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The disengagement of major drug firms is described as "a type of market failure" in a briefing paper published last month by the UK think-tank Chatham House.
In our December/January issue, View from Brussels columnist Peter O’Donnell writes about discussions in November that surrounded antibiotics and anti-microbial issues. The article briefly touched on the lack of engagement from sponsor companies because of the lack of incentives. While public-private partnerships such as the European Innovative Medicines Initiative (IMI) are considered a plus, examination of other approaches, such as the use of transferable patent vouchers, or even paying more for antibiotics, should be explored.
The disengagement of major drug firms is described as “a type of market failure” in a briefing paper published last month by the UK think-tank Chatham House. “A new sustainable business model would be key to fueling antibiotic development,” says its author, Gemma L. Buckland Merrett. In her view, prerequisites are clear market signals to stimulate R&D, and delinking the cost of R&D from sales revenues. “In order to correct current misaligned incentives, the right institutions, incentives, cost- and risk-sharing, and funding mechanisms are needed.” John H. Rex of AstraZeneca, speaking on the economics of antibiotics at the EMA meeting, put it like this: “We can’t make companies do this work... we have to make them want to do this work.”
Something radical is needed to move out of the trap created by high costs and risks of development for products that are, ideally, going to be used sparingly. The classic concept of payment according to usage is clearly the wrong model for medicines where the objective is to limit their use strictly. Traditionally, drug firms have maximized sales to maximize return on investment. But if wide use is not, in this field, to be the consequence of successful innovation, some other incentives that de-link reward and usage must be found. So far, not much progress has been made in identifying these alternatives. The clinical need for effective new products remains high—but innovation remains low, and is likely to stay low as long as returns from investment in antibiotic R&D are seen as too small.
Should assistance through any new scheme be concentrated on research into a small number of innovative and highly effective products, ignoring any second-rank research into minor improvements on existing products? Advocates of this approach claim it would be more efficient, while opponents point to the inherent difficulties of accurately predicting the merit of any potential new medicine.
Should governments be more actively involved? One approach being canvassed envisages early-stage research funded by public-private partnerships, with governments then taking over funding of Phase III development. A long-term contract with the company would provide a fixed fee, while the company would guarantee supply of however much (or little) the government decided was required by public health needs. Since the company would be removed from any influence over decisions on usage, governments would then be free to introduce mechanisms conducive to appropriate use.
Another approach under discussion foresees shorter-term contracts allowing a healthcare agency the option to use an effective innovative product as much or little as necessary, while guaranteeing a fixed level of payment to the company.
Proposals exist for a global approach, with the creation of a large fund that would manage the entire innovation process from discovery to the market, or would reward the private sector for reaching agreed development or production milestones.
Guaranteed purchase of a final product, or some other sort of prize, or a special patent incentive, might be worth examining, but whatever incentives that make a break between reward and usage must, say senior industry figures, provide innovators with the confidence that it will deliver rewards for innovation predictably—and at a level that matches returns in other drug classes. This would mean that a mechanism based on simpler criteria, such as pay-for-performance, would be judged excessively risky by companies.
It is now nearly two years since the European Union launched an initiative boldly titled “The Microbial Challenge—An Emerging Threat to Human Health,” with ambitious goals for collaboration among policy-makers, healthcare agencies, the research community and the drug industry. But despite its long list of recommendations for working together to boost research, more than 25,000 people are still dying each year in the EU from resistant infections. And the problem continues to grow, in terms of human suffering and social costs. Some progress has been registered in reducing the indiscriminate use of antimicrobials that contributes to resistance. But, as the Council recognized, that is only part of the challenge. The development of resistance and the emergence of new infections are unavoidable facts of life. The reality is that so far, little has been done to respond to these inevitabilities.