to another company seeking a faster path to market, their monetary value can be a significant incentive for developing a qualifying product. Vouchers have been sold for prices between $67 and $350 million, prices that Ridley and Régnier note could fluctuate from around $25 million to hundreds of millions of dollars depending on how many vouchers are available for purchase at any given time and a purchaser’s willingness to pay.
While the original legislation required a sponsor to give FDA 365 days of advance notice before redeeming a PRV, current statute has reduced that requirement to 90 days before using a voucher. There is also a user fee for redeeming a voucher, which varies from year to year and is intended to help ameliorate additional staffing or resource challenges FDA may encounter in expediting review.
For Fiscal Year 2016, the voucher fee is $2.7 million paid in addition to the standard NDA fee of $2.4 million. Some have argued that a higher voucher fee as established in previous fiscal years should be enough to help FDA build staffing capacity, but a number of constraints described below still make it difficult for FDA to use the fee to help address hiring challenges regardless of its amount.
To date, nine vouchers have been awarded. Three have been awarded for drugs treating NTDs, (malaria, tuberculosis, and leishmaniasis) and six for rare pediatric diseases (Morquio A syndrome, high-risk neuroblastoma, rare bile acid synthesis disorders, hereditary orotic aciduria, hypophosphatasia, and lysosomal acid lipase deficiency). Four vouchers have been redeemed, two of which resulted in approvals (for Sanofi’s Praluent and Gilead’s Odefsey) and one in rejection (Novartis’ Ilaris); the fourth NDA utilizing a PRV is currently under regulatory review (an investigational type 2 diabetes drug from Sanofi). Four have been sold or transferred to other companies. Three of the four vouchers redeemed to date were purchased from their original holder.
Potential Challenges For Expanded PRV Programs
As touched on in both Health Affairs articles, a number of questions remain around the design and effectiveness of the PRV program. For example, many have questioned whether or not PRVs truly stimulate innovative drug development — or at least question whether they’ve had this effect in the nine years since being introduced in FDAAA. The first NTD voucher, for example, was awarded to Novartis for its anti-malarial drug Coartem, but the drug had been widely used around the world for nearly a decade at the time of FDA approval.
Other researchers have highlighted a similar story in the development of Knight Therapeutics’ Impavido, a treatment for leishmaniasis, a parasitic infection present in the tropics and subtropics, that was awarded a voucher upon FDA approval but largely developed by the World Health Organization and its partners in the 1990s and approved in 14 countries prior to 2010. This loophole effectively leaves the door open for exploitive practices, most recently highlighted by Kalobios’ (a company formerly run by pharmaceutical malpractice poster child Martin Shkreli) plan to register an old, widely used drug to treat Chagas disease with FDA in order to obtain a voucher.
On the pediatric side of PRVs, the Government Accountable Office recently concluded that it is too early to determine if the voucher program is working as promised to spur innovative development. The six drugs approved and awarded pediatric vouchers were already well into development prior to the program’s implementation in 2012, so it is likely that the products would have been approved without the voucher incentive in place. While these six drugs are the first approved by FDA to treat the seven rare pediatric diseases for which they are indicated, their development was not initiated with the goal of winning a PRV in mind.
There have also been questions raised about downstream availability and affordability of drugs associated with the PRV program. The development of a therapy through the PRV program, especially in the NTD space, does not guarantee its accessibility. In 2014, global health advocates wrote a letter to the chairman of Janssen Pharmaceuticals pleading to make Sirturo, a tuberculosis drug awarded a voucher, more affordable for middle- and low-income countries where the greatest burden of disease exists. There also may not be strong incentives for further development or refinement of an NTD drug to improve its administration or utility in resource-limited settings.
Following successful use of a PRV to shorten regulatory review timelines, some worry about the potential health spending impacts that might arise. Ridley and Régnier demonstrate that the value proposition for a company using a voucher to speed review is inherently linked to the amount of market share they can capture from competitors, earlier sales, and additional months of on-patent coverage and reimbursement prior to generic entry. Should the approved drug be high-cost, additional months of market access could translate to significant spending or the use of PRVs in arms races between companies with products expected to command high prices.
In 2015, Sanofi used a PRV to boost its PCSK9 inhibitor Praluent to approval and first-in-class status, beating competitor Amgen to market by about a month in a therapeutic area that was initially estimated to generate billions of dollars in sales in the coming years. While that additional month is a relatively short amount of time without direct competition in a drug class, the potential ramifications of longer lags between a PRV-enabled approval and competitor products could exacerbate current trends and concerns related to drug costs.
Finally, FDA has voiced concerns related to the outsize impact expanded PRVs could have on internal processes. When a voucher is redeemed, it diverts frontline resources away from other important, sometimes less-visible work that supports FDA’s central mission to protect and promote the public’s health. This work, such as guidance drafting or early-stage interaction with sponsors, is put on hold in order to expedite what would have been a standard review cycle. As more vouchers are redeemed, transitioning staff to PRV-enabled reviews may even cut into work that is directly tied to reviewing applications of greater public health priority. Finite resources would be reallocated to speed review of a product that would not have qualified for other expedited review pathways on its own at the cost of speeding review for more novel or impactful products.
