David's New Book

Monday, September 23, 2019

It's the Resistance, Stupid!

This is not the MRSA pandemic, ladies and gentlemen. Lets take a look at the MRSA pandemic. In  US hospitals, even today (latest CDC data is from 2014), 46% of S. aureus IV catheter, urinary catheter and surgical wound infections are MRSA. At one point, in the early 2000s, over 70% of S aureus isolates from emergency rooms in the US were MRSA. Although the resistance levels vary from state to state, the range of MRSA is 33-68%. 

Looking at the same CDC data set for carbapenem-resistant Enterobacteriaeceae, for example, we can see that the US average is about 3.5% and ranges from 0-12%.  The state with 12% levels of resistance is New York, by the way. As of five years ago, there was, therefore, over a 10-fold difference between the incidence of CRE and MRSA infections that are followed by the CDC. 

If we now apply these data to US market conditions for antibiotics, the comparisons become enlightening. The MRSA pandemic started in 1968 and accelerated around 1982 or thereabouts. By 2005, over 50% of S.aureus isolates in US hospitals were MRSA. To translate that into actual infection incidence rates, see the figure below from the CDC. In 2005 there were almost 20 MRSA infections per 1000 hospital admissions. Although this number has decreased, as noted above, 46% of strains are still MRSA. 

This tremendous medical need drove the market for anti-MRSA drugs for years.  Incredibly, the only (mostly) drug available to treat serious MRSA infections was vancomycin.  The graph below shows how this market was driven in terms of annual production of vancomycin by Lilly. The market continued to drive the sales of newer agents like linezolid and daptomycin.  Whether that will apply to newer anti-MRSA agents is not really clear. 

I have been unable to find US case incidence rates for CRE infections. But clearly, this is not the MRSA pandemic. For MRSA infection, we always had vancomycin, and later there was linezolid and daptomycin. Of course, before 2015 and the approval of ceftazidime-avbactam, there was almost no therapy for many of these resistant Gram-negative infections.  With emerging resistance to the polymyxin, there was no therapy at all.  Now, of course, we have ceftazidime-avibactam, meropenem-vaborbactam, imipenem-cilastatin-relebactam, and plazomicin. With the possibility to combine aztreonam with any of the above, the truly untreatable infections are exceedingly rare today. 

Resistance is spotty. If you are hospitalized in New York and you acquire a Gram-negative infection in hospital, there is a reasonable chance it will be caused by a highly resistant pathogen. If you go to a hospital in New Hampshire or Vermont, there is almost no chance for that to happen. Even within New York, there is considerable variability from hospital to hospital and between geographic areas. My recent survey on the utility of reimbursement rates for expensive new antibiotics active against these resistant Gram-negative pathogens reminded me of the spottiness of this resistance.  Those centers that already have a significant resistance problem are already using the expensive drugs with little thought to their expense.  They understand that efficacious, non-toxic therapy of serious infections is always cheaper than non-efficacious toxic alternatives. Those centers that simply do not see resistance, or only see such cases very rarely, have not considered adding these new drugs to their formulary simply because they do not need them.  In my survey, price seemed to be of little concern. But something must account for the fact that about 35% of CRE infections in the US are still treated with the polymyxins (see this paper by Clancy et al).

The problem is, though, that resistant Gram-negative pathogens are unlikely to go away, and are, in fact, more likely to spread. And, not only that, but as Stuart Levy would have pointed out, resistance to the new antibiotics will also crop up. To deal with that, we will need to use the newer drugs we already have and we will need a pipeline of new antibiotics for the future.  Not only will we need antibiotics to overcome emerging resistance, but we will need a choice of various classes to provide alternative therapies for drug intolerance and for specific types of resistance. But today, because of the lack of a sufficient level of resistance to drive appropriate use, the market simply does not exist. And without the market, there will be no new drugs. 

So – what we need to do is to establish a market in the absence of a medical need that is sufficient to drive the market by itself. We also need to recognize that this is what we are asking. Yes – there is a resistance problem. Yes, there are more and more serious infections that are “difficult to treat.”  And yes, there are areas where these infections are common like Greece, Italy, and New York. But all this together, as yet, does not a market make. What we don’t want to do is wait until there are sufficient numbers of highly resistant infections to drive the market. This will be especially true if resistance to the newer drugs emerges – because then it will be at least a 10-15 year wait for new, effective antibiotics. 

