The End of the FDA’s Rare Pediatric Disease Priority Review Voucher Program

What’s Next for Rare Disease Innovation?

For children suffering from rare and often life-threatening diseases, access to new and effective treatments can mean the difference between life and death. Developing drugs for these conditions is particularly challenging due to the high research costs and small patient populations, which often make investment unattractive for pharmaceutical companies. Recognizing this challenge, the FDA’s Pediatric Disease Priority Review Voucher (PRV) Program was established in 2012 as a financial incentive to encourage drug development for rare pediatric diseases.

However, as of September 30, 2024, the program has officially ended, leaving many stakeholders questioning what the future holds for innovation in pediatric rare disease treatments. With increasing calls for Congress to reauthorize the program, the debate continues over whether it should be revived and how it might be improved.

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Background & History of Pediatric Rare Diseases

Rare pediatric diseases have historically been overlooked in drug development, as pharmaceutical companies often prioritize research for conditions affecting larger patient populations. Before the 1983 Orphan Drug Act (ODA), there were very few financial incentives for companies to invest in rare disease treatments, leading to significant unmet medical needs for children suffering from life-threatening conditions.

The ODA helped encourage research and development by providing tax credits, grant funding, and market exclusivity for rare disease treatments. However, there was still a gap when it came to pediatric-specific conditions, which typically involved even smaller patient populations and unique scientific challenges.

Recognizing this gap, Congress passed the rare pediatric disease PRV Program as part of the FDA Safety and Innovation Act of 2012. The program was modeled after the Neglected Tropical Disease PRV Program (2007) and sought to accelerate the approval process for rare pediatric treatments by offering priority review vouchers as a financial incentive.

FDA’s Rare Pediatric Disease Priority Review Voucher Program

What Was the Rare Pediatric Disease PRV Program?

The rare pediatric disease PRV Program was designed to incentivize the development of treatments for rare and neglected pediatric diseases by offering pharmaceutical companies a priority review voucher upon FDA approval of an eligible drug. This voucher allowed the recipient to receive priority review of another drug application, cutting the review time from the standard ten months to just six months. This potential for a shortened marketing application review incentivized Sponsors as it allowed for additional revenue from marketing the drug four months sooner. However, the largest incentive came from a unique feature of these vouchers which allowed them to be transferred to another company—companies could sell or trade them, sometimes for hundreds of millions of dollars. Historically, priority review vouchers have sold for as much as $350 million, with more recent sales in the range of $75 to $100 million. This secondary market became a major financial driver for drug developers, providing additional funding to reinvest in further research.

Rare Pediatric Disease designation was obtained by a formal request to the FDA that provided information to demonstrate that the drug or biological product being developed is intended for the prevention or treatment of a rare pediatric disease, data to support that the pediatric disease or condition is rare (i.e., prevalence of fewer than 200,000 people in the US), and data to indicate that the drug or biological product may be effective in the specified rare pediatric disease. In FDA’s guidance on the topic, it’s noted that “in vitro data supporting the mechanism of action of the drug in the disease or in a related disease may suffice for rare pediatric disease designation, whereas that level of data would not generally suffice for orphan drug designation.”

Benefits of the Program

The rare pediatric disease PRV Program yielded several significant benefits:

• Accelerated Drug Development: Shortening the FDA review period helped speed up access to life-saving treatments for children with rare diseases, often with unmet medical needs. It is estimated that industry advancements resulting from the rare pediatric disease PRV program have benefited over 200,000 rare disease patients.
• Incentivizing Investment: The potential financial rewards of obtaining and selling a voucher encouraged pharmaceutical companies to invest in rare pediatric disease research.  For emerging biotech companies with limited revenue streams, the financial incentives of this program were enormous.
• Encouraging Innovation: Many diseases that previously lacked any FDA-approved treatments received attention due to the program's incentives.
• Generating Funding for Further Research: The sale of PRVs provided additional capital to support continued drug development efforts.

