The EU Pharma Package: The Transferable Exclusivity Voucher Compromise Proposal

Background

In our third alert in this EU Pharma Package Series, we provided a detailed overview of the diverging positions of the European Commission, the European Parliament , and the Council of the European Union on the transferable exclusivity voucher (TEV) for priority antimicrobials.

Addressing antimicrobial resistance (AMR) is one of the key objectives of the EU’s legislative reform. However, the development pipeline for new effective antimicrobials is obstructed, primarily due to a profound market failure: the low commercial value of the antimicrobial medicinal product market (costly development versus naturally limited market). In short, the market alone cannot deliver the solutions urgently needed to address AMR.

To reverse this trend, one of the proposed mechanisms to incentivize pharmaceutical companies to develop new antimicrobials is the introduction of a mechanism whereby the manufacturer of a new antimicrobial which meets certain criteria (a “priority antimicrobial”) would receive a TEV upon regulatory approval. This voucher could also be used to extend the data exclusivity of a different, high-value product or transferred to another company, creating a strong economic incentive for sustained investment in antimicrobial development.

The TEV mechanism in short

The TEV mechanism is set out in the proposed Regulation and will work as follows:

• A company can request a TEV when it applies for a marketing authorization (MA) for a priority antimicrobial.
• The TEV is granted by the Commission by way of an implementing act after a scientific assessment by the European Medicines Agency (EMA) and is valid for five years.
• The TEV gives the marketing authorization holder (MAH) one additional year of data exclusivity (the "exclusivity" aspect), either for the priority antimicrobial itself or for any other centrally authorized product of the same or a different MAH (the "transferability" aspect).

The Parliament’s proposal for modulated data exclusivity depending on the priority level of the antimicrobial was not withheld.

The definition of “priority antimicrobial” in the compromise text largely follows the Council’s proposal with a narrower definition than the one proposed by the Commission and Parliament. Accordingly, a “priority antimicrobial” is an antimicrobial that “addresses a multi-drug resistant organism and if the preclinical and clinical data demonstrate a significant clinical benefit with regard to antimicrobial resistance and if it has at least one of the following characteristics: (a) its mechanism of action is distinctly different from that of any authorised antimicrobial in the Union; [or] (b) it contains a new active substance that when used either alone or in combination with other active substances addresses a serious or life-threatening infection”.

The grant, use, and transfer modalities of the TEV

• Grant of a TEV: To obtain a TEV, the MAH must (i) demonstrate capacity to supply the priority antimicrobial in sufficient quantities in the EU; (ii) disclose any direct financial support received from any source worldwide for research related to the development of the priority antimicrobial; and (iii) demonstrate that the MA application for the priority antimicrobial was either first submitted to the EMA or submitted within 180 days after the submission of the first MA application outside the EU. Condition (iii) was added based on the Council’s proposal but extended from 90 to 180 days. The Parliament’s suggested amendments (for example, ensuring supply rather than just demonstrating capacity to supply) were not withheld in the compromise text.
• Use of a TEV: A TEV may be used once for a single centrally authorized product. The compromise text follows the Council’s proposal that, for use of a TEV: (i) for the priority antimicrobial itself, there is no longer a requirement that the product must be within its first four years of data exclusivity, and (ii) for another product (whether by the same or a different MAH), a double condition is added:
  • A predictability requirement that the TEV can only be used in the fifth or sixth year of data exclusivity of the product — which avoids “last-minute” extensions of the data exclusivity.
  • An anti-blockbuster provision that the annual gross sales of that product in the EU cannot have exceeded 490 million euros during any of the first four years after the MA grant. This limitation is important as the lack of commercial interest in antimicrobials implies that MAHs would be more likely to use the TEV to extend the data exclusivity on the most profitable drug in their portfolio. However, this can lead to (i) a delay in affordable access for patients and (ii) a significant cost increase for EU Member State public health systems.
• Transfer of a TEV: Alternatively, the MAH can make a one-time transfer (i.e., sale) of the TEV to any other MAH who can use it for an eligible medicinal product. There will be some transparency with respect to such transfer as the value of the transfer and the identity of the voucher holder will be made public by the EMA. Again, the Parliament’s suggested amendments that aimed at securing the manufacturing capacity and supply of the priority antimicrobial were not withheld in the compromise text.

In addition, the Commission can revoke a voucher prior to its transfer if a request for supply by any Member State or the Commission, procurement, or purchase of the priority antimicrobial in the Union has not been fulfilled.

Voluntary subscription model

The compromise text also includes a voluntary subscription model for the joint procurement of antimicrobials, whereby contracting authorities from different Member States may act jointly in the award of public contracts to purchase antimicrobials. The contract will be a multi-year subscription with at least the following conditions: (i) (partial) delinkage of funding from the volume of sales of the antimicrobial, and (ii) arrangements regarding criteria to support continuous and sufficient supply in pre-agreed quantities.

The intention of this mechanism is to alleviate concerns for developers by ensuring a viable market for newly developed antimicrobials. By reducing uncertainty around future demand, this approach directly addresses one of the main barriers discouraging investment in antimicrobial innovation. The subscription model was proposed by the Parliament to complement a milestone payment reward scheme, but the latter component was not retained in the compromise text. The conditions for the subscription model have also been streamlined to increase its practical appeal. For instance, stringent obligations, such as a commitment to antimicrobial stewardship and detailed access plans — including submission of a global access plan to ensure supply for third countries in critical need — were ultimately not included.

Conclusion

As all three EU institutions supported the concept of the TEV before going into the trilogue negotiations, the inclusion of this mechanism in the compromise text was to be expected. As in our previous alert on RDP, we note that (with the exception of the voluntary subscription model) it is mostly the Council’s proposals that have made their way into the compromise text, for example the inclusion of the anti-blockbuster provision.

The TEV is designed to be a highly targeted and exceptional incentive, ensuring that its use remains both rare and strategically impactful. Under the current proposal, the mechanism will be available for a maximum of 15 years, or until five TEVs (as proposed by the Council) have been granted across the EU — whichever occurs first. The proposal also requires a thorough evaluation by the Commission. This evaluation will take place after the first two vouchers have been used or after five years, whichever comes first, and will then occur every five years. The mechanism may only be extended following a positive assessment by the Commission. A similar periodic evaluation will be conducted to assess the uptake and impact of the voluntary subscription model, allowing the EU to adapt its incentives.