The New EU “Pharma Package”: The transferable exclusivity voucher—A comparison of Commission/Parliament/Council positions

The New EU “Pharma Package” Series

In our first alert in this weekly series on the EU Pharma Package we provided some important background and general information about the status of the Pharma Package and how the trilogues work, and in the second alert we discussed the proposed changes to regulatory data protection.

In this third alert, we delve into the different proposals of the European Commission, the European Parliament, and the Council of the European Union regarding the transferable exclusivity voucher (TEV) for priority antimicrobials.

Alert 3: The transferable exclusivity voucher (TEV)—A comparison of Commission/Parliament/Council positions 

Antimicrobial resistance (AMR) arises when a microbe evolves to become more or fully resistant to antimicrobials which previously could treat it. Antibiotics, which kill or prevent the growth of bacteria, fall under the umbrella of antimicrobials. AMR constitutes one of the most important global public health threats of our time. However, research and development of new, effective antimicrobials is hampered by a lack of commercial interest from the pharmaceutical industry. Addressing AMR is therefore one of the key objectives of the EU’s legislative reform. One of the proposed mechanisms to incentivize pharmaceutical companies is the introduction of a mechanism whereby the manufacturer of a new antimicrobial which meets certain criteria (a “priority antimicrobial”) would receive a transferable exclusivity voucher upon regulatory approval.

What is a priority antimicrobial?

The TEV mechanism would work as follows: a company would request a TEV when it develops and applies for a marketing authorization (MA) for a priority antimicrobial. The EU institutions have not yet reached full agreement on the definition of “priority antimicrobial”, with the Council proposing a narrower definition than the Commission and Parliament.

According to the Commission and the Parliament, a “priority antimicrobial” should be defined as an antimicrobial where “preclinical and clinical data underpin a significant clinical benefit with regard to antimicrobial resistance and it has at least one of the following characteristics: (a) it represents a new class of antimicrobials; (b) its mechanism of action is distinctly different from that of any authorised antimicrobial in the Union; (c) it contains an active substance not previously authorised in a medicinal product in the Union that addresses a multi-drug resistant organism and serious or life-threatening infection”.

The Council, on the other hand, proposes that this definition be amended so that (i) section (a) (regarding a new class of antimicrobials) be removed and (ii) section (c) refer simply to a new active substance. The Council further proposes that the requirement in section (c) that the antimicrobial address a multi-drug resistant organism and serious or life-threatening infection be made into a separate, cumulative condition applicable to sections (a), (b) and (c), instead of an alternative one.

What are the grant, use and transfer modalities of the TEV?

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).

This transferability aspect is important because, although the TEV could in theory be used to extend the data exclusivity of the priority antimicrobial, 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. Alternatively, if they themselves did not own such an eligible, profitable drug, they could sell the TEV to another company, potentially for a very large sum. This could effectively delay the entry onto the market of generic or biosimilar versions for widely used blockbuster drugs and result in (i) a delay in affordable access for patients and (ii) a significant cost increase for EU Member State public health systems.

The position of the Commission on grant, use and transfer

The Commission recognizes in the recitals of the Pharma Package that the financial reward of the TEV “is ultimately borne by health systems” and that it is therefore necessary to keep the number of vouchers on the market to a minimum and establish strict conditions for the grant, transfer and use of the voucher. However, the Commission’s proposal includes only a few conditions to obtain a TEV, and very limited restrictions on transferability:

• • 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 and (ii) disclose any direct financial support received for research related to the development of the priority antimicrobial.
  • Use of a TEV: a TEV can only be used once and must be used within five years after it was granted, including in case of transfer. The MAH can either use the TEV itself for the priority antimicrobial or any other centralized product in its portfolio as long as the product is within its first four years of data exclusivity. This four-year limitation is beneficial for the predictability of the mechanism, as it avoids “last-minute” extensions of the data exclusivity. Given the often time-consuming and expensive development pathways for medicinal products, especially biosimilars, predictability is to be applauded.
  • Transfer of a TEV: alternatively, the MAH can make a one-time transfer (sell) 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 will be made public by the European Medicines Agency (EMA).