FDA Rare Pediatric Disease PRV Program Success

Since its inception, the rare pediatric disease PRV Program has awarded 53 vouchers across 39 different rare pediatric diseases, almost all of which had no prior FDA-approved treatments. More than half of these vouchers were awarded in the last four years, demonstrating the program’s increasing impact before its expiration.  Further, there were 350 additional Rare Pediatric Disease (RPD) designations granted between 2020 and 2022, demonstrating the success of the program in encouraging the development of treatments for rare pediatric diseases.

Some key data points:

• The program contributed to the development of treatments for spinal muscular atrophy, sickle cell disease, and Batten disease, among others.
• PRVs were often sold for upwards of $100 million, enabling companies to reinvest in further research.
• Advocacy groups estimate that approximately 30% of the drugs approved through the program may not have been developed without this incentive.

Why Did the Program End?

While the rare pediatric disease PRV Program saw notable successes, its legislative authorization included a sunset clause, which resulted in the program expiring in September 2024. Congress did not act in time to extend or reauthorize it, despite strong advocacy from patient organizations, researchers, and industry stakeholders.

Key reasons for the program's expiration include:

• Debate over effectiveness – Some critics argued that the program primarily benefited large pharmaceutical companies rather than truly driving innovation for rare diseases.
• Concerns over high voucher prices – The ability to sell vouchers for millions of dollars led to concerns that the system was being exploited for financial gain rather than serving its original purpose.
• Lack of immediate Congressional action – With competing healthcare priorities, lawmakers failed to renew the program before the deadline, despite bipartisan support for rare disease initiatives.

The Push for Congressional Reauthorization

Despite the program’s expiration, there is growing momentum for Congress to bring it back. Advocacy groups, industry leaders, and patient organizations argue that the financial incentive was a key driver in the approval of life-saving treatments for diseases that would have otherwise been ignored.

Legislators are now considering:

• Reauthorizing the program with potential reforms to improve transparency and oversight.
• Modifying the voucher system to prevent abuse while still maintaining incentives for drug development.
• Exploring alternative rare disease funding mechanisms, such as grants or tax incentives.

Patient advocacy groups stress that without the rare pediatric disease PRV Program, drug development for rare pediatric diseases may lose critical momentum.

What’s at Stake?

With the expiration of the rare pediatric disease PRV Program, there is concern that fewer companies will pursue treatments for rare pediatric diseases, leading to prolonged suffering for affected children and their families. Some potential consequences include:

• Reduced investment in rare pediatric drug research
• Longer development timelines for life-saving treatments
• Higher barriers for small biotech companies aiming to bring innovative therapies to market

At the same time, alternative incentive structures may emerge, including expanded federal funding, tax credits, and grant programs aimed at supporting pediatric drug development. Whether these will be as effective as the rare pediatric disease PRV Program remains to be seen.

The Future of Pediatric Rare Disease Drug Development

The FDA’s Rare Pediatric Disease Pediatric Priority Review Voucher Program was a critical tool in addressing the challenges of rare pediatric disease drug development. Its expiration in 2024 has sparked significant debate over the best way to continue incentivizing research in this field.

With Congress now considering reauthorization, the future of rare pediatric drug innovation remains uncertain. Advocacy from patients, families, researchers, and industry stakeholders will play a crucial role in shaping the next steps. Whether through reviving the rare pediatric disease PRV Program or exploring new funding mechanisms, ensuring continued innovation for pediatric rare diseases must remain a national priority.

Your Partner in Orphan Drug Development

Developing a drug for the treatment of a pediatric rare disease is life changing to those currently impacted by the disease. However, it is also extremely challenging. For the last 40 years, ProPharma’s team of regulatory consultants has been supporting clients with the most unique and difficult drug development programs – our team has seen a lot. Using science as the driver of success, we have developed a history of success with FDA.