This worry is compounded by the differences between applications for drugs that often qualify for priority review versus those that receive a standard 10-month timeline. The latter tend to have smaller effect sizes, consist of larger trials and resultant data packages, and require more time from review staff to adequately assess. Compressing the workload from these larger reviews by four months—and doing so without enough lead time to hire, train, or reassign experienced staff—places further stress and unpredictability on the agency. Significantly increasing the number of available vouchers may potentially even undermine the priority review pathway altogether if the number of vouchers available to sponsors on a steady basis render the distinction between priority and standard review moot.
Refining The PRV Process
Given the potential challenges listed above, the considerations that both articles lay out, and little evidence to date that vouchers are encouraging significant innovative drug development, stakeholders and policymakers should carefully review and revise the existing voucher program prior to expanding PRVs to new disease areas. In line with the recommendations put forward by the articles’ authors, we reiterate and reemphasize four issues that deserve greater attention as Congress weighs action.
Tightening Qualifying Criteria
In order to encourage development of truly novel medical products, a revised PRV process could include more significant thresholds for the reward and use of PRVs. Companies could be required to show that they conducted the majority of late-stage research necessary to obtain approval for the drug, for example. Other restrictions could limit eligibility for the voucher to novel products that have not been approved in other countries for a set number of years prior to FDA submission, or even tie vouchers more tightly to New Molecular Entity or First-in-Class designations.
It might also be possible to further refine the settings in which a PRV can be redeemed, as has been done in the generics-specific PRV program currently proposed. Variations on these thresholds have been floated in legislation, most recently as NTD-related addendums in the generics PRV proposal and as part of expanding the NTD program to include treatments for material threats (see Table 1), but not yet enacted.
Guaranteeing Access And Affordability
Still other criteria for being granted a PRV could require companies to establish and publicize plans for ensuring that their drugs are accessible and affordable. As Ridley has suggested elsewhere, companies could be required to issue continued reports on these parameters, potentially with commitments to generics’ licensing arrangements in developing nations that further lower barriers to access and utilization.
A loose example for how to tailor an access-related requirement can be found in the current generic PRV proposal: a voucher granted under this program would be revoked if the generic is not marketed in the U.S. within one year of approval. Other proposals would require sponsors to file a public plan for distributing the treatment and a three-year follow-up report on their success.
Setting A Fixed Supply Of Vouchers
While the value of vouchers on the secondary market has risen dramatically, Ridley and Régnier have demonstrated that a greater number of PRVs from expanded programs could seriously diminish the value of each voucher individually. In order for vouchers to encourage drug development, it is critical that their value remain high enough to incentivize early-phase research and development.
To maintain this intended incentive, it may be possible to fix an optimal number of vouchers available or redeemable at any given time or across all voucher programs. A capped number could help to ensure that the value of PRVs stays relatively high or consistent rather than flooding the secondary market with lower-value PRVs that are attractive to companies seeking to game the system.
The fixed number should be set so that there is some predictability as to when vouchers would be available to companies pursuing innovative development, avoiding a waitlist approach that could further undercut a voucher’s value. Challenges to predictable availability could be lessened if coupled with the stricter eligibility limits described above. Setting a cap may also enable FDA to better anticipate and plan for a more cyclical process in which a fixed number of PRVs are granted or in circulation; this might allow the agency to better anticipate staffing requirements and project adequate fee structures for redeeming a voucher.
Equipping FDA With Necessary Resources
FDA has a central role in the success of the PRV program. Potentially insufficient PRV fees, variability in how or when a voucher is currently redeemed, and challenges inherent in reallocating staff, however, mean that there is a structural imbalance between the “no-cost” view of the up-front incentive for industry and the downstream burden that unpredictable continued use of the program has on the agency.
If Congress and stakeholders continue to see expanded use of PRVs as a viable path for encouraging innovative drug development—and indeed establish a further complicated patchwork of voucher varieties—much more thought is needed around how to better support and prepare FDA to both fulfill its primary public health activities and the potentially increased demands that PRVs may place on it.
Priority review vouchers are one tool in the policy incentives toolbox, and have proven to be of interest to developers and stakeholders as a means of encouraging innovation in areas of unmet medical need. Indeed, there are currently products in the pipeline—moxidectin for the treatment of river blindness,Sequella for tuberculosis, and DengueCideTM for dengue fever—that have in some part been developed with the PRV incentive a motivating factor.
Yet the challenges outlined above and expounded upon by Ridley, Régnier, Outterson, and McDonnell show that it may be more prudent to continue to learn from and improve the PRV program as it is currently constituted before significantly expanding it. This can be done by addressing FDA concerns related to staffing and resources, further refining eligibility for existing PRVs, and finding better ways to ensure that the program is indeed incentivizing and rewarding real innovation. A variety of potential fixes have been introduced in recent months, and policymakers have a timely opportunity to enact these changes and build a better program that can then later be expanded to other therapeutic areas in need of development incentives. We hope they take it.
Authors' Note: The authors would like to thank David Ridley at Duke University and Adam Kroetsch at FDA for very helpful discussions on this topic.