Incentives for the development of novel antimicrobials in the revision of the EU general pharmaceutical legislation: an urgent call for predictable and sustainable solutions

Antimicrobial resistance (AMR) is one of the most urgent global health threats of our time. The statistics are stark and alarming: in Europe alone, AMR claims 35,000 lives annually, with healthcare costs and productivity losses estimated at €1.5 billion each year. Without immediate action, these figures are poised to worsen in the years ahead.

Addressing AMR requires a multifaceted approach encompassing human health, animal health, and environmental considerations. Each domain presents its own unique set of costs and challenges. One thing is certain: AMR is a naturally occurring phenomenon, meaning existing antimicrobial treatments will inevitably lose their effectiveness over time. Therefore, developing new antimicrobials to replace those that become ineffective is imperative.

Are antimicrobials taken for granted?

We often take today’s antimicrobial treatments for granted. But how safe would you feel knowing that if current antimicrobials stopped working, a simple scratch or graze could become life-threatening? Alarmingly, the antimicrobial pipeline is critically underdeveloped. According to the WHO’s annual review of antibacterial agents in clinical and preclinical development, the research and development (R&D) pipeline for new antibacterial medicines is insufficient to tackle the growing challenge of AMR.

The reasons for this challenge are well-documented: developing an innovative antimicrobial is commercially unviable because it needs to be sold in low quantities to preserve its effectiveness and is priced very low. Moreover, antimicrobial R&D faces unique hurdles, including the difficulty of recruiting sufficient patients for trials, navigating stringent regulatory requirements, addressing the complexities of infection settings, and managing the emergence of resistance. The average cost to develop a novel antibiotic can be as high as $1.5 billion, while the average annual revenue from its sale is only about $46 million. In other words, for antimicrobials, the traditional intellectual property system must be complemented by additional incentive structures.

Pull incentives for novel antimicrobials: size and predictability matter

While the debate on how to best incentivize antimicrobial development has been ongoing for many years, concrete solutions at the EU level have only emerged in recent months, thanks to the revision of the EU general pharmaceutical legislation. There is consensus on one critical point: a combination of push and pull incentives is essential to reinvigorate the pipeline. Push incentives, already implemented worldwide, provide early-stage support for the development of new products. Pull incentives, currently insufficient, reward successful antimicrobial development based on the product’s ability to address unmet need, at a level sufficient to enable further R&D investment.

To ensure that a pull incentive effectively serves its purpose of reinvigorating the antimicrobial pipeline, two critical and interrelated factors must be met. First, the incentive must provide predictability for companies and investors funding R&D efforts, offering legal certainty that it will be awarded once the product is developed. Second, the incentive must be substantial enough to stimulate innovation. Without addressing these two factors, the development of new antimicrobials will remain commercially unviable, perpetuating the cycle of inadequate treatment options in the face of AMR.

At the EU level, transferable exclusivity vouchers (TEV) could play a key role in contributing to a global incentive ecosystem that ensures novel antimicrobials are developed and made accessible to patients in need.

In the revision of the EU general pharmaceutical legislation, the European Commission has proposed an EU pull incentive in the form of transferable exclusivity vouchers (TEV). The European Parliament, in its April 2024 position on the pharmaceutical legislation, has maintained TEV under stricter conditions. TEV presents several advantages: it can be effectively implemented via EU-level legislation, it delinks the reward from sales volumes, and under reasonable conditions, it could provide a significant incentive to spur investments in antimicrobial R&D by offering the necessary legal certainty thanks to its embedding in EU legislation.

What is the cost of a voucher? According to the Commission’s impact assessment, the estimated value of each TEV for developers is set at €413 million. This figure could cover part of the EU's estimated $1.43 billion “fair share” of a global pull incentive. While all pull incentives, including the TEV, come with a price tag, they should be viewed as investments. The numbers paint a compelling picture. Experts estimate that an EU antimicrobial incentive programme could yield $15.5 billion in total benefits for the EU over 10 years. That is a return on investment (ROI) of 4:1, and over 30 years, the ROI increases to 11:1, calculated for 18 new antibiotics over three decades.

Concerns have been raised about the unpredictability of TEV. Critics argue that TEV could potentially be attached to high-revenue medicines, leading to unforeseen consequences for public budgets. However, the Commission's proposal includes several conditions to ensure that only medicines eligible for regulatory data protection, with strict associated criteria, would qualify for TEV. Regulatory data-protected products comprise about one-third of the product basket but account for only 23% of total sales. In contrast, supplementary protection certificate-protected products represent the highest sales volumes and are not eligible for TEV. Many cost estimates of TEV have therefore been inflated, often based on historical high-revenue products that would not meet the Commission's TEV criteria. Additionally, these estimates frequently overlook the costs associated with generic medicines themselves.

Others have argued that TEV will not adequately address access issues, prompting the Parliament to propose stricter conditions for TEV, such as mandatory product supply obligations. Indeed, TEV is primarily designed to stimulate R&D and, as proposed by the Commission, would only cover part of the EU’s “fair share” of a global incentive. Therefore, it would need to be complemented by additional measures. Recognizing this limitation, the European Commission is exploring access models to complement TEV.

Voluntary incentive schemes alone are insufficient for impacting R&D decisions

While TEV has been proposed by the Commission and confirmed by the Parliament, other incentive proposals have been suggested over recent months. Will these provide a predictable and substantial financial incentive that can significantly influence developers’ investment decisions? The 2023 Council Recommendation on AMR and the 2024 Parliament's first reading position on the proposed pharmaceutical Regulation offer various solutions, centered around a voluntary element, allowing Member States to decide whether to participate or not. These proposals mainly include two schemes: voluntary subscription models and milestone prizes.

The key challenge with the fully voluntary nature of subscription models is the lack of upfront clarity regarding their expected value and whether they will be awarded at all. This results in a lack of predictability, making it impossible for developers to plan R&D investment decisions. What if, despite initial promises, no country decides to opt in due to changes in national political priorities? What if the size of the incentive ends up being much smaller than originally anticipated due to insufficient funding commitments? At best, a voluntary subscription model could help secure access to existing antimicrobials and the Commission’s Health Emergency Preparedness and Response Authority (HERA) has recently announced a small pilot with a €17 million budget to address this issue.

Milestone prizes present additional challenges. Essentially, a milestone prize involves the public sector engaging in at-risk research with no guarantee that the funded products will eventually reach the market. How does this align with the prudent use of public budgets, a principle frequently championed by critics of TEV?

The time for effective action is now

The revision of the EU general pharmaceutical legislation marks a significant milestone in the fight against AMR, with concrete solutions finally being discussed. As negotiations on the legislation progress in the Council, I urge all stakeholders to approach these discussions with openness and a collaborative spirit. The potential consequences of inaction are clear: a fragmented landscape of politically compromised measures that fail to address the root issue of insufficient R&D, increase bureaucracy, and fall short of the goal to deliver novel antimicrobials to patients, escalating healthcare costs and straining our economies.

I remain optimistic that we can achieve the best possible outcome: an effective, appropriately sized pull incentive that will position the EU at the forefront of the fight against AMR in the years to come, benefiting patients and our economies.

Kristine Peers

Kristine Peers is General Counsel at EFPIA.Kristine builds on a career combining legal expertise with public policy...
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