PRVs Revisited During Drug Pricing Hearing: FDA Still Doesn’t Like Them

It’s not what most people will remember from the event, but the Feb. 4 hearing on drug pricing included an exchange reinforcing FDA’s reservations about the priority review voucher program – including a quote from an interview published by The RPM Report.

It wasn’t the topic everyone was there to say, but House Oversight Committee Chairman Jason Chaffetz was eager to discuss the Priority Review Voucher program with FDA during a Feb. 4 hearing focused on drug pricing.

Chaffetz didn’t make the connection explicitly, but there is one. The main focus of the hearing was on Turing Pharmaceuticals AG and its ex-CEO Martin Shkreli as the “poster child for price gouging” in the biopharma industry. Shkreli’s former company, Retrophin Inc. , was among those who profited by selling a PRV, and Shkreli had announced plans to follow a similar strategy at his new company – before his legal troubles intervened.

Then exchange allowed FDA Center for Drug Evaluation & Research Director Janet Woodcock to go on the record as agreeing with concerns about PRVs voiced by other FDA officials – including Office of New Drugs Director John Jenkins in an article in The RPM Report, which was cited by Chaffetz during the hearing. (Also see "Priority Review Vouchers: Buyers Beware!" - Pink Sheet, 14 Oct, 2015.)

Here is the exchange.

Chaffetz:

I want to get into these Priority Review Vouchers, these were intended to incentivize treatment for rare pediatric and tropical diseases.  The vouchers were supposed to shorten the FDA review time frame by roughly four months.  Companies have figured out how valuable these are, and I think it demonstrates their frustration with the FDA and the timing.  Recently, there was one voucher in August that was sold for $350 million, that means roughly they were willing to pay — they though it was a good business transaction to pay roughly $2 million a day just to get in line a little bit quicker.  I am concerned that not everybody can buy their way to the front of the line, but this does demonstrate how backlogged and problematic the demand is at the FDA.  Does the FDA have the necessary authority to prevent the alleged abuse of the PRV system?  Do you think there is any abuse of the PRV system?  Should they be sold the way they are being sold?

Woodcock:

Again, this is an economic issue.  It is intended to incentivize development, these recent vouchers were being applied to products that were already in development because its early…

Chaffetz:

But they don’t have to sell those drugs, they don’t have to actually market those drugs, correct?

Woodcock:

Correct, they need to be approved.

Chaffetz:

So they can be used for a variety of different things… because you develop one, you are going to get this Priority Review Voucher, but you can use the Priority Review Voucher for something other than  that category correct?

Woodcock:

Yes and that is what has been done, and I do have to comment on what you initially said, the Priority Review Vouchers are applied to novel drugs, they have nothing to do with the generic drug review process.  That program is completely on time.  The reason people use Priority Review Vouchers is to move in front of competitors, and reach the market faster than a competitor who may be developing a drug in the same space. Because for a new drug, a novel drug, being first on the market  — and I know nothing about this — but apparently, must have a great deal of value.  So it does not apply to generic drugs or generic drug process.

Chaffetz:

But you can see how this can be manipulated?  Do you see any evidence of manipulation here?

Woodcock:

Depends on how you define manipulation…

Chaffetz:

Are they eating these up to get the voucher without any real intention of marketing, producing or investing in the smaller drug?

Woodcock:

The companies that we have awarded vouchers to have fulfilled the requirements of the statute for being eligible to be awarded a priority review voucher.

Chaffetz:

The worry is that the statute is inadequate. It’s provided a market way that people can get in line sooner, they are willing to pay hundreds of millions of dollars in order to do so, and we are concerned about spurring innovation and actual drug development

Woodcock:

The existence of the PRV was supposed to spur the developers of tropical diseases or rare pediatric diseases to enter that space because they would get this reward at the end…

Chaffetz:

And I think that is one of our questions, are they actually spurring innovations.  Should there be limitations of the re-sell of those vouchers.  Again, when you have a difficult disease that affects such a small population it is difficult — not everyone can just act altruistically, there has to be some degree of profit motivation

But this rise has gone from tens of millions of dollars to hundreds of millions of dollars just to get that four month edge.  When I see three hundred and fifty million dollar transactions for that four month edge, that catches a lot of people’s attention.  We are just asking the FDA if it is fulfilling its original mission and are you seeing any abuse?

Woodcock:

There are two sides to this, is it stimulating development in rare pediatric diseases or tropical diseases? I think it is too early to say because it takes a long time to develop one of these products.

Chaffetz:

Let me read a quote here really quick — and I am sorry to cut you off — but I have gone past my time —

John Jenkins, the Director of FDA’s office of new drugs, has publicly criticized the PRV program.  He said “The program is diverting time and resources away from other important public health works such as reviewing other applications for potentially much more serious conditions, or drafting of guidance documents on issues related to drug development.”

Is he, in your opinion, right or wrong?

Woodcock:

Yes, that is true.  But we have to implement this program as established by Congress, and we will implement it.