[Ip-health] Presidential Advisory Council on Combating Antibiotic-Resistant Bacteria unanimously endorses delinkage - Delinkage

James Love james.love at keionline.org
Sun Sep 17 08:57:46 PDT 2017


Presidential Advisory Council on Combating Antibiotic-Resistant Bacteria
unanimously endorses delinkage

Posted on 17 September 2017

On Thursday,
​ September 14, 2017, ​
the Presidential Advisory Council on Combating Antibiotic-Resistant
Bacteria unanimously endorsed a report that included very powerful
recommendations on delinkage. This is a link to the report that was

One of the key recommendations follows:

​* ​
Adoption of some form of a delinkage model as a pull incentive.

Delinkage is a proposed model to incentivize the development of new drug
products in which profitability is separated from sales volume. The pull
incentives most likely to be effective in the U.S. market are all
variations on the delinkage models proposed by DRIVE-AB and the
Duke-Margolis Center. A core feature of this model is an agreed-upon
payment for the delivery of a given antibiotic to the marketplace—or an
MER—rather than a payment based on the use of the product. The value or
price of the MER is benchmarked (indexed) to reflect the level of public
health need that would be addressed by the new antibiotic product.
Different approaches for setting the value of the MER should be
debated—recent work has suggested that total values may need to be $1
billion to $2 billion or more. Fixed value based on desired characteristics
of the drug will be the easiest to measure. Approaches based on assessing
utility in the clinic are desirable but will be confounded by the limited
use that is both expected and desirable with these products. Receipt of the
MER should be tied to restrictions on sales and marketing through use of a
delinkage model. Plausible options for paying for pull incentives include
establishment of an antibiotic incentive fund (AIF) support
ed by an antibiotic usage fee, by auctioning transferable exclusivity
vouchers, or by allowing registration of a new antibiotic to earn a
transferable exclusivity voucher. Government appropriations also could be
considered, but experience shows that these are unpredictable and likely
not sustainable. Under a delinkage model, the drug developer retains all
intellectual property (IP) and has responsibility for approval,
manufacturing, and sales of the antimicrobial. However, by accepting MERs
as payments from the AIF, the company would have to agree to forgo profits
based on volume of sales and to forgo active marketing of the product. The
major advantage of this approach is that government could prioritize health
products for unmet medical need. Disadvantages include the political
challenge of committing to funding for new products, defining the value
benchmarks, and allocating the cost of the delinkage payments to the
consumer market.

​* ​
For pull incentives, development by CMS and the Treasury Department of
value metrics for antibiotics and diagnostics, the required size of
delinked MER rewards, and options for plausible business models for
antibiotics, including delinkage, in consultation with FDA and CDC, and
through collaboration with public health experts and the international

The financing recommendations, which include transferable patent
extensions, were problematic, the but the new incentive mechanisms proposed
were good.

Professor Kevin Outterson and BARDA played an important role in advancing
delinkage. The industry pushed for off-budget financing via patent
extensions, unfortunately, but that is something the Congress is unlikely
to endorse. A better approach is found in S.771 and HR 1776. (See:
Delinkage.Org report here)

The endorsement of delinking R&D rewards from units sold is an important
step toward broader reforms on drug pricing that are needed.

In the AMR case, industry backed delinkage because they thought returns
would be higher than what they could get normally. But delinkage is also
very important in introducing budget constraints and expanded access to
rewards for drugs in general.

​In terms of industry support for delinkage, t
he former CEO of GSK suggested another early application of delinkage could
be for rare diseases where prices of products make zero sense, and society
wants to ensure robust innovation without high prices. (more here).

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