The TEV is intended to be a rare occurrence, as the mechanism will only remain in place for 15 years or until 10 TEVs have been granted throughout the EU. However, the impact on the industry, the public health systems and ultimately the patients should not be underestimated if these 10 TEVs are used for the 10 most profitable and sought-after medicines in the market.

The position of the Parliament and Council on grant, use and transfer

Both the Parliament and the Council recognize this potential negative impact and proposed several additional requirements and limitations on the grant, use and transfer of the TEV:

• • Grant of a TEV:
    • the Parliament built on the Commission’s proposal regarding the grant of a TEV by also requiring (i) disclosure of indirect financial support, (ii) actually ensuring supply rather than just demonstrating capacity to supply and (iii) submission of the necessary stewardship and (EU and global) access plans.
    • the Parliament added an alternative mechanism in the form of a milestone payment reward scheme, which could be opted for instead of the TEV. The payments under the scheme could only be used for further development, applying for an MA, conducting stewardship and access plans, and applying for a joint procurement agreement.
    • the Council did not retain any of the Parliament’s suggestions, but added its own requirement that the MA application in the EU for the priority antimicrobial must be the first in the world or must be submitted in the EU no later than 90 days after submission of the first MA application in a third country.
  • Use of a TEV:
    • the Parliament proposed a modulated data exclusivity of 6/9/12 months, respectively, depending on the priority level of the antimicrobial (medium, high or critical). In addition, the data exclusivity extension of the TEV is made subject to the general data exclusivity cap of 8.5 years proposed by the Parliament (see also our previous alert on the regulatory data protection framework). This limits the possibility to accumulate various extensions for a blockbuster drug.
    • the Council added a double condition for use of a TEV on a product other than the priority antimicrobial (whether by the same or a different MAH): (i) a predictability requirement that the TEV can only be used in the fifth year of data exclusivity of the product, and (ii) an “anti-blockbuster” provision that the annual gross sales of that product in the EU cannot have exceeded 490 million euros in any of the preceding four years.
      
      For use of a TEV for the priority antimicrobial itself, the Council removed the requirement proposed by the Commission that the product must be within its first four years of data exclusivity. This is less of an issue given the relative lack of economic impact of a data exclusivity extension of a priority microbial compared to a blockbuster drug.

• • • the Council lowered the total number of TEVs that can be issued in the EU from 10 to five.

• • Transfer of a TEV:
    • the Parliament added a provision aimed at securing the manufacturing capacity and supply of the priority antimicrobial in case of a transfer of the TEV. Under the Parliament’s proposal, the monetary value of the TEV must be paid to the Health Emergency Preparedness and Response Authority (HERA), who will pay the buyer-MAH in annual instalments as long as the seller-MAH complies with its supply obligations.

Conclusion

All three EU institutions support the concept of the TEV. We can thus be fairly certain that this mechanism will be included in the final text of the Pharma Package. The question, however, will be what the specific modalities for grant, use and transfer of the TEV will be, notably with respect to blockbuster drugs.

The TEV mechanism is relatively straightforward on paper. It would be implemented at EU-level – which makes it independent of individual EU Member States’ economic or political situations. In addition, it would support pharmaceutical companies of all sizes and would not require up-front government funding (in contrast to the milestone payment reward scheme proposed by the Parliament).

However, the advantage of incentivizing the development of new antimicrobials and the impact on global public health must be considered in the light of concerns regarding costs for EU Member State public health systems and the wider impact on patient access. These concerns include (i) lost genericization savings for EU Member States resulting from the data exclusivity extension of a product which uses the TEV – especially a blockbuster drug – and (ii) patients in other therapy areas “paying for” antimicrobial innovation that does not directly benefit them, if the TEV is used to delay generic or biosimilar entry for their product instead of the antimicrobial.

The modalities for the TEV mechanism must be designed in such a way that the benefits it brings to patients and society ultimately outweigh the cost for EU Member State public health systems and the potential harm caused by restrictions in patient access to other medicines. The Council has attempted to address this, most notably through its proposed predictability requirement (i.e., that the product must be in its fifth year of data exclusivity), and the proposed annual gross sales cap of 490 million euros.