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FDA Priority Review Vouchers – A Bull Market!

September 2, 2015 | Mark Cierpial, PhD, RAC, Chief Executive Officer | Regulatory Affairs

Given the recent volatility in the Stock Market, here’s another investment opportunity for you … FDA Priority Review Vouchers!

If you had bought one in mid-2014 for a measly $67.5 million you could be asking $350 million or more for it today; a return on investment of over 500% in just over one year. Ask your financial advisor to top that!

So what are Priority Review Vouchers (PRVs) and why does the industry believe they are so valuable?

fda Voucher Types:

Tropical Disease Priority Review Voucher
(Tropical PRV)

Rare Pediatric Disease Priority Review Voucher
(Pediatric PRV)

FDA conducts standard reviews of new drugs and biologics on a 10-month clock from the time of filing, but the review time is cut to 6 months if you are granted priority review. So, by obtaining a PRV under one of these programs, a sponsor can reduce the review time for one of their subsequent products – one that would not normally qualify for priority review – by 4 months.

Tropical PRVs

As an incentive for companies to develop drugs for certain tropical diseases, the FDA Amendments Act (FDAAA) of 2007 established the Tropical Disease Priority Review Voucher program (see draft guidance here).

Under the program, the sponsor of a human drug application for a qualified tropical disease may be eligible for a voucher that can be used to obtain a priority review for any subsequent human drug application (an NDA under section 505(b)(1) of the FD&C Act, or a BLA under section 351 of the PHS Act).

Tropical PRVs are also transferable, so can be sold to another drug company (or investment group for that matter!).

FDAAA specified 16 tropical diseases that qualified for the program, plus allowed the HHS Secretary to add more diseases to the list via rule-making. More recently, Congress passed a bill which added Ebola to the list of qualified tropical diseases and also gave FDA the authority to add diseases to the list by order, rather than the cumbersome rule-making process.

With the addition of Filoviruses (including Ebola), Chagas Disease, and neurocysticercosis to the original list of 16, 19 tropical diseases currently qualify for the voucher program.

Thus far, FDA has awarded three so-called “golden tickets” under the Tropical Disease PRV program:

Pediatric PRVs

The Rare Pediatric Disease Priority Review Voucher program came along in 2012 as part of the FDA Safety and Innovation Act (FDASIA).

Analogous to its tropical predecessor, the goal of the pediatric rare disease program is to encourage development of therapies to treat rare diseases that primarily affect children, defined as those that affect fewer than 200,000 individuals in the US, primarily aged from birth to 18 years of age (see draft guidance for other qualification provisions and exceptions).

Like the Tropical PRV program, the Pediatric PRV program’s carrot is a transferable voucher good for one priority review by the FDA. Thus far, FDA has awarded three Pediatric PRVs:

Market Value of a “Golden Ticket”

One of the six Tropical and Pediatric PRVs that have been issued was used by the company who received it (Novartis) to obtain a priority review of one of its subsequent applications.

Four of the six PRVs have been sold on the open market. BioMarin parted with theirs first, selling its Pediatric PRV to Sanofi for $67.5M in July of 2014. The next one to be sold was Knight’s Tropical PRV which went to Gilead for $125M in November of that same year. Retrophin sold its Pediatric PRV in May of 2015 for $245M to Sanofi, followed 3 months later by the sale of United’s PRV to AbbVie for a whopping $350M. prv

That leaves one golden ticket still out there. Apparently Janssen’s Tropical PRV has gone unused and unsold thus far. But let’s not forget that the other three unused PRVs can potentially be re-sold by the current holder!

sunset Pediatric PRV Sunset Clause

There is currently uncertainty regarding the issuance of future Pediatric PRVs (but not Tropical PRVs). That’s because the law that enacted the Pediatric PRV program included a sunset clause specifying a “date” on which the program would end, unless Congress re-authorized it.

 Specifically, the law states that:

“The Secretary may not award any priority vouchers under paragraph (1) after the last day of the 1-year period that begins on the date that the Secretary awards the third rare pediatric disease priority voucher under this section.”

The sunset clause was thus triggered on March 17th of this year when the third Pediatric PRV was issued to United Therapeutics. That means Sponsors have until March 16, 2016 to get a qualifying NDA or BLA approved in order to snag a voucher.

Many believe that Congress is likely to take action to re-authorize the program by some means, either as standalone legislation or as part of a larger bill such as the 21st Century Cures Act. Various versions of the 21st Century Cures Act would have the program sunset again anywhere from 2018 to 2022. Another bill proposed in Congress this year (March 2015) called the Advancing Hope Act would make the program permanent.

True Value of “Golden Ticket” … ?

So is a 4-month shorter review of an NDA or BLA by the FDA really worth $350M? Is it worth more than that? If so, how much more do you think a company will be willing to pay for one of these priority review vouchers in the future? Run it by your commercial colleagues and see what they say.

But before answering, stay tuned for an upcoming blog which will tell the story of two sure-to-be blockbuster drugs, their race to approval, and how a Pediatric PRV played a crucial role!



Category: Regulatory Affairs
Keywords: tropical diseases, pediatric rare diseases, priority review vouchers

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