Transferrable Market Exclusivity Extensions to Promote Antibiotic Development: An Economic Analysis

Abstract

Abstract Background To address the growing threat of multidrug-resistant organisms, policymakers are seeking ideas to promote development of novel antibiotics. In 2018, the REVAMP Act was proposed in Congress to reward manufacturers of certain novel antibiotics with transferrable market exclusivity vouchers. Methods We estimated the economic impact of this proposal by identifying antimicrobial drugs approved by the FDA from 2007–2016 that would likely have qualified for an exclusivity voucher and matching each drug to the highest-revenue fast-track drug facing generic entry within 4 years after the antibiotic was approved. Assuming a spending decrease of 75% after generic entry, we calculated the per-drug and total societal costs of these transferrable market exclusivity extensions over a decade. Results We identified 10 antimicrobials that would have qualified for an exclusivity voucher, each of which was matched with 1 of 17 fast-track drugs facing generic entry through July 2019. These 10 drugs had a median annual revenue before generic entry of $249 million (range, $26 million–$2.7 billion). Accounting for a 75% spending reduction after generic entry, the median excess spending associated with 12 months of extended exclusivity was $187 million, for a total of $4.5 billion over 10 years. Conclusions While market exclusivity extensions are a politically appealing mechanism to encourage novel antibiotic development, this approach would cost public and private payers billions of dollars over the next decade.