Section 908 of the FDA Safety & Innovation Act is, in the words of Nancy Goodman, a “historic” provision. Goodman, who founded the Kids v. Cancer advocacy organization to encourage more research into pediatric cancers, hailed the provision (known as the “Creating Hope Act”) as “the first time Congress has passed legislation to address the dire need for new drugs developed expressly for children with cancer and other life threatening diseases.”

The goal of the program is to encourage more research into therapeutics focused on rare pediatric diseases and especially pediatric cancer. And, while there are already incentive programs for rare disease research (the Orphan Drug Act) and for pediatric research (6-month exclusivity), this is indeed the first time an incentive has been created specifically for pediatric rare diseases.

The laudable goal of the act is undeniable, and the stand-alone bill had 168 co-sponsors.

But the provision’s real impact is likely to be less important for pediatric cancer research than it is for the future of the incentive model itself: Section 908 amounts to a second chance to establish a Priority Review Voucher system that could serve as an incentive for many different aspects of drug development.

Section 908 would reward sponsors who develop new drugs to treat pediatric rare diseases with a voucher modeled on the Neglected Tropical Disease incentive program enacted in 2007. Also see "Treat and Trade: The New Priority Review Voucher Market" - Pink Sheet, 1 July, 2008.

The idea is that a sponsor who develops a drug for a use that might not be commercially viable is rewarded with a faster review of another application: the voucher allows the sponsor to receive a “priority” designation from FDA on an application that would otherwise not qualify. And the vouchers were designed to be transferrable, in an attempt to create a market that would allow non-commercial sponsors to monetize the voucher to support their programs by selling them to a Big Pharma company.

Little Success So Far

The voucher program is undeniably creative and interesting. But the experience so far suggests that it isn’t working too well. Only one voucher has been awarded so far, to Novartis AG for the malaria treatment Coartem. Also see "Novartis Coartem NDA May Lead to First Priority Review Voucher" - Pink Sheet, 1 October, 2008.

Since Novartis already had Coartem in development in 2007, it is fair to say that the voucher wasn’t much of an incentive to that company. Moreover, the use of the voucher itself underscored the limitations of its value. Novartis cashed in the voucher for a supplemental indication for canakinumab for use in gouty arthritis in 2011. While FDA did afford the application a priority review timeline, the result was a rejection of the application.Also see "The End of Priority Review Vouchers? Reactions to Novarits' Ilaris Panel and Incentives for Tropical Disease Research" - Pink Sheet, 1 September, 2011.

Given that background, the value of new incentive is decidedly uncertain. However, the new program is constructed to be, as Kids v. Cancer describes it, a “demonstration project,” with a strict limit on the number of vouchers to be awarded before reconsideration by Congress. As a result, there is no reason for sponsors to alter their current development plans; the current authority will almost certainly be used solely for projects already in late development. In fact, the vouchers are very likely to be awarded to non-cancer projects.

The real question will be whether the experience proves that vouchers work.

Addressing Some Obstacles to PRVs…But Not The Biggest

The new pediatric program includes provisions that differs from the tropical disease voucher in several details, but does not clearly resolve the core dilemma in the PRV model: a confusion about the real value of a “priority” designation.

The vouchers will be awarded to sponsors of new molecular entities (or novel biologics) that qualify for Orphan Drug status and are submitted for approval for a disease that “primarily affects individuals aged from birth to 18 years.” Products that seek any adult indication at the time of submission are not eligible. Only applications submitted after October 9, 2012 will qualify. The voucher is awarded upon approval.

However, the law has a quick sunset after three vouchers are awarded. No further vouchers can be awarded “after the last day of the one-year period that begins on the date” that the third is granted. In other words, there won’t be more than a handful of vouchers created under this authority.

The awarding of the third voucher also triggers a GAO study to consider the effectiveness of the program. That study will be completed after one year, at the same time the voucher authority sunsets. At that point it will be up to Congress to consider reauthorizing the program.

The details of the pediatric voucher program are written to address some of the shortcomings that emerged after the tropical disease program was implemented.

First, the law makes clear that the voucher is an asset that can be transferred freely among sponsors. The original PRV statute (as interpreted by FDA) allowed only a single transfer—though the agency has said that sponsors can work around that limitation by structuring contracts to limit the actual transfer of ownership.
In addition, the pediatric PRV law requires only 90 days notice of the sponsor’s intent to use the voucher as opposed to the year’s notice required for the tropical disease program.
Finally, the new law more clearly stipulates that an extra user fee to use the voucher will cover the difference in cost between a standard review and a priority review; in the tropical disease program, FDA interpreted the fee amount as covering the entire cost of the review.

However, the pediatric voucher program shares the same fundamental challenge as the tropical disease voucher program: telling FDA it must grant a priority review to a given application doesn’t mean that the application will truly be a priority.

For sponsors, the value of “priority” status is not simply the faster review (6 months vs. 10 months for applications in recent years, though PDUFA V changes the timeline for new molecules to 8 months vs. 12 months.)

Four months faster to market clearly has value in the context of finite patent terms.

But “priority” status confers much more value than that, since FDA has historically approved priority applications on the first cycle at a much higher rate than standard applications.

Bear in mind that the designation of priority status is normally made by the agency after an initial review of the application. While FDA strives for consistency, there is considerable discretion in determining what qualifies for the priority status – and that discretion helps explain why priority applications have consistently had a much higher first cycle approval rate than standard applications.

Given the historic trends, standard reviews end in a complete response more than half the time. That suggests a PRV only buys a sponsor a faster CR letter (which should, in theory, still result in a faster approval, but the time value of four months is far lower in the context of a multi-cycle review).

The pediatric voucher program amounts to a second chance to see if the PRV model can work. But it may end up proving once and for all that incentives that interfere with FDA’s ability to set its own priorities are unlikely to work well.

Another Chance to Make Priority Review Vouchers Work

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