Priority Review Vouchers

The U.S. Food and Drug Administration’s (FDA) Priority Review Voucher Program creates a powerful new incentive for investment in the development of new drugs and vaccines for neglected tropical diseases.

The FDA will award a priority review voucher (PRV) to the sponsor of a newly approved drug or vaccine that targets a neglected tropical disease such as malaria, tuberculosis, and intestinal worms. This voucher, which is transferable and can be sold, entitles the bearer to the priority review for a future new drug application that would not otherwise qualify for priority review. 

Incentive mechanisms that leverage free markets can help harness the biopharmaceutical technologies that have revolutionized healthcare for developed nations and extend those benefits to underserved patients throughout the world. 

Background

The PRV is a transferable voucher awarded to a company that receives FDA approval for a new vaccine or drug that prevents or treats a neglected tropical disease, such as malaria, tuberculosis, and intestinal worms. A PRV entitles the bearer to priority review for a future new drug application that would not otherwise qualify for priority review, potentially shaving-off four to 12 months from the standard FDA review. This expedited review could potentially be worth hundreds of millions of dollars.

Why Companies Need PRVs

How do PRVs help inspire research and development for neglected diseases?

  • PRVs reduce the FDA review time by 4-12 months. The sooner companies put a drug on the market, the faster they begin to earn revenue.
  • Earlier market entry also gives companies a greater advantage over their competition.
  • Experts have estimated a PRV could be worth between $50 to $500 million--enough to help offset the investment required for discovery and development of a neglected disease drug or vaccine.
  • Companies that don’t have a top-selling drug or vaccine can sell or trade the voucher to another company.
  • Private investors are exploring options for trading PRVs as a commodity.

Ultimately, revenue generated through priority review vouchers can encourage much-needed innovation and development of drugs and vaccines for neglected diseases.

How PRVs Work

The PRV program awards a voucher to a company that gains FDA approval for a new product that prevents or treats a neglected tropical disease. To be eligible for a PRV, the application must be:

  • Eligible for priority review by the FDA
  • Approved after the PRV program start date (September 27, 2007)
  • For a human drug application
  • For a new product that has not been previously approved by the FDA

The PRV program covers products for the following neglected diseases:

  • Blinding trachoma
  • Buruli ulcer
  • Cholera
  • Dengue
  • Fascioliasis
  • Dracunculiasis (Guinea-worm disease)
  • Human African trypanosomiasis (African sleeping sickness)
  • Leishmaniasis
  • Leprosy
  • Lymphatic filariasis
  • Malaria
  • Onchocerciasis
  • Schistosomiasis
  • Soil transmitted helmithiasis (intestinal worms)
  • Tuberculosis
  • Yaws

The FDA may expand this list in the future.

Companies that receive a voucher can apply it to earn priority review on another drug in development. Companies must notify the FDA 365 days in advance of their intent to use the voucher. They must also pay an additional user fee to the FDA to use the voucher. The FDA aims to complete priority reviews within six months, instead of the standard 10-month period.

PRVs are also transferable. Companies that receive a PRV have the option of selling or transferring it to another organization.

History of the PRV

Three economics professors at Duke University conceived the idea for a FDA priority review voucher. Henry Grabowski, Jeffrey Moe, and David Ridley published a 2006 Health Affairs journal article, in which they proposed PRVs as a low-cost solution to inspire drug companies to create new drugs that address the unmet health needs of developing nations.

In 2007, Senators Sam Brownback (R-KS) and Sherrod Brown (D-OH) recognized the exceptional humanitarian interest in creating new medicines for neglected tropical diseases, and acknowledged the need for a market-based mechanism that encourages industry to take up the challenge. They co-sponsored a provision to the Food and Drug Administration Amendments Act of 2007 (FDAAA) that would award a transferable PRV to any company that earns approval for neglected tropical disease treatment. The program was signed into law on September 27, 2007. It went into effect one year later.

