(Bloomberg Opinion) — This is one of a series of interviews by Bloomberg Opinion columnists on how to solve today’s most pressing policy challenges. It has been condensed and edited.
Lionel Laurent: Despite a rich history of scientific breakthroughs, from Louis Pasteur’s rabies vaccine to the discovery of HIV in the 1980s, France is the only permanent member of the UN Security Council not to have its own Covid-19 vaccine. Doses have been administered to just over 3% of the French population, below the European Union average and well behind the U.K. and U.S. You’re a French-American professor of economics in Paris and co-author of a Jan. 2021 report on the French pharmaceutical industry’s struggle to innovate. Is France’s lagging performance in the Covid vaccine race a case of bad luck, or something deeper?
Margaret Kyle, Professor of Economics, Mines ParisTech: It’s hard to generalize when it comes to vaccines. There are American companies that have failed too, like Merck. So the fight isn’t over. But what I think is striking is that despite the French government’s habit of spending a lot of money, research spending is below the target 3% of GDP set by the European Union. So there’s Big Government, but it’s not necessarily focused on innovation.
LL: So there is money available, but it’s not flowing to the right places?
MK: When you look at the average salary for a researcher in France, it’s not great relative to the rest of the OECD. A lot of that has to do with the university system. It’s very different to other models like the U.S., where financial incentives are geared to performance. There’s been a brain drain. There haven’t been French universities capable of developing real research strengths like Oxford or Cambridge – in England and in Massachusetts — because of the way the system is structured.
The grants system could also do with improvement. One report from 2019 found that not only is the level of funding low, but the probability of a successful application is very low, which means that researchers spend a lot of time preparing applications that aren’t funded. It also means that selection committees can’t finance all worthy projects. This might lead to the selection of “mainstream” applications and not more innovative work.
LL: What about France’s approach to risk? Politicians are clearly keen to avoid repeating the errors of past public-health scandals, and they’re also constitutionally bound by France’s “precautionary principle” — to evaluate and manage environmental risks even if there isn’t always enough scientific evidence available. Is there a lot of caution?
MK: Without inferring too much from the vaccine experience, there is culturally a lot of risk aversion in the French system. Even at the European level, you can see the focus in the purchase of vaccines was very focused on price and liability. Speed to market was not a priority at the time the contracts were negotiated.
This kind of risk aversion speaks to the struggle to develop innovative pharmaceuticals or vaccines. There’s a reluctance to invest in risky startups and tolerate failure.
LL : Is it revealing that the most famous French scientific face in this pandemic is Didier Raoult, who very early on championed hydroxychloroquine rather than new discoveries?
MK: It shows where the spending is. The excitement around hydroxychloroquine came from a trial with very few patients and no randomization. That’s the kind of trial that should not be supported by public funds. I was surprised to see, when we looked at the breakdown of clinical trials for all diseases for our report, that a disproportionate number of trials are not randomized or blinded, and these were not funded by industry.
So it’s not just that France hasn’t produced a vaccine, it hasn’t produced research into treatments either.
LL: How do you change risk aversion in scientific research? Can it be done top-down by the French government?
MK: Well, it’s not just culture — there’s a lot of friction in the system. Research is a long and burdensome process. It’s a classic criticism of France, but lowering paperwork could reduce a lot of barriers in the process.
We talked with people from different government ministries and they understood the problem. There have been efforts in the past to address them. It just takes a long time to change the direction of the tanker. Policies take time and money: What you do today might not show the benefits tomorrow, or even next year. And that matters when trying to appeal to the electorate.
LL: What about from the bottom up? Emmanuel Macron has talked about turning France into a “start-up nation” for years…
MK: Talking about a start-up nation is one thing, but having the right incentives in place is another. When we look at funding, it seems that French biotech companies tend to raise less money than in neighboring countries. It’s hard to know if that means there are fewer home-run candidates. Venture capital firms in France are also, again, somewhat more risk-averse.
LL: You’re a French-American scholar who’s seen academic systems around the world up close. Does France have the right kind of innovation “ecosystem,” where universities feed into start-ups and VC funding?
MK: From my own experience on the faculty of a French engineering school, there’s definitely more talk about generating spinoffs from university research over the last five to ten years. But the issue is the conditions, the financial incentives given to academics.
The thing is, there are some bright spots in French research. When we reviewed patent applications in Europe, France’s national institute Inserm was at the top for pharmaceuticals. But there is still clearly a competitiveness gap in attracting talent. French universities and grandes ecoles (elite civil-service academies) are not competitive on salaries.
There is also a lot of pushback inside French universities to the idea of tenure track — fixed-term contracts that put academics on a multi-year path to permanent employment, provided they meet various evaluation criteria — which unions say is too selective and bad for job security. And there’s a lot of resistance to the notion that some fields should be paid more than others.
LL: Let’s talk about hurdles later on in the process. Is regulatory approval a problem? There was a lot of criticism, even from inside the EU, over the time it took the Europeans to approve its first Covid-19 vaccine.
MK: Well, the approval process has definitely gotten simpler since the mid-1990s. The European Medicines Agency grants approval for all EU countries. The bottleneck isn’t with this first authorization but with the negotiation with the payer in each country. Health is considered a national competence: That means Germany might ask for an additional clinical trial, or France might restrict the product to specific populations. That adds time and money to the process as well.
LL: What about intellectual property rights? Is there enough incentive to reward innovation?
MK: What could be done better is to refine market exclusivity. Right now, you get ten years of market exclusivity after European approval is given. Maybe a little bit more than that if you demonstrate a new use after launch. That’s something we could do more on. The more effective the drug, the more exclusivity it might be offered, and vice versa. The patent system gives the same period of protection across the board, including for secondary patents that don’t necessarily represent much clinical advance and that are costly to litigate, but market exclusivity terms provide more legal certainty.
LL: Should France copy parts of the American model, such as BARDA (Biomedical Advanced Research and Development Authority), which puts a lot more money up front? When French drug maker Sanofi warned it was the U.S. that would be first in line to receive doses if its vaccine candidate worked out, Macron seemed taken by surprise.
MK: I personally like that model, with advanced purchase commitments based on need and minimum efficacy. That way, if the vaccine candidate fails, the taxpayer isn’t actually paying anything, and not in fact committing that much risk.
The issue is more political, because optically it looks like taxpayers are paying twice: Once through public research and development, and twice when it’s commercialized.
LL: Right now, the vaccine race seems to be looking more like a manufacturing story than a scientific one, with plenty of contenders but too little supply. Is it simply too late for France to catch up?
MK: It still makes sense to try. It’s true that Sanofi has agreed to dedicate all of its manufacturing capacity to other vaccines, so it raises the question of what happens if it does produce a successful candidate. Still, its own vaccine trials are ongoing. And even if it seems like we’re in the end game of this pandemic, I don’t think it will be over by next year. We will need all the help we can get. There will be more viral diseases, so it still makes sense to keep researching.
LL: What’s the bottom line? What should France do to prepare itself for the next pandemic, from an innovation standpoint?
MK: France needs to do low-cost things to help improve the research environment: removing some of the bureaucratic impediments, for a start, and making much more use of the medical data that French agencies collect. There’s a wealth of information there that would reduce the cost of doing research and would attract the private sector. Look at what worked well with cancer and not so well with Covid: Cooperation between pharmaceutical companies, VCs and biotech, and recognizing importance of academic research. Without all those elements, research innovation won’t be productive.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Lionel Laurent is a Bloomberg Opinion columnist covering the European Union and France. He worked previously at Reuters and Forbes.