NCBI Bookshelf. A service of the National Library of Medicine, National Institutes of Health.

Institute of Medicine (US) Forum on Medical and Public Health Preparedness for Catastrophic Events; Institute of Medicine (US) Forum on Drug Discovery, Development, and Translation. The Public Health Emergency Medical Countermeasures Enterprise: Innovative Strategies to Enhance Products from Discovery Through Approval: Workshop Summary. Washington (DC): National Academies Press (US); 2010.

Cover of The Public Health Emergency Medical Countermeasures Enterprise

The Public Health Emergency Medical Countermeasures Enterprise: Innovative Strategies to Enhance Products from Discovery Through Approval: Workshop Summary.

Show details

Engaging Industry

Incentives: Push vs. Pull

Incentives used to engage the participation of commercial parties are generally thought of as either “push” or “pull” incentives, with push funding inputs, and pull funding or rewarding outputs. Push strategies should focus on cultivating partnerships and collaborations, James Guyton of PRTM said, while pull strategies should focus on increasing market sustainability. Guyton highlighted a number of push and pull incentives. Common incentives for industry are listed in Box 9.

Box Icon

BOX 9

Incentives That Could Be Applied in the Development of Medical Countermeasures. Push incentives focus on cultivating partnerships between government and companies: Tax credits and grants

A recent study by the London School of Economics supported the use of a combination of push and pull incentives (LSE, 2010). The study, described by Chantal Morel of the London School of Economics and Political Science, looked at incentives to spur research and development for antibiotics, specifically those for which there are high levels of pathogen resistance, and considered 24 types of incentive mechanisms.

As discussed above, pharmaceutical companies will assume the risk of failure in development if success can be expected to bring substantial market return. The industry is accustomed to raising capital to fund research when they choose to assume that risk. In that regard, some participants commented that industry does not need push incentives, but rather an assurance of a market (e.g., via a pull incentive). A report by BIO Ventures for Global Health supports the use of market-based incentives, in particular, advanced market commitments (BVGH, 2006). A workshop participant cautioned that paying incentives to industry up front (push incentives) raises the issue of the government “paying for failures.” Adopting a defense contractor model, where the government assumes all risk, is the most expensive and least productive way to proceed. Goal-line benefits (e.g., cash, patent benefits, liability protections) are a better approach.

Rex of AstraZeneca said, however, that push incentives are useful and appropriate for industry. Researchers, he said, must compete internally for company resources. If there is a tax incentive available for research on products for a particular threat, it is easier to make the business case internally that such research should be brought on board. Another participant noted that tax incentives are beneficial primarily for profitable companies, and therefore the majority of small companies that are innovating will not perceive tax credits as an incentive.

Offering a small-company perspective, Martin of Dynavax supported the concept of a prize-based funding strategy (retrospectively funding based on accomplishment of critical elements of a product profile), noting that such an approach creates a tremendous timing incentive. “If I can achieve the prize in one year by doing the critical experiment to show I have the appropriate attributes of the product profile, that is more interesting to me than achieving the same prize in 3 years,” Martin said.

Regarding market exclusivity as an incentive, it was noted that medical countermeasures have very small, variable, or even nonexistent markets, and such exclusivity will not give rise to a strong private-sector reaction.

A question was also raised regarding how to encourage studies of appropriate countermeasure use in special populations, such as children. Although a pediatric incentive11 exists to encourage the testing of products in children, in many situations involving countermeasures development, there will not be clinical trials at all, negating the current pediatric incentive.

Russell added that operationalizing many of these incentives is a real management challenge because they can be difficult to administer equitably and effectively.

Priority Review Voucher

The Priority Review Voucher was also discussed in some depth. As David Ridley of Duke University explained, this FDA program was enacted into law in September 2007 (Public Law 110-85) to establish an additional incentive for companies to invest in new drugs and vaccines. Under the program a company that develops a treatment for a neglected disease is awarded a Priority Review Voucher, which it can then (1) use when submitting an approval application for a different drug, or (2) sell to another company. Redeeming a voucher and receiving priority review would theoretically allow a company to bring a potential blockbuster drug to market sooner. Ridley noted that Novartis recently received the first voucher, but has not applied it yet. In support of the Priority Review Voucher, Smith of UPMC said there is a potential for significant benefit at minimal social cost.

A participant from a small company, however, expressed skepticism about the value of the Priority Review Voucher. As a small business enterprise, her company would be able to obtain a Priority Review Voucher, but most likely could not use it for the company for another product. Because no company has redeemed one yet, it is unclear what value it would hold for a large pharmaceutical company if the small company would try to sell it. Ridley acknowledged that until the vouchers begin to be used, there is great uncertainty associated with their value.

Incentives Not Needed?: Making a Strong Business Case

The government needs to try to speak the same language as industry when seeking collaboration. When approaching companies, the answer given is a function of the question being asked, said Douglas Pon, Pfizer’s assistant vice president, Licensing in Global Business Development.

Industry is consolidating, cutting back, and trying to become more efficient. Companies are assessing their portfolios, looking at medical need, technical feasibility, and regulatory hurdles. When industry looks at medical countermeasures in terms of the larger company portfolio, it sees low margin and low volume. Consequently, the U.S. government needs to establish a very good business case, with a solid product profile including, for example, the target population, mechanisms of action, and forecasted demand, Pon commented. This business case should also provide a gap analysis, defining what technologies are needed, what other intellectual property will be needed, and what would be required in terms of scale-up process development and manufacturing.

All of this could be done through a government-backed “incubator” or center of excellence, similar to how venture capital investors foster innovation, Pon said. Venture capitalists identify a need and identify the technology and intellectual property that are required, and they build a sound and strong scientific and operational management team. For any gaps, they form strategic partnerships. This is how the government may be able to engage the pharmaceutical industry. The government needs to approach senior management with a direct question and a defined plan to be able to expect a direct and sincere answer in response.

Pon said incentives may not be necessary if there is a true and urgent national need for these products. Whittle the long list of potential threats down to a priority few, define what is actually needed in terms of manufacturing, analytic support, and other capabilities, and come to the table with proposals ready for discussion. Follow the same model that companies use internally, Pon said, by approaching corporate management with a sound business case and request for resources.

An RFP-style process, Pon said, where government publishes a notice that there is an opportunity for collaboration, is not going to work. Government leadership needs to engage individual corporate leaders directly, with a plan in hand, and ask for help.

Under the “Pediatric Rule,” FDA can issue a written request to the sponsor of an investigational product, or the manufacturer of an approved product, that studies in children be conducted. The reward for conducting the requested studies is a 6-month period of marketing exclusivity (“pediatric exclusivity”).

Footnotes

11

Under the “Pediatric Rule,” FDA can issue a written request to the sponsor of an investigational product, or the manufacturer of an approved product, that studies in children be conducted. The reward for conducting the requested studies is a 6-month period of marketing exclusivity (“pediatric exclusivity”).

Copyright © 2010, National Academy of Sciences.
Bookshelf ID: NBK50757
PubReader format: click here to try

Views

  • PubReader
  • Print View
  • Cite this Page
  • PDF version of this title (1.9M)

Recent Activity

Your browsing activity is empty.

Activity recording is turned off.

Turn recording back on

See more...