Rep. Pallone is wrong about priority review vouchers

Muddled thinking undermines support for an incentive that brings new drugs to kids

New Jersey lawmaker Frank Pallone has over the years used a variety of arguments to criticize priority review vouchers, which is unfortunate because as the ranking Democrat on the House Energy & Commerce Committee, an advocate for children, and representative of a district that is home to pharmaceutical companies and their employees, he ought to know better.

Last week, he came up with a new argument.

Rare pediatric disease priority review vouchers, Pallone complained at an E&C markup hearing, are usually redeemed for me-too drugs.

Well, yes, and most people who buy combs have hair.

Pallone wasn’t merely stating the obvious. He was turning the obvious on its head, arguing that an essential feature of PRVs is a reason to eviscerate the rare pediatric PRV program. He proposed, and then abandoned, an amendment that would have rendered vouchers worthless by limiting redemptions to innovative drugs.  

It is worth considering his comments because bipartisan support will be required later this year to ensure that PRVs are reauthorized in legislation Congress will pass in December.

If someone who is well-versed in FDA issues gets such a fundamental issue wrong, other members of Congress who reflexively vote against anything that helps drug companies are also likely to misunderstand the issue.

It is important that legislators understand how the vouchers work and how valuable they are for some of their most vulnerable constituents. Pallone’s muddled thinking shows the limits of advocacy. He and his staff, along with every other member of the E&C committee, have received countless briefings from patient advocacy groups and biopharma companies about PRVs over more than a decade.

FDA on board

The rare pediatric PRV program has helped children suffering from rare diseases, given hope to the families of children who desperately need new medicines, and helped tiny biotechs keep their lights on — and it hasn’t cost the taxpayers a dime.

FDA charges a hefty fee, $2.5 million in fiscal year 2025, to companies that redeem PRVs.

FDA leaders maybe have opposed PRVs in the past, arguing that they diverted resources from reviews of innovative drugs, but they’ve changed their minds. In July, Peter Marks, director of FDA’s Center for Biologics Evaluation and Research, and Patrizia Cavazzoni, director of the Center for Drug Evaluation and Research, said loss of the incentive would be a blow to rare disease drug development. Noting that FDA officials are precluded from lobbying for legislation, Marks said he has heard from the rare disease community that the “potential sunsetting of the pediatric vouchers is a huge issue.”

Although a Government Accountability Act report that looked at data from 2012 to 2019 failed to find definitive evidence that rare pediatric disease PRVs were effective, a more recent study from the National Organization for Rare Disorders (NORD) that examined data through April 2024 shows clear benefits.

The proof is in the pudding. Fifty-four PRVs have been awarded for treatments for 40 rare pediatric diseases. Only three of these diseases had FDA-approved treatments prior to creation of the PRV program.

Last week FDA approved Miplyffa arimoclomol from Zevra Therapeutics Inc. (NASDAQ:ZVRA) to treat Niemann-Pick disease type C, a devastating disease that affects a few hundred children in the U.S. Without the prospect of a PRV, it would have been impossible to convince investors to fund development of Miplyffa.

PRVs have enabled the development of three new drugs for neuroblastoma, a usually fatal cancer that is diagnosed in 700-800 children in the U.S. every year.

As Marks noted, vouchers are making possible some of the most compelling applications of gene therapy, such as treatments for ultra-rare diseases including mucopolysaccharidoses (MPS).

From classroom to boardroom

The PRV idea was first proposed in 2006 in a Health Affairs article by three academics at Duke University — David Ridley, Henry Grabowski and Jeffrey Moe — whose idea was simple. Drug companies were not developing therapies for diseases that cause immense suffering in poor countries because it wasn’t possible to earn a financial return.

To stimulate investment in neglected diseases, Ridley and colleagues suggested giving companies that develop drugs for them a voucher that could be used to expedite review of a future drug. FDA would be required to change the future drug’s review status from standard to priority, but the voucher would have no impact on the outcome of the review.

Not only was the idea a good one, suggesting that the vouchers be transferable was a stroke of genius.

The prospect of obtaining a PRV that could be sold for over $100 million is a powerful economic incentive for struggling biotechs to create drugs that would never generate enough sales to offset development costs.

Legislation authorizing PRVs for neglected tropic diseases was enacted in 2007, and the concept was extended to pediatric diseases in 2012.

Getting it backwards

Explaining why he believes the pediatric PRV program needs to be overhauled, Pallone said last week that it is “not well targeted.” He supported that assertion by stating that “only about a quarter of the drugs that have redeemed a pediatric PRV have been for rare diseases, and that’s not even specific to pediatric rare diseases.”

Pallone’s solution is to limit PRV redemptions to innovative orphan drugs.

This would, he said, “provide an important guardrail to target what we have intended to do from the start of the program.”

He concluded by stating that PRVs “should not be a tool for the biggest pharmaceutical companies who are willing to pay the highest price to cut the line for FDA review.”

There’s a lot to unpack in those comments.

Actually, PRVs are intended to be tools for big pharmas to pay high prices to cut the line. From the perspective of people who want to see more drugs for rare pediatric diseases, the more they pay for the vouchers, the better.

More importantly, Pallone has things backwards with regard to the purpose of PRVs. The program is intended to incentivize the manufacturers that receive vouchers, not those that redeem them.

Vouchers that could only be redeemed for innovative orphan drugs would have no value because those drugs almost always qualify for a priority review.

That’s not just my opinion.

I asked Ridley, Grabowski and Moe, the authors of the PRV concept, about Pallone’s proposal.

Here’s what they said in a joint email: “Restricting the type of product which can be ‘vouchered,’ the voucher product, could significantly reduce voucher value which defeats the purpose of the program. For example, if the voucher product was limited to a new molecular entity (NME) product to treat orphan conditions, there would be no need for a voucher. NMEs for orphan conditions are eligible for priority review without a voucher; vouchers would be worthless.”

Ridley et al. added that while limiting the scope of redemptions would make vouchers useless, the rare pediatric PRV program “would benefit from better targeting of the award eligible product.”

It certainly would be reasonable to debate the pros and cons of targeting awards to ensure they are incentivizing desired behavior and to increase the value of vouchers.

Undermining PRVs would be a tragic mistake.

Signed commentaries do not necessarily reflect the views of BioCentury.