First, I need to apologize to my readers. I took almost the entire month of February
off to escape the New England winter – hence the lag in blogs. I promise to
make it up to you in the next few weeks.
There have been a number of developments in clinical trial
design issues and, at the same time there is a continuing failure to develop
novel trial designs as well. I’ll
discuss this in my next blog.
Today, I want to speculate on incentives for antibiotic
research and development. As I have mentioned, I recently joined the Drive AB
effort to help design effective incentives.
The Drive AB effort is very well described on their website. The purpose of the Drive AB effort as
they clearly state is to “develop new economic models to incentivise
antibiotic discovery and development activities while safeguarding the
efficacy of antibiotics by researching and advocating their appropriate use.”
On the surface, this sounds simple – but as most of us know – achieving this
will be incredibly challenging.
As I have been thinking about incentives, a single
question keeps popping into my thoughts. Who, exactly, are we incentivizing? I
think the incentives required will differ depending on the answer to this
question. The Drive AB private partners are large pharma companies. The first stakeholder meeting of Drive AB
focused on European small to medium sized enterprises. (My view is that these
companies and investors are far less numerous and experienced than those found
in the US, by the way). But the concerns
of large pharma are entirely different than those of small pharma. Lets try and
dissect this out a little.
Large pharmaceutical companies are mostly worried
about a return on their investment in antibiotic R&D. Because of the high
risk of such research, high margins are required for any successful products to
provide a reasonable return. In today’s
markets, these high margins have been impossible to achieve with antibiotics –
which partially explains the abandonment of the area by most large
companies. For these companies, a large
incentive that provides for a rapid return such as the incentives discussed in
the O’Neill report
is best. So called “push” incentives
where upfront costs are defrayed by funding for research and development are
also helpful since this ultimately reduces the amount of money required during
sales in the marketplace in order to provide a return.
The situation for small companies may be somewhat
different. Here, push incentives are
probably even more important as this reduces the amount of money that must be
raised from investors (like VCs). Other advantages like tax breaks will also be
more important for the small company than the large one. But, when it comes to
marketing, we come to another fork in the road. Some small companies like
Theravance, The Medicines Company and Allergan are willing to or even prefer
marketing the antibiotