Massimo Florio: could a ‘European Medicines Infrastructure’ solve market failures in pharmaceutical R&D?

Interview with Massimo Florio (Professor of Public Economics, University of Milan, Italy) about a new European approach to pharmaceutical policy.

In response to the Covid-19 crisis, the European Union has increased its commitment to the EU public health agenda. It has strengthened the mandate of both the European Medicines Agency (EMA) and the European Centre for Disease Control and Prevention (ECDC), and it has established the European Health Emergency Preparedness and Response Authority (HERA).

But what about the European pharmaceutical sector? According to a recent study, carried out for the European Parliament’s Panel for the Future of Science and Technology (STOA) and based on 60 interviews with experts from the field, many issues remain to be tackled in this sector. The study notes a disconnect between the priorities of corporate research and development (R&D) and public health priorities for human well-being, resulting in, amongst others, a lack of access to medicines and high prizes.

There already is an ambitious pharmaceutical strategy for Europe, adopted by the European Commission on 25 November 2020, which aims to tackle these matters. But on top of this, could a large-scale medicines infrastructure, which would oversee pharma-related R&D activities within the EU, help solve such market failures? We asked Professor Massimo Florio, economist and primary contributor to the study, for his views on the issue.

In your opinion, how could we make sure that the most pressing public health needs are met?

Massimo Florio profileMassimo Florio: We need to rethink public policies in the area of knowledge creation and innovation. There seems to be a mismatch between open science in the public sector, including universities, and patents protecting private investors. The former pushes researchers to create knowledge as a public good, without any barriers to access. The latter does the opposite, as it establishes private legal monopolies over knowledge.

In the case of biomedical research, this conflict has led to an oligopoly over Covid-19 vaccines by a group of companies, which has resulted in excessive prices and profits, and production and distribution choices that have left low-income countries by the wayside and have in general restricted the speed of the response to the pandemic. At least some conditionality in the public interest should have been attached to public money given to private companies in the first instance.

In your opinion, should the EU establish a systematic policy framework to deal with the protection of public interests? Should the EU regulate the sector by reforming its patents regulations?

Massimo Florio: The study we presented at the STOA panel concludes that we lack a European-wide research infrastructure for medicines in certain critically important areas, such as infectious diseases, pathologies associated with an ageing population, certain genetic conditions, and health risks correlated with poverty.

The United States has long since built its own federal institutions in this area, such as the National Institutes of Health (NIH) and the Biomedical Advanced Research Authority (BARDA), with a yearly budget of about €38 billion and €1.45 billion respectively (in 2020). They have a clear advantage compared to the EU.

However, the US has not solved the issue of the above-mentioned conflict between public and private interests in patent law, as demonstrated by the controversy between NIH and Moderna over the intellectual property of the vaccine. Considerable upstream NIH research and public money have been channelled into the vaccine, but this seems not to have been adequately acknowledged in downstream patents.

How would a European Medicines Infrastructure (EMI) strengthen and ensure the affordability and sustainability of medicines supply?

Massimo Florio: The proposed EMI should adopt a selective R&D portfolio strategy, exclusively in the public interest, looking at underinvested areas, and over 20-30 years should create the knowledge and fully develop the drug cycle in certain areas. Medical innovations may be co-developed with private companies, including innovative small-to-medium enterprises, with ownership, licences, prices and other market policies firmly in the control of the EU-sponsored public research infrastructure.

With the aim of optimising treatments, should the EU implement comparative clinical trials post-authorisation? Would the EMI be capable of carrying out long-term studies committing itself to this objective?

Massimo Florio: The creation of a platform for clinical trials should be a core aspect of the EMI’s mission, and such a platform should be available for comparative studies post-authorisation. Clinicians and health authorities should be able to get access to information on which therapy works better in terms of efficacy, risk and cost, and this information needs independent assessments and large-scale studies.

Do you think the EU should regulate the sharing of such information and data, and demand full transparency from pharmaceutical companies?

Massimo Florio: Yes, but we need to be realistic. Private companies will never share all their information, as we have seen in other regulated industries such as telecommunications. That is why we need a public player that has built-in transparency. A side effect of the establishment of the EMI would be the creation of an entity that would compare R&D costs declared by companies.

Why is expanding HERA’s mandate, instead of establishing a new infrastructure, insufficient in your opinion?

Massimo Florio: Currently HERA is part of the European Commission and seems to be a service for certain procurement activities related to health emergencies. This arrangement is very different from that of a research infrastructure where ownership, governance and management are largely the preserve of scientific communities, such as for example in the case of CERN and the European Molecular Biological Laboratory. The EMI should have ambitions similar to those of the European Space Agency or other European research infrastructures, rather than those of a European Commission department.

If it would become a reality, the EMI would likely encounter resistance of major multinational pharmaceutical companies, the so-called ‘Big Pharma’. What are your evaluations on this aspect?

Massimo Florio: The study for STOA was based, inter alia, on anonymous interviews of around 60 experts, including within companies. There is a strong consensus on the need for a European R&D infrastructure.

Moreover, the biomedical and pharmaceutical industry is wider than just big names. For example, the EMI would find partners in highly competent innovative firms, service providers and manufacturing suppliers. Some big pharmaceutical companies may also consider working in partnership with the EMI in certain areas. In general, the industry has a positive attitude towards the European Space Agency, so why not towards an EMI?

Useful link:
• Study: ‘European pharmaceutical research and development: Could public infrastructure overcome market failures?’
Recording of the study presentation at the STOA Panel Meeting of 16 December 2021

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