Tuesday, September 17, 2019

Stuart Levy - A Giant in the Fight Against Resistance is Gone

Stuart Levy passed away last week after a long illness.  He was a friend, not a close friend, and a colleague.  I hadn’t spoken with him in a while – probably not since I wrote an article for the Alliance for the Prudent Use of Antibiotics (that he founded) Newsletter last year. But I think I speak for many when I say that I will miss Stuart. 

I first met Stuart in the mid-1980s, just after I started my career in infectious diseases. He was one of a number of antibiotic-resistance researchers who were complaining that the NIH was not funding their research. I joined this group of “disgruntled” scientists, as Science magazine referred to us in a 1994 article, and got to know Stuart well.  He was a leader of our effort to try and hold the NIH accountable. We felt that our grant requests were not being reviewed by our peers, but rather by experts in areas such as vaccinology, immunology and pathogenesis. Our group included greats in the area like George Jacoby, Bob Moellering, Gordon Archer and several others. Stuart was instrumental in getting the NIH to provide data on their past funding for antibiotic research (nil) and for helping to arrange a series of workshops with NIH to explore the reasons for this lack of funding and lack of appropriate peer review. He was the diplomat of the group. The NIH finally followed Stuart’s advice and established a separate study section to deal with antibiotic research 20 years after Stuart first suggested the idea.  

When I met him, Stuart corrected my misguided assumption that he was a microbiologist or an infectious diseases specialist.  He pointed out that he was a hematologist in a department of hematology and oncology. I understand my mistake as I look back on his career. He was probably the first or one of the first to demonstrate the effect of antibiotic feed supplements for animals on the emergence of resistance in farm animals and the transmission of that resistance to humans in the farm environment. He developed the notion that antibiotics follow the “you use it, you lose it” rule, and that using them more sparingly might delay the emergence of resistance.  He was a strong believer in the idea that the density of antibiotic use was correlated with the rapidity of emergence of resistance. He founded the Alliance for the Prudent Use of Antibiotics in 1981 with the goal of protecting that precious resource. 

In the late 1990s, Stuart was part of a large group working on guidelines for the Infectious Diseases Society of American and the Society for Healthcare Epidemiology of America for the prevention of resistance in hospitals. This turned into a two-year effort where I became the secretary for luminaries like Stuart, Dale Gerding and John McGowan. Stuart and the others pushed hard for systems to control the use of antibiotics in hospitals with the goal of slowing emerging resistance.  In the guidelines that were finally published, this became known as antimicrobial stewardship and achieved prominence both then and now. 

Stuart also pointed out the potential importance of antibacterial products used in homes and industry for everything from hand washing to environmental cleaning. He realized that resistance to these products was often related to augmented bacterial efflux, and that this efflux could affect the activity of standard antibiotics as well. 

In later years, I used to quibble with Stuart by noting that even appropriate use of antibiotics, as is the case for most hospital use these days, will select for resistance. He would always counter with his density of use argument. 

Stuart also was prominent in showing us that commensal bacteria could be important harbingers of resistance genes for pathogens.  Thus, antimicrobial use of any kind could provide selective pressure on the commensal flora that, in turn, could pass on acquired resistance determinants to any pathogens in the same niche. He noted that the problem was that we did not routinely survey these commensals, but rather focused on the pathogens. 

Stuart was a tetracycline researcher.  Not only did he discover various tetracycline resistance determinants, but he also founded a company (Paratek) that competed with Wyeth in the development of new tetracycline analogues.  I remember this well since I worked at Wyeth where tigecycline was our major project at the time. During Stuart’s work on tetracycline resistance, he came upon the Mar system that was involved in the early steps towards multiple antimicrobial resistance as well as being important in virulence and the response to environmental stress in bacteria. 

I always considered Stuart a friend and a mentor. I am personally saddened by his passing. There are few with the depth and breadth of knowledge combined with an ability to move others to act that Stuart possessed. We will all miss him.

Thursday, August 15, 2019

Incentives from Medicare?

The key problem for many struggling with the treatment of resistant infections and a paltry pipeline of new antibiotics has been the lack of a return on investment for companies trying to discover and develop new antibiotics.  In hospitals, since these infections may be rare for a given center, there is a reluctance to place expensive new antibiotics on formulary and stock them given a limited pharmacy budget. This may result in a delay in adequate therapy or the substitution of older, cheaper and toxic drugs like colistin for newer, more expensive, more effective and less toxic therapies like ceftazidime-avibactam.  This concern is borne out by market data on antibiotic use in the US. 