Value of PRVs

The market value of priority review vouchers will ultimately depend on a number of factors including the perceived approval time saved and anticipated sales of a new blockbuster product. An intangible benefit of the voucher is the competitive value created for a company if the faster review provides a “first mover advantage,” introducing the voucher-holder’s product ahead of potential competitors.

While estimates vary, many experts place the value of a PRV somewhere between US$50 million and US$500 million – enough to help offset the investment required for discovery and development of a neglected disease product.

In a paper published in Health Affairs, as well as in a subsequent manuscript [pdf], Duke University economists estimate that priority review can shorten the FDA review process by seven to 12 months, from an average new molecular entity standard review time of 15 months down to seven or eight months. If used to expedite the review of a top-selling drug (predicted to achieve US$1 billion in sales by year five), the expedited review could be worth over US$300 million in pre-tax revenues, potentially translating into vouchers traded at upwards of US$100 million each in after-tax-income terms.

While the monetary value of a PRV will be difficult to determine until vouchers are traded, initial reactions are positive. A number of companies are already expressing interest in pursuing priority review vouchers and private investors are exploring options for trading PRVs as a commodity.

Ultimately, revenue generated through priority review vouchers can encourage much-needed innovation and development of drugs and vaccines for neglected diseases.

Description of Economic Analysis

Grabowski, Ridley, and Moe of Duke University determined the potential value of a priority review voucher by calculating the present value of obtaining expedited review based on the net present value of an average blockbuster biopharmaceutical product.

Assuming 11 years of market exclusivity and US$1.5 billion in sales the year prior to generic competition, revenue earned from advancing market entry by seven months would be worth an additional US$322 million (time-value of money).

If patent protection and the expiration date on that protection remain the same, products stand to gain an additional seven months of market exclusivity worth US$277 million based on the aforementioned revenues.

Products with much longer or much shorter patent protection – such as products that qualify for patent extensions up to the full 14 years, or products whose patents are successfully challenged early on – would not enjoy the benefits of increased market exclusivity but will still profit from advanced market entry.

These figures translate to after-tax incomes of US$150 to 200 million.

One factor that may reduce the market value of priority review vouchers is risk tolerance. For example, companies may not be willing to invest as much in obtaining a priority review voucher if there are any doubts as to whether or not their product will be approved. Companies are also interested in seeing, in practice, exactly how much time is saved when using a priority voucher to accelerate the review of an application. That said, the potential of gaining a first- or early-mover advantage in a highly competitive space through the use of a priority review voucher could be worth tens or hundreds of millions of dollars in its own right

Current Status

Use of the First PRV

In February 2011, Novartis submitted an sBLA application to FDA to support use of canakinumab (Ilaris) in gouty arthritis. Novartis used their PRV to accelerate this review. 

Awarding the First PRV

On April 7, 2009, the FDA issued the first priority review voucher to Novartis Pharmaceuticals Corp. for the anti-malarial drug Coartem®. Although the drug was developed in 1996, and has been used for over a decade internationally, it had never been submitted for approval to the US FDA. Coartem treats malaria caused by Plasmodium falciparum—the deadliest malaria species. In clinical trials, Coartem cured 95% of patients, even in areas where there was drug resistance.

Previous Updates

  • November 6, 2008: FDA announced a public meeting to seek input on expanding the list of PRV-eligible diseases. While the law specified 16 diseases eligible for PRVs, Congress gave the FDA the authority to expand the list of diseases through regulation. The meeting took place on December 12th, 2008, and interested parties submitted written comments regarding expansion of PRV eligibility. Slides from the presentations given at the meeting can be found on the FDA website by clicking here.
  • October 20, 2008: the FDA released a Draft Guidance for Industry: Tropical Disease Priority Review Vouchers [pdf] for public comment. The draft guidance provides sponsors greater certainty about how the agency plans to implement the program.
  • September 27, 2007: the Priority Review Voucher program went fully into effect. Sponsors can earn a Priority Review Voucher by obtaining FDA approval for eligible products.

Impact

Priority review vouchers were created as an important tool to encourage research and development in the world’s neglected tropical diseases. As vouchers are awarded, this section will chart the impact that each product has made on the global health landscape.