COVID-19: It’s a Threat. And It’s Material

By Sara W. Koblitz

Now that most of the country has been in lockdown for about two months, everyone is undoubtedly aware that COVID-19 has been declared an “official” public health emergency.  In addition to the official declaration in January, HHS issued an additional and separate declaration – called a PREP Act declaration – that COVID-19 constitutes a public health emergency under section 319 of the Public Health Safety Act.  As we explained in some of our earlier COVID-19 coverage, this PREP Act declaration provides broad statutory immunity from liability under federal and state law for public health activities related to combatting COVID-19, such as the manufacture, testing, development, distribution, administration, or use of one or more “covered countermeasures,” defined as a drug, biologic, or device intended to address the public health emergency, to address side effects of such products, or to enhance the effect of such products.   While the PREP Act is critical to the COVID-19 response, it also  offers incentives for the development of drugs to treat “material threats” –but right now, that incentive cannot be utilized to address COVID-19.

As an added incentive to develop more medical countermeasures, defined as “FDA-regulated products (biologics, drugs, devices) that may be used in the event of a potential public health emergency stemming from a terrorist attack with a biological, chemical, or radiological/nuclear material, or a naturally occurring emerging disease,” the 21st Century Cures Act added section 565A to the Federal Food, Drug, and Cosmetic Act.  Section 565A requires FDA to award a priority review voucher (PRV) to sponsors of certain medical countermeasure applications.  The application must be eligible for Priority Review, approved by FDA, and the first instance of approval for the active ingredient of the drug, including an ester or salt of the active ingredient.  Most importantly, the medical countermeasure must be an application for a drug intended to prevent or treat harm from a material threat or intended to mitigate, prevent, or treat harm arising from the administration of a drug or biological product against a material threat.  “Material threats,” defined under 42 USC 247d–6b(c)(2), are threats “sufficient to affect national security” that have been determined to be a priority by the Department of Homeland Security (DHS), in conjunction with Health and Human Services (HHS).  PRVs will be awarded only to sponsors of drug applications for products that have been designated a “material threat.”

As critical as it is to develop drugs to treat COVID-19, we recently learned that even though COVID-19 has been declared a national emergency and is a pandemic wreaking havoc on the world, “a Material Threat Determination (MTD) has not been issued for SARS-CoV-2 (COVID-19).”  This means that the country has not yet decided that we need to incentivize drug development to treat COVID-19 with a PRV, one of the most valuable incentives that FDA has to offer.  PRVs are incentives to spur the development of drugs to treat much-needed drugs to treat serious disease.  The voucher entitles the holder to designate a subsequent 505(b)(1) drug or biologic application as “priority” even if it would not otherwise have qualified for Priority Review.  Such a voucher is used to accelerate FDA’s review process of any drug by four months, allowing a drug to come to market earlier – potentially with more patent protection.  Additionally, they can be sold to other companies for substantial profit: sales of PRVs have ranged from $50 million to as much as $350 million back in in August 2015 (most seem to go for around $125 million).

Arguably, COVID-19 is the most “serious” disease this country has seen – at least in the last 100 years, and definitely since the adoption of the PREP Act.  And it certainly meets the definition of “material threat.”  But, for some reason, DHS and HHS have not yet declared it a material threat.  Ebola has been declared a material threat.  Pandemic influenza is a material threat.  Smallpox, the plague, and typhus are all medical threats.  But not COVID-19.

The major question is why doesn’t COVID-19 merit “material threat” status?  Is it because the country fears that any drug or vaccine developed to treat COVID-19 would be such a blockbuster drug that a PRV would be windfall for the developer?  Is it because companies are already striving to develop these products anyway and don’t need incentives?  Or maybe it has something to do with the public outcry that arose when FDA designated Gilead’s remdesivir an orphan drug back in March?  Regardless, there are many companies that could really benefit from any incentives to develop a COVID-19 product.  An incentive that requires very little of the agency, like a PRV, could make drug development financially feasible where it otherwise might not be.  There seems to be little reason not to declare COVID-19 a material threat, especially because a PRV is awarded only once a drug is ultimately approved.  And even if the development of a COVID-19 drug actually leads to the award of a PRV is a blockbuster drug, would it really be so bad to reward the developer with administrative priority?  Ultimately, that leaves us with a single question: why is the country not doing everything it can to incentivize drug development for COVID-19?

There’s legislation pending that may provide that incentive.  On February 28, 2020, Rep. Jeffries introduced H.R. 6019, the Cure the Coronavirus Act, which indirectly addresses the consequences of the lack of “material threat” status for COVID-19.  Congress does not have the authority to designate COVID-19 material threat, but it can find other ways to offer priority review vouchers as incentives to drug development.  This bill would do just that: instead of a “medical threat counter measure” priority review voucher, COVID-19 would become eligible for a “tropical disease” priority review voucher.  All the bill does is expand the definition of a “tropical disease” to include COVID-19.  COVID-19 is not your typical tropical disease.  FDA has explained that tropical diseases usually those that disproportionately affecting poor and marginalized populations and are found primarily in developing countries.  Obviously, COVID-19 is a lot more widespread than that.  But, even if COVID-19 is not a typical tropical disease, does it matter?  The priority review voucher for medical threat countermeasures and tropical diseases are the same.  So it provides the same incentive.

The bill hasn’t made any traction on the hill yet, as it hasn’t yet been addressed by the House Committee on Energy and Commerce.  Hopefully, it will.  It’s a clever piece of legislation that would go a long way to address the issues raised by the lack of a material threat designation.  That priority review voucher could be the incentive needed to get the right company involved in treatment development.