Recently the Centers for Medicare and Medicaid Services (CMS) launched policies meant to provide incentives for hospitals to use newer, expensive, more effective and less toxic antibiotics for the treatment of infections caused by resistant pathogens. Obviously, this will only apply to the US. CMS provides a two-pronged approach. Hospitals can now apply to receive reimbursement of 75% of the drug cost beyond the usual diagnostic related group (DRG) reimbursement. The previous reimbursement allowed being only 50% under their New Technology Add-on Payment (NTAP) program.  (The DISARM bill currently under consideration in congress would allow a 100% reimbursement for drug charges for the treatment of resistant infections – but I am not sure if that would have to go through the NTAP application procedure or not). In addition, hospitals can now classify resistant infections under CMS’ “complicated conditions” rubric allowing for a higher reimbursement than would be obtained under a usual DRG. For a more complete review of this, see this article.

Lots of really smart people are very excited about these new “incentives.” Either I’m not so smart or someone is out of touch with reality. Being a data-driven person, I reached out to five hospitals.  Four are large, academic, multi-hospital groups.  One is a small hospital that is part of such a group but that functions semi-autonomously. People I contacted included a CMO (Brad Spellberg of USC), two antimicrobial stewardship directors, a pharmacist and an infection prevention director. OK.  This is not an extensive survey, but so far the response has been unanimous.

I posed two questions.

1.  Will these (new CMS moves) measures make any difference to formulary position or prescribing patterns in your hospital?
2. If there were 100% reimbursement instead of the 75% CMS currently proposes for expensive antibiotics and as described in the DISARM Act before congress, will that make a difference?

I have received four responses – all from large centers.  All stated that the new CMS incentives would NOT change current practice in their institutions. Only one center stated that if they consider placing the new expensive antibiotics on their formulary, these incentives would help their argument to the hospital administration.  Currently, their resistance rate is so low that they haven’t considered it necessary to have these drugs on their formulary (see below). 

1.    Resistance in two of the centers I polled is rare.  This is consistent with a recent study of “difficult to treat” infections in the US where only 1% of bacteremias caused by Gram-negative pathogens were considered to fall into this definition. Resistance across the US is spotty.  The latest CDC geographic data is old and comes from 2011-2014 and can be seen here.  But for these centers, there is no urgency to place newer agents on their formularies.
2.    In several centers, the antimicrobial stewardship group and/or individual physicians are given considerable autonomy in prescribing and the expensive new drugs are already being used in the absence of any incentives. 
a.    This suggests that the rarity of resistance is more important in determining the market than the expense of new drugs in many centers. 
b.    Physicians generally have no idea what DRGs or CCs are nor do they know about the costs of antibiotics.  They prescribe drugs targeting their individual patients’ needs without considering DRGs or other administrative issues.  
3.    The NTAP application process is burdensome and many hospitals hesitate to use it for that reason (as I’ve heard from previous inquiries). 
4.    One center is skeptical that the complicated condition reimbursement will fully cover their costs for resistant infections. (But I would think that any additional remuneration would at least be an improvement)
5.    In the case of Brad Spellberg’s hospitals at USC in California, 80% of their patients are covered by MediCal, not Medicare.  So these incentives would not apply to them anyway.  Others note that private insurers might not follow CMS’ lead here either. 

I am convinced by the market data that patients are still being treated with colistin/polymyxin in lieu of new antibiotics.  I think this is partly because expensive newer agents don’t get on hospital formularies. If higher reimbursement will encourage some hospitals to change their approach in a positive way, that would be great.  But the responses to my small survey were not terribly encouraging in this regard. 

CMS is to be commended for trying to address the antibiotics market failure by providing policies meant to incentivize appropriate use of newer antibiotics in spite of their expense. Nevertheless, based on the responses I received, it is not at all clear that the CMS incentives will significantly increase formulary inclusion of the newer antibiotics or their use by physicians – therefore, it is not at all clear that these moves will work as intended by CMS.  As Brad noted to me, it seems like CMS and the pundits advising them failed to actually speak to physicians and pharmacists on the front lines to understand what might and what might not work. 

My view remains that in order to fix the broken antibiotic market we will need a very significant pull incentive such as a market entry reward or a transferable exclusivity voucher. 

Thursday, July 18, 2019

Expert Societies Need to Step Up

I have a modest proposal that comes from my recent discussions with Brad Spellberg, Lew Barrett and John Rex. I am grateful to all three of these experts for their thoughts on this topic. 

To successfully commercialize a new antibiotic, the drug must be shown in clinical trials and via microbiology and PK/PD data to provide advantages that fill a medical need.  An obvious example would be if someone markets an oral antibacterial active against MDR pathogens that works clinically in complicated urinary tract infection. The “educational” activities (marketing) required to convince physicians and pharmacists that any new agent should be available to physicians via their hospital formulary or that insurance companies should cover the cost of a new drug in community pharmacies, requires a substantial investment by the company.  For a hospital product, I have heard cost estimates from $8 million for a single-indication drug to $30 million for one with multiple approved clinical indications. For a community-based product, this cost could be much greater given the number of physicians, pharmacies and insurance plans one would have to inform. 

A number of small companies have drugs in the pipeline in phase 2 or later development.  They will all be severely challenged to meet the costs of launch if these drugs are actually approved for the marketplace.  A substantial number could face bankruptcy just like Achaogen.

My proposal is that the various societies that promulgate authoritative clinical guidelines intervene either at the time of approval or simply on an annual basis to disseminate key educational information and very focused real-time clinical guidance as to how the new drug should be used. Every guideline has a table summarizing recommended therapies for the clinical indication under consideration.  It is this table that could be targeted for modification.  By focusing on just the therapeutic recommendations portion of the guideline, the task for societies should be less burdensome that a review of the entire guideline. These societies might include the IDSA, ATS, BSAC, the Society of Infectious Diseases Pharmacists and others. I am not sure how much this would affect initial expenses associated with launch, but it should accelerate uptake of deserving therapies. 

To achieve this, sponsors would need to provide a full package of clinical trial, PK/PD and clinical microbiology data to the societies in a timely manner. I suggest that this would occur after the regulatory interactions that lead to approval.  In this way, regulatory feedback can also be included in the information provided to the societies. Sponsors should also provide a preliminary price estimate to the societies. The societies would then modify (or not) the table of therapeutic recommendations in clinical guidelines for physicians. The societies would, of course, be free to provide additional details in guidelines that might expand on the table or even limit the use of the new drug based on their view of cost, side effects, toxicity and benefits compared to products already available. Of key importance would be to place the new product in the context of older therapies.  (I have colistin and polymyxin firmly in my sights here). The sponsors would not pay the societies for this work. But, of course, sponsors would be free to disseminate any modified guidelines resulting from the societies’ work.

The societies, especially the ID pharmacists, should also consider making recommendations regarding off-label use.  These should be based on clinical (if any), microbiological and pharmacodynamic and pharmacokinetic data. 

An example would be guidelines including a treatment recommendation table. This guideline should have been promulgated within a year after the approval of ceftazidime-avibactam.  It might have discouraged the use of colistin or polymyxin for the treatment of resistant Gram-negative infections and encouraged the use of the newer, albeit more expensive, agent for cUTI, cIAI, and nosocomial pneumonia when resistant pathogens susceptible to ceftazidime-avibactam were suspected or documented. 

I think that we can all agree that timely modification of guidelines from experts would go a long way towards modifying the treatment paradigms utilized by physicians.  If you have any doubt about this, look at the effect of a recent guideline change on the use of fidamoxcin in the treatment of C. difficile. Its shameful that it took eight years to get to this guideline change. Our expert societies simply have to do a better job of keeping up with the changing therapeutic environment as resistance evolves. Such action would, in a modest way, provide an additional pull incentive for sponsors and investors. 

Tuesday, July 16, 2019

Q&A with Brad Spellberg - Another Point of View Part 2

You noted that a subscription payment system such as the one recently proposed by the UK for purchases of low-volume use antibiotics would not work. I noted that these are used by an increasing number of states in the US to purchase drugs of Hepatitis C and HIV treatment of prisoners and Medicaid recipients.  The idea here is to get more treatments at a lower price per treatment via the subscription contract. Pharma at least does not lose money because they sell more drug (at a lower price per treatment) and the users win because they can treat more patients than they might otherwise treat with these expensive therapies. Why do you think this will not work?

HIV and HCV drugs are extremely profitable for companies. Antibiotics are not.  The purpose of the subscription model for profitable drugs is to save money, period.  That is why Medicaid programs are interested in it for HIV and HCV drugs (note that this is not Medicare, but Medicaid).  For Medicaid, the alternative is rationing.  And rationing drugs that are used to prevent the spread of contagious diseases is not deemed optimal from a public health perception.  The purpose of subscription models in these cases is never to increase revenue to the companies—they’re already making killing on these drugs.  The purpose is to contain costs.

