Executive Summary – The European pharmaceutical industry is advocating for the implementation of a Transferable Exclusivity Extension (TEE) system to address the critical challenge of antimicrobial resistance (AMR). Modeled after the Priority Review Voucher (PRV) system in the U.S., the TEE mechanism offers a powerful market-based incentive for companies to invest in the development of novel antibiotics. Companies that successfully bring groundbreaking antibiotics to market would receive a voucher to extend the exclusivity period of another product or sell the voucher to generate financial returns. The TEE system aims to mitigate the economic barriers to antibiotic research and development (R&D), which include high costs and low returns due to stewardship practices. The European Federation of Pharmaceutical Industries and Associations (EFPIA) supports this initiative,backed by a comprehensive framework analyzing its costs and benefits. While the societal and healthcare gains from combating AMR are significant, concerns about increased drug prices and delayed generics necessitate careful design and implementation. European policymakers are exploring pilot programs to evaluate the feasibility and impact of the TEE system, signaling a critical step toward revitalizing antibiotics innovation.

The European pharmaceutical industry is rallying behind a novel proposal to address the escalating global challenge of antibiotic resistance by incentivizing the development of new antimicrobials.
Drawing inspiration from the successful PRV system in the United States, European stakeholders are
advocating for a TEE mechanism. This system aims to provide a financial and market-driven boost to
the stagnant antibiotics R&D sector.

The Urgency of New Antibiotics – AMR is a growing global threat, leading to reduced efficacy of existing antibiotics and a dearth of new drugs to combat resistant infections. Despite the critical need, antibiotic development faces unique challenges, including high R&D costs and limited financial returns due to the careful stewardship required to prevent resistance. This market failure has disincentivized pharmaceutical companies from investing in antibiotic innovation.

What Is the TEE Voucher System? The TEE voucher system, as outlined in a report by the EFPIA, would work by rewarding companies that successfully develop a novel, critically needed antibiotic with a voucher. This voucher could be:

1. Used directly to extend the exclusivity of another drug in the company’s portfolio.
2. Sold or transferred to another company for financial gain.

By offering a potentially lucrative reward for innovating in the antibiotics space, the TEE system seeks to align financial incentives with public health priorities.

Learning from the PRV Model – The proposed TEE system mirrors the U.S. PRV model, which has demonstrated success in spurring investment in areas like rare pediatric diseases and tropical diseases.

PRVs grant companies expedited regulatory reviews for new drugs, providing a competitive advantage and market value when traded. Similarly, a TEE voucher would leverage market forces to stimulate R&D without directly tapping intopublic funds, making it a politically attractive option. However, it also faces scrutiny, as extending exclusivity periods can increase costs for healthcare systems and patients by delaying generic drug competition.

Balancing Costs and Benefits – The EFPIA report, developed in collaboration with the consultancy Charles River Associates, provides a framework for assessing the net benefits of the TEE system. The analysis suggests that the societal and healthcare benefits of novel antibiotics, such as reduced mortality and healthcare costs associated with AMR, could outweigh the financial impact of extended exclusivity. However, the report acknowledges the need for careful implementation to ensure affordability and equitable access.

European Context: Testing the Waters – European policymakers are considering pilot programs to test the efficacy and impact of TEE vouchers. This aligns with broader EU efforts to address AMR, including initiatives like the EU Pharmaceutical Strategy and the development of an “antibiotic pull incentive” framework. Critics, however, caution against potential drawbacks, such as higher drug prices and inequitable access, urging for robust safeguards and a multi-stakeholder approach.

The Path Forward – The TEE voucher proposal represents a significant step in addressing the antibiotics innovation crisis. If successful, it could serve as a model for other regions facing similar challenges. As discussions progress, the focus will remain on balancing innovation incentives with accessibility and sustainability.

Conclusion – Antimicrobial resistance poses a significant global health and economic threat, demanding urgent action to spur innovation in the development of new antibiotics. The proposed TEE voucher system represents a promising solution, leveraging market incentives to address the current R&D crisis while aligning with public health needs. Though the system has potential to reinvigorate antibiotics research, its implementation must include safeguards to ensure affordability, equitable access, and sustainable healthcare financing. With pilot programs and multi-stakeholder engagement on the horizon, the TEE system could set a global precedent for tackling AMR while fostering innovation.
By bridging the gap between financial incentives and public health imperatives, Europe has the opportunity to lead the charge in combating this critical health challenge.

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References: These references provide valuable insights into the FDA’s approach to orphan drug and rare pediatric disease designations, with a particular focus on financial and regulatory incentives that support the development of novel therapies. The NIH’s work on AAV9-hPCCA gene therapy offers a case study in navigating FDA designations (Reference 1), while webinars from Mayer Brown (References 2 and 5) detail lifecycle management and exclusivity strategies, including pediatric incentives. Roberta Szydlo from the FDA and Scendea’s guidance (References 3 and 4) outline key financial motivations and recent developments in the PRV program, respectively. The FDA’s recent approvals for Argenica’s therapies (Reference 6) and official guidance on PRVs (Reference 7) underscore the FDA’s commitment to fostering innovation in rare pediatric diseases by awarding vouchers for groundbreaking treatments.

