Pull Incentive for Antibiotic R&D from Europe

By David Shlaes — May 26, 2023
Europe’s proposed pull incentive for antibiotic R&D is a mixed bag ...

As many of you know, I spent many working days in Europe during my career and I still live there several months a year.  In fact, I’m currently in a rather cool, wet Europe. As such, my thoughts have turned once again to Europe’s struggles with antibiotic policies. Last month the European Commission issued a number of recommendations for changes to the EU’s policies on pharmaceuticals. Some of their recommendations propose pull incentives for antimicrobial research and development – a much anticipated and much-needed reform. Others though seem destined to be bitter poison pills either for the pharmaceutical industry or for individual members of the EU. The presentation to the European Council and Parliament promises to be “interesting” to say the least.

I am once again reminded of Flora Lewis’ excellent and prescient book, Europe, A Tapestry of Nations, published in 1987. In her book, Ms. Lewis discussed the difficulty of getting (now) 27 member nations with disparate languages, cultures, and customs to agree on almost anything.  That this system works from time to time approaches the realm of miracles.

Europe - A Tapestry of Nations

In the case of pharmaceuticals, the EU has managed to develop a common regulator, the European Medicines Agency (EMA). They approve (or not) marketing applications to the EU from sponsors serving a function similar to the FDA in the US. In the case of recent antibiotic decisions, in disagreement with the FDA decisions, the EMA has asked for additional studies.  In at least two cases, the sponsors walked away from the European market entirely believing that the cost of the additional studies could never be returned by a meager EU marketplace. .

The EMA does not get involved in marketing decisions such as pricing and sales.  Those decisions are left to individual member nations. The sponsor must negotiate the terms of sales and pricing with each member country separately. Those decisions tend to be disparate. The result is that access to new drugs can differ very markedly from one country to another, and, sometimes, as in the case of the UK, from one county or town to another. These different countries consider their healthcare budgets, the potential benefits of a new drug and the size of the population that would be served by the new treatment.

With the above discussion as background, let’s examine the proposal by the European Commission. 

European Union Pharmaceutical Reform

They propose several different approaches for antibiotics considering access, stewardship, and market incentives.  The one proposal I want to examine in detail is that around pull incentives for antibiotic research. They propose a transferable exclusivity voucher good for one year. This means that for successfully achieving approval of a needed new antibiotic, a sponsor would be awarded an additional year of exclusivity within the EU market for a product of their choosing.  This voucher would be completely transferable. This could be worth billions of dollars to companies with high-revenue products facing loss of exclusivity in the EU.  It would also incentivize large pharma to obtain new antibiotics from biotech companies to cash in on the extended exclusivity. This approach is clearly within the limits of authority of the EU since it involves exclusivity and is under the aegis of the EMA. The problem is that the EU cannot set financial limits or guardrails on such exclusivity extensions based on revenues since that falls under the aegis of each member country individually. In their proposal, the Commission suggests that the voucher system ultimately be replaced by a Europe-wide market system such that a single EU incentive such as a subscription plan like that in place in the UK could be established throughout Europe. But that would take an incredible sacrifice of budgetary authority from individual member states.

The transferable exclusivity voucher would work. Of that there is no doubt. Will member nations agree to implement such a system given its expense and the resulting delay in the arrival of generic versions of expensive branded products?

The Commission also proposes reducing the current exclusivity for newly marketed products from 12 to 8 years EXCEPT if medicines are launched in all Member States, if they address unmet medical needs, if comparative (superiority?) clinical trials are conducted, or if a new therapeutic indication is developed.  This proposal could be a poison pill for the industry depending on the details of the proposal.  Industry has already sounded the alarm.

Reduced Exclusivity

While it is exhilarating to see Europe actively considering a pull incentive for antibiotic research and development that would, without any doubt whatsoever, work as such, I am left with significant doubts and the Commission’s current proposal will be adopted as written. It seems like the Commission is attempting to incorporate suggestions and responses to critiques provided during the comment period. The resulting proposal attempts to please everyone and risks pleasing no one.


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