For antibiotics, the situation is vastly different. Companies want a subscription model to increase revenue for antibiotics.  Government views a subscription model as a means to control costs. Those two goals are contradictory and I see no way to reconcile them.  For antibiotics, I see no path forward there.  Also, the UK is far better positioned to operationalize a subscription model since the government is the healthcare payor and operator. Not so in the US.

Finally, an advantage of the subscription model for HIV in particular (and arguably for HCV is well) is to enhance uptake of the drugs for public health purposes by psychologically delinking usage from the cost. We want all HIV patients on medications so they stop spreading the virus to others—it’s a public health need. That’s why HIV drugs are historically carved out of managed care MediCal capitated costs in California, for example. The situation for antibiotics is very different.  We do not want to encourage rampant use of antibiotics, we want to control their use. Psychologically delinking cost from use has the potential to encourage inappropriate antibiotic use that is contradictory to good antibiotic stewardship practices.

Those advocating for a subscription model for antibiotics may not understand well the practice of medicine in this case.

Can you explain how a non-profit antibiotic discovery and development organization would work – all the way to commercialization?  I assume that there will be no large pharma or even small pharma partners for eventual products. Therefore, would the non-profit, to be evergreen, have to earn enough money from sales to support itself?

What we described in the NEJM article was an idea where non profit institutes would be set up with a mission to discover and develop new antibiotics.  For example, a group of perhaps 15-20 FTEs with expertise in antibiotic discovery, microbiology, med-chem, and translational and clinical development research would be full time within the institute.  Those FTEs would be funded off of a sizable endowment, which generates sufficient interest to sustain the FTEs without eating into the principle.

DS - You need at least 30 FTEs here including biologists, chemists and management. 
Brad - I defer to you, with the exception of pointing out that much work can be contracted out to boutique firms with expertise in specific areas.

The research work would be funded principally by existing push incentives, i.e., grants and contracts from government, non-profit, and foundational funding agencies and organizations.  With existing pull incentives and funding opportunities, it is possible to go from discovery to completion of phase III clinical trials without spending any internal R&D dollars, all funded by external funding organizations.  Future revenue generated from licensing deals or sales would be fed back into the endowment to grow it, and could also be used to support the R&D.

Yes, the idea is that the organization could take a drug from discovery to marketing without requiring a for-profit partner.  But, they certainly could partner with for-profit companies if there were companies interested in specific products.

I actually am interested in a very carefully targeted transferrable market exclusivity extension to be used in a limited way (capped in dollar value or time) to encourage late stage deals with for profit companies.  More important than the for profit participation to me is the potential for redirecting some of the revenues generated by the incentive to found or sustain non profits.  To me, this is a potential win-win.

DS - If you re willing to have a transferable exclusivity voucher, do we still need non-profits?
 Brad - Yes, for two reasons.  The targeted exclusivity voucher will encourage late stage acquisitions not up front discovery.  Someone needs to do the discovery work, and I trust non profits more than for profits based on recent track record.  Second, the transferrable extension would undoubtedly be time limited. It is unlikely to be sustainable politically past a few uses, and that is assuming we can get it done in the first place

Finally, I should point out that GARD-P is an existing non profit that is taking a slightly different approach than the one I’ve laid out. From what I’ve been told by Dr. Piddock from GARD-P, they are initiating a discovery process by leveraging partners who can do discovery screens, as well as running more mature clinical development programs in partnership with for profit companies.  That model make sense too.  There doesn’t have to be only 1 way for non profits to work.  The more non profits working, with the more diverse models, perhaps the better off things are.

We discussed the need, at the time of launch, for educational efforts (some call this marketing) to teach clinicians about the utility, specificity and toxicities of recently approved antibiotics. These efforts cost money. I have estimates of $8-30 million for this effort for a hospital product depending on its label.  Community products would be more costly to market. How will your non-profit deal with this? 

I think we need a totally different way to license and market antibiotics.  I frankly don’t think antibiotics should be marketed really, in a traditional sense. We need a requirement, baked into regulation or law, that newly approved antibiotics can onlybe prescribed by physicians or pharmacists who have undergone specialized training in Infectious Diseases and antimicrobial stewardship.  Only oncologists can prescribe chemotherapy.  Only rheumatologists and GI docs prescribe the latest “blah-blah-blamumab” for their target diseases.  And those drugs are not shared societal trusts.  Only experts in ID should be entrusted with the power of antibiotics to sustain their power to cure for as long as possible, and avoid wasting them.

Specialty societies should be highly motivated to assist with this.  I have been hugely disappointed with IDSA, for example, which hasn’t done anything to actually promote the value of ID specialists.  If those who have completed ID fellowships (for MDs) or residencies (for PharmDs) are the only ones who can prescribe these drugs, it will help drive up the societal value of these specialists in way that far exceeds whatever has been attempted to date.  One would then expect that the specialty societies would take the lead in working with entities bringing a new antibiotic to market to develop and disseminate educational materials around the prescription of these drugs.  Let’s not leave it to corporate marketing. Let’s have clinical and scientific experts develop those materials and share them via societal networks among those specialized in this field.

DS – Even ID docs need education.  In fact, unless things have drastically changed, ID specialists get very little clinical microbiology training these days and may not be well equipped to understand the microbiology and PK/PD that support antibiotic dosing and decision making without additional guidance. I agree that the ID Society could do a much better job of helping here. 

One concern is about access.  Small hospitals and rural hospitals may not have ID specialists, whether MD or pharmacists.  But, with the availability of tele-medicine, and the Joint Commission/CMS requirement around having a stewardship program, there is no reason they can’t all access such specialists.  If only such specialists can prescribe these drugs, they will absolutely find a way to get access to those specialists.

This is a win-win-win-win proposition.  The public has specially trained experts in charge of prescribing the most power life-saving drugs we have, who are far better positioned to protect and save this shared societal trust than other prescribers would be—a win for patients and public health.  The specialists would find their reimbursement and value rise, improving recruitability of new physicians and PharmDs into the field in the long run—a win for the physicians/PharmDs.  The specialty societies would find their importance and necessity greatly enhanced, and will have created a brand new source of revenue, which is the creation and distribution of educational materials around use of new antibiotics—a win for them.  Non-profits would win because they would find the cost of launching a new drug hugely less—a win for them.

You seem to think that a “pull” incentive that provides a large reward to PhRMA will not occur because it is politically unpalatable. I agree – that is my perception as well - at least for now.  But what is your model, how long will it take to implement and provide products and what can we do between now and then? 

Let’s be clear here.  I am in favor of one, very carefully targeted, and limited pull incentive (as described above), both to encourage late stage for profit participation, and also a source of revenue to feed back into non profits to ensure their sustainability.

DS – see previous response re: vouchers above. 

As far as how long will it take for non profits to participate, we have a pipeline with 42 drugs in it currently, at multiple stages of development.  If we had a rich donor or government seed a non profit, I see no reason why it could not be up and running within 1 year, and could take on discovery work but also could begin participating in developing molecules that are already in development.

As mentioned, GARD-P is an existing non profit that is already doing this work.  So, I don’t think setting up non profits would delay things much.  They could take over existing programs such that they don’t start truly from scratch.

DS – I have actually carried out scenarios on this. It will take 2-3 years to get an organization established on paper, obtain funding, and then get everyone hired and installed in a laboratory. It may take more to actually in-license a product since decent in-licensing candidates are very rare on the ground these days. And it will take even more time to discover, develop and introduce a new product to the market.  We’re looking at a 10-20 year timeline here. 

Q&A with Brad Spellberg - Another Point of View - Part 1

Dr. Spellberg is an old friend and a co-author of a 
recent paper (requires subscription or registration) from the New England Journal on the establishment of non-profit entities to carry out the discovery and development of new antibiotics. We recently had a far-ranging discussion on his vision of the future that I wanted to share.  To do so, Brad agreed to provide written answers to a set of questions derived from our conversation.  This will be a 2-part blog.

To start, you take issue with many “alarmists,” myself included, who think that resistance is approaching a state of crisis. Recent particular examples include nice NY Times articles by Matt Richtel on antibiotics for UTI and on the emergence of Candida auris as a highly resistant fungal pathogen. (I’ll provide links). What is your view of the resistance “crisis?”

We need to be honest with ourselves and with the public. The situation today is hugely better than it was 15 years ago, when you and Bob Moellering first alerted people to the crisis.  At that time, MRSA was exploding into communities and we had few new MRSA drugs available, and had not yet learned to reuse old drugs to treat S. aureus.  In addition, we had no new Gram negative drugs—Pseudomonas, CRE, and Acinetobacter were huge concerns, with rising incidences and rising rates of resistance.  We hadn’t had a new TB drug in half a century.  In 2004, only 6 new antibiotics were in the pipeline, and in the ensuing decade, FDA approvals fell by >90% from peak.

