Report Recommends a Variety of “Push” and “Pull” Mechanisms to Incentivize New Antibiotic Drug DevelopmentOctober 30, 2009
By Kurt R. Karst –
A recent report issued by the London School of Economics and Political Science (“LSEPS”), and commissioned by the Swedish government, urges governments to create new incentives to promote the research and development of antibiotics in light of the growing concern over resistance to existing antibiotics, such as the emergence of drug-resistant “superbugs” like Methicillin-resistant Staphylococcus aureus, which reportedly kills approximately 18,650 Americans each year. Sweden, which currently holds the rotating European Union (“EU”) Presidency, will reportedly lobby EU and U.S. officials to push for legislation creating new incentives for antibiotic drug development.
According to the report, titled “Policies and incentives for promoting innovation in antibiotic research”:
The potential for an impending health crisis due to the lack of new antibiotics, along with the inherent externalities in the market and the likely cost-savings from improving treatment, provide ethical and economic justification for some intervention in the market by a public body. However, the design of the incentive – in terms of the timing and size of the prize, the organisational driver, and the target beneficiary – will determine its chances of success.
The LSEPS report goes on to divide “traditional” R&D incentives into two main types – “push” and “pull” methods. “Push incentives focus on removing barriers to developer entry largely by affecting the marginal cost of funds to the developer for investments in R&D and tend to impact the earlier stages of the development process,” and include tax credits and grants, according to the report. Meanwhile, “pull mechanisms involve the promise of financial reward only after a technology has been developed,” and include monetary prizes, and intellectual property extensions. (The idea of creating a “Medical Innovation Prize Fund” and abolishing non-patent market exclusivity has been proposed in the U.S. by one member of Congress; however, the idea has not gained traction. The recent creation of priority review vouchers in the U.S. is one new “pull” mechanism, but because the priority review voucher market is untested, it is unclear how successful this incentive mechanism will be.) The report goes on to note that:
The basic elements of push and pull mechanisms can also be combined to create hybrid mechanisms. . . . Hybrid mechanisms may provide crucial impetus to overcome developer reticence at the different (and perhaps key) stages of product development: early stage push funding provides greater financial space to explore early discovery ideas without needing to understand their full potential, whilst the larger pull element entices them to undertake the latter phases of development, including expensive Phase III trials. The evolution between the respective incentive forces within a hybrid incentive (push to pull) is important in that developers have been understood to respond more to profit incentives at the later stages of the research process than at the earlier stages. In combining push and pull incentives, hybrid mechanisms also spread risk between the funder and the developer.
Among other incentives identified in the 199-page report, the report discusses regulation-based incentives, such as reducing clinical trial requirements. This could include delaying Phase 3 clinical trials until post-approval for drugs for very serious infections, and accepting more evidence based on modelling predictions. To that end, earlier this year, legislation co-sponsored by Senators Sam Brownback (R-KS) and Sherrod Brown (D-OH) was enacted that requires FDA to establish two new review groups to recommend solutions for the prevention, diagnosis, and treatment of rare diseases and neglected diseases of the developing world. These two groups must recommend to FDA “appropriate preclinical, trial design, and regulatory paradigms and optimal solutions for” rare and neglected diseases.
The report also notes that “pharmaceutical companies may hesitate to initiate new clinical trials for antibiotics because guidelines for clinical trials in this therapeutic area remain unclear.” Over the past couple of years, FDA has held several meetings to discuss clinical trial design issues for antibiotic drug development, and recently scheduled a meeting of the Anti-Infective Drugs Advisory Committee to discuss clinical trial endpoint and design issues in the development of antibacterial products for the treatment of community-acquired bacterial pneumonia. In addition, the FDA Amendments Act of 2007 – at Title XI, Subtitle B (Antibiotic Access and Innovation) – requires FDA to convene a public meeting on serious and life-threatening diseases due to antimicrobial resistance and to make available on FDA’s website any clinically susceptible concentrations (i.e., values that characterize bacteria).
Also of interest, the LSEPS report addresses the issue of so-called “wildcard” patent term extensions (“PTEs”). “Under wildcard patent extensions, also known as transferable IP protection, a company that successfully develops a new antibiotic is granted a patent extension for another drug that is approaching patent expiration in its portfolio. Suggested lengths of the patent extension range from 6 months to 2 years in the US and to up to 5 years in the EU or proportional to therapeutic benefit,” according to the report. After noting the various advantages and disadvantages of wildcard PTEs (“The main advantage of the scheme is that it would present a significant reward for large companies with lucrative products to protect or for small companies who could sell the extension to them. . . . [T]he main disadvantage of the scheme is the significant social costs of a wildcard patent extension. The estimated cost of allowing wildcard patents for just 10 drugs exceeds US $40 billion.”), the report concludes that “[w]ildcard patent extensions should not be considered for promoting R&D in antibiotics.”
The idea of creating a wildcard PTE has been proposed and rejected in the U.S. This pull mechanism was most recently proposed in the Biodefense and Pandemic Vaccine and Drug Development Act of 2005 (Bioshield II), which is intended to stimulate the development and approval of countermeasures to biological weapons. Bioshield II was signed into law, but without the proposed wildcard PTE provision.