1. “European pharma group wants to create PRV-like system to spur antibiotics R&D”. This article highlights the European pharmaceutical industry’s proposal to introduce a TEE system, modeled after the U.S. PRV. The TEE would incentivize the development of novel antibiotics by granting vouchers for exclusivity extensions, which can be used or sold to other companies, thereby addressing financial challenges in antibiotic R&D and combating AMR. https://endpts.com/european-pharma-group-wants- to-create-prv-like-system-to-spur-antibiotics-rd/
2. “A framework for assessing the potential net benefits realised through Transferable Exclusivity Extension (TEE) as an incentive for development of novel antimicrobials: Final Report”. This EFPIA- supported report provides a detailed analysis of the proposed TEE voucher system. It explores how TEE could act as a financial incentive to revive antibiotics innovation, similar to the PRV system in the U.S., which has been successful in spurring research in rare pediatric diseases, rare tropical diseases, and medical countermeasures. The voucher would reward developers of novel antimicrobials by allowing extended exclusivity of another drug, fostering investment in a neglected area of R&D. The report positions TEE as a key tool for addressing the urgent need for novel antibiotics while balancing societal benefits and healthcare costs. https://www.efpia.eu/media/676634/cra-efpia-a-framework-for-assessing-the-costs-and-benefits-of-tee-final-report.pdf
3. “Challenges and opportunities for incentivizing antibiotic research and development in Europe”. This paper discusses the economic and structural barriers to antibiotic innovation in Europe, such as limited market returns and regulatory hurdles. It reviews current and potential incentives, emphasizing the need for mechanisms like TEE to align financial incentives with public health priorities. It also outlines the opportunity for Europe to lead global efforts in addressing AMR by implementing innovative policy solutions tailored to its unique healthcare and regulatory landscape.
   https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10403717/
4. The report “Improving access to medicines and promoting pharmaceutical innovation” examines the urgency of combating AMR and evaluates policy tools for promoting antibiotic innovation, with a focus on the TEE system. It contextualizes TEE within the broader European legislative framework, addressing its potential as a transformative pull incentive to stimulate R&D. The report also delves into the economic, societal, and ethical implications of exclusivity extensions, providing a foundation for policymakers to implement effective and balanced solutions. https://www.europarl.europa.eu/RegData/etudes/STUD/2023/753166/EPRS_STU(2023)753166_EN.pdf
5. PRV Market Insights and Strategic Implications: Please contact the authors.

Authors

Dr. Nana Mainoo, PharmD, MA
Chief Executive Officer at Cleracs Consulting
Email: nkmainoo@cleracs.com
With over 16 years of experience in the healthcare industry, Nana has held key roles at Pfizer and Komodo Health and co-founded Medsfinder, a healthtech platform. As CEO of Cleracs Consulting, he specializes in regulatory strategy, focusing on orphan drug regulatory affairs. Nana holds a Doctor of Pharmacy from Nova Southeastern University, a Master of Arts from IE Business School, and certificates in Health Leadership and Finance from INSEAD and Cornell University, respectively, along with a Bachelor of Pharmacy from KNUST.

Christian Girard, MiM
Co-Founder at The PRV Fund Project
Email: christian@prv.fund
Christian is a co-founder of The PRV Fund, an initiative focused on providing non-dilutive funding to early-stage biotech companies developing treatments for rare pediatric-onset disorders. Christian has over 30 years professional background marked by his commitment to advancing rare pediatric disease drug development, from lab bench to approval. His involvement in this sector highlights his dedication to supporting innovative therapies aimed at improving the lives of children with rare diseases. He is a graduate of ESCP Europe, an European business school.

Dr. Jean Chatellier, PhD
Partner, EVP & Managing Director at KYBORA
Email: jean@kybora.com
Jean is a Partner and EVP at KYBORA, a global advisory firm specializing in M&A, licensing, fundraising, and strategic advisory services in biopharma. He contributed to the divestiture of Bayer’s PRV to argenx for $98M [1].
With over 24 years of experience, he has held key leadership roles, including CBO at Besins Healthcare and pivotal positions at Avadel Pharmaceuticals, Micromet (now Amgen), and Crucell (now J&J). He was the founding CEO of Avidis (now Osivax) and has worked with Nobel laureates during his postdoctoral research. Jean holds a PhD in Biochemistry and Molecular Biology and has led significant industry partnerships and transactions throughout his career.

[1] On November 2020, argenx enters into agreement to acquire Priority Review Voucher https://www.globenewswire.com/news-release/2020/11/23/2131371/0/en/argenx-Enters-Into-Agreement-To-Acquire-Priority-Review-Voucher.html