Things are very, very different now.  Today, 42 antibiotics are in the pipeline, and FDA approvals have tripled in the last 7 years.  Today, MRSA is a non-issue for new drug development.  We have at least 30 drugs on the market to treat MRSA.  Today, CRE is no longer an issue with respect to inadequate antibiotics, with 4 drugs approved to treat CRE, and numerous more in development including in late stages.  Today, Pseudomonas resistance rates have stabilized, and have had a new pseudomonal agent (ceftolozane) FDA approved, and others in late development. Today, Acinetobacter rates have stabilized, and we have several Acinetobacter drugs in late development.  Today we have had 1 new TB drug approved, and several others in advanced development.  Our situation with antibiotic availability to combat resistance is better today than it has been in 20 years.

That’s not to say that we don’t still have problems.  We certainly do need new oral agents to treat Gram negative bacteria.  But those patients have IV options.  And many of us have already adapted to using oral Fosfomycin to temporize the problem.

Candida aurisis almost always echinocandin susceptible and the case numbers are small.

My view is that we have a window of opportunity here to thoughtfully redesign how we discover and develop new antibiotics in a much more sustainable way.  We should stop pushing a bunch of me-too drugs to market, and a bunch of redundant drugs to market (4 CRE drugs approved, may more still in development). Pounding the table to demand that taxpayer dollars be pumped into pharma profits is not the solution.  It is neither necessary, nor acceptable to the public, and it frankly ignores much higher priority needs that the public has with respect to spending its money to support healthy people, families, and communities—such as housing, combatting homelessness and substance abuse, mental illness, and other means of counter-acting social determinants of ill health.

Why do you think that new pull incentives to promote increased profit for companies is not a good solution to the problem?  Why do you believe non-profits are a better option?

Those who are insisting that the public subsidize profits for pharma are deeply out of touch with what most of the public, and even most physicians in practice, feel and think.  The US is running trillion dollar deficits, and is already $22 trillion in debt. Our debt to GDP ratio is the greatest it has been since World War II—no joke, see graph below.

This debt is driven by several factors, but by far the biggest expenditure is healthcare, and that expenditure is projected to markedly increase in the coming 30 years (see 2ndgraph below).  Our healthcare costs now constitute a national security crisis: they are eating so much of our federal budget that there threatens to be insufficient funds for infrastructure, safety net, and military, as well as other discretionary projects.  To pretend that we can just continue pouring money into pharma companies to help them make more profit in an era of huge deficits and debt is irresponsible.

Furthermore, the public has an exceedingly negative view of the pharmaceutical industry, and overwhelmingly believes it is not only too profitable already, but that it has too much influence in politics (numerous large surveys have demonstrated this in the last several years).  To think that the public will stand for public money being pumped into profits for pharma is deeply out of touch with what Americans say is important to them, what they want, etc.  Those advocating for this approach are operating in an echo chamber—they are reinforcing their own message by talking only to the small group of people who agree with them, and tuning out the thoughts and feelings of those who don’t.

Finally, I would say, those working in the for-profit sector are supposed to be capitalists.  What kind of capitalism is it where one says, we believe in the profit motive, but when things get hard, we expect the taxpayers to cough up public money to pour into profits?  I’m actually proposing that we listen to the capital markets.  The capital markets have spoken here.  They have said, we won’t make profits in this space.

We have existing push incentives (which should be much better targeted towards unmet need) that enable companies to do their R&D with little cost or risk.  Should we also pay company profits on the backend?  If the public is fronting the R&D costs on the front end, and paying the profit on the back end, what is the company needed for?

To me, the non-profit motive is the natural response to what the capital markets are telling us.  The public will front the R&D cost, and reduce the risk.  But don’t ask it to pay profits on the back end too.

DS – but this is exactly what you will propose in the next blog. 

I don’t view it that way.  I talk about a limited, focused market exclusivity extension, one of the primary points of which is to raise funds for non profits.  To me, this is a tool to get the non-profits going more than it is a tool to retain for profits in the space.

Thursday, June 27, 2019

Musings on The Future of Antibiotic Biotech

Warning – this is a long one!

