Last month, the FDA released a guidance document explaining a new iteration of its priority review voucher program, the Rare Pediatric Disease Priority Review Voucher Program (“RPD program”). The RPD program was enacted in 2012 under the Food and Drug Administration Safety Act, and is closely modeled from Congress’s first priority review legislation passed in 2007 designed to incentivize pharmaceutical companies to engage in research targeting a defined set of neglected tropical infectious diseases. Although the new pediatric-centric program adopts the same basic voucher model, it has important improvements such as a shortened notice requirement and unlimited transferability—improvements likely to increase the program’s popularity compared to its underutilized predecessor.

Under priority review programs, companies that gain FDA approval for a novel drug or vaccine aimed at curing one of the program’s selected rare pediatric diseases also receive a voucher entitling priority (i.e. expedited) review of another new drug application (NDA). The average review period to obtain FDA approval of new drugs ranges between 10 to 16 months. In contrast, the priority review voucher guarantees a sixth-month review cycle. While speedier approval is always desirable, the decreased approval period is particularly valuable when it provides a “first-mover advantage” for companies targeting lucrative drug markets.

The first major improvement of the new pediatric voucher program as compared to its sister-program targeting tropical diseases is the shortened notice requirement. Companies obtaining a voucher pursuant to the 2007 legislation had to provide the FDA with 365 days notice of its intention to redeem the voucher. The length of this advance notice requirement made it impractical, and thus undesirable, for many companies that would otherwise seek to purchase a priority review voucher. In contrast, vouchers under the new legislation are redeemable after just 90 days.

The FDA’s priority review voucher programs permit a company to sell, trade or auction its voucher. However, the new draft guidance explains that a pediatric voucher—unlike its predecessor—may be transferred an unlimited number of times. The main skepticism surrounding the FDA’s first voucher program was whether companies would recognize the existence of significant value available to companies willing to invest research and development to obtain vouchers for drug and vaccine innovation. This skepticism is minimized now that pharmaceutical and biotech companies can engage in creating a marketplace to auction vouchers numerous times depending on need and financial stability of the company seeking FDA approval. The other benefit of unlimited transferability is that upon discovery of a new drug innovation, there is a certainty of availability for a voucher—at least for the right price. Indeed, given that just a few weeks ago a voucher under the pre-existing tropical disease voucher program was purchased at auction for $125 million, one would expect that vouchers under the improved RPD program will draw even higher bids.

The new improvements to the rare pediatric disease priority review program are thoughtful and certain to encourage greater participation. Furthermore, with increased popularity and participation, the improved voucher program clarifies to market participants the value of priority review not only to the pharmaceutical drug-makers, but also to patients that gain access to innovative drug therapies.

NOTE: The author of this post, Alexis Kellert, is a first year associate but is not yet admitted to practice.