Abbvie is buying Allergan – but not for its antibiotic franchise.  They are more interested in Botox and other esthetic products that provide the vast majority of Allergan’s revenues. Abbvie has been out of the antibiotics area for 20 years. Allergan has been trying to sell its antibiotic franchise (that includes the North American rights to ceftazidime-avibactam) for over a year now without success.  It looks like Abbvie has solved that little problem for them. The big question is, now that Abbvie will take over, what will happen to ceftaroline and ceftazidime-avibactam. Stay tuned.

Moving on. Since the vast majority of our antibiotic pipeline comes from biotech, I’ve been interested to hear from these companies on their reaction to the Achaogen bankruptcy and to the future of their business. This week I had a discussion with a CEO of a publicly held biotech on this topic.  For obvious reasons, they preferred to speak “in background.”  Our discussion focused on the causes of bankruptcies and what might be done to avoid them. I want to share our discussion with you. 

One issue we discussed is the management of investor expectations. In the early days of a biotech, when they are usually privately funded, in order to lure new investors and the money needed to pursue their goals for their products, companies carry out marketing studies to bolster the idea that their products will have value and are therefore worth the investment. In my own experience, such studies are often poorly done and biased to inflate any realistic value of an antibiotic product. They further do not usually take into account the costs that might be required to actually reach the projected revenues (marketing, sales force, manufacturing, etc). Or, if such costs are cited, they are also often unrealistic. As a company moves from private to public funding via an IPO, they become linked to their prior assessments of market size – or they are simply unwilling to come back to reality. The investors, it turns out, are not very good at determining market size and costs either – so they often end up with projections that curiously jive with those of the company in whom they are investing. This, ultimately, leads to investor disillusionment and disappointment when a new antibiotic is launched into a distinctly challenging market. And disappointment means falling stock price.  Falling stock price leads to inability to sustain spending that is required for the product launch and this all leads to a sort of death spiral. If a company has also taken on debt, the problem is further compounded.  

In speaking about launch expenses, we entered a discussion of the community vs the hospital market. I remember that during my days at Wyeth, the marketing folks talked about the fact that they felt they had to sell every single prescription in the community. This required a lot of sales reps. Things have changed over the last 20 years. But even with the complicated pharmacy situation today, selling antibiotics in the community market is still very challenging and requires a much larger sales force than that required to sell to the hospital market. During our discussion, I brought up the model pioneered by Pfizer with linezolid. They leveraged the hospital to sell into the community via step down therapy and earlier discharge from the hospital.  This worked because linezolid filled a unique niche of high medical need – it was the only orally available antibiotic proven effective in treating MRSA infections at the height of the MRSA pandemic. But this niche is no longer there.  There are a number of products available and linezolid is now generic. Further, for respiratory infections as targeted by Nabriva and lefamulin, the community market will be even more challenging. This will drive up the need for a large sales force and therefore drive up marketing costs. But with a market cap under $100 million, small, publicly held companies will have difficulty succeeding in the marketplace and investors will continue to flee. 

To increase the chances of success, companies might do well to stay with the hospital market and to keep their sales force as small as they can while still getting their new product on hospital formularies (I’ll come back to this). Part of succeeding here will depend on price. A development strategy targeting a small population or an antibiotic that can only be used in a small population provides pressure to raise the price. But a high price is a deterrent to hospital formularies and pharmacies. Just look at ceftazidime-avibactam in the US for example. The current DISARM Act seems unlikely to change this calculus significantly, especially given that 70% of US hospitals are under 200 beds. Their ability to buy expensive antibiotics up front while waiting for the rare patient that requires treatment with them will be extremely limited.  A competitive price for a product that can be used in a larger population consistent with good stewardship is still probably the best strategy.

The other area where small companies will need to save is in research.  Market conditions and squeamish investors will tend to force companies to give up any research and development that is not specifically targeted at supporting the launch of their new product. 

Biotech needs to spend much more time thinking about mergers. This would allow a small sales force to effectively sell more than one product.  The problem is that the products have to be viewed by physicians, patients and pharmacists as adding value. Melinta sells several antibiotics, but they reported a meager $34 million in revenues and $34 million in expenses for the 3rdquarter of 2018 (last available data).  These results may partly reflect the large sales force required to sell delafloxacin in the community (I’m guessing here). Melinta also has debt that requires servicing.  

But putting several products with modest value together makes sense, especially if they can all be sold in the hospital market. What is one factor preventing mergers?  Egos. Many biotech CEOs think that they can build a company based on one or maybe two antibiotic products.  But this is probably unrealistic, and some would even say arrogant, given the market conditions today.  Antibiotic biotechs must seriously consider merging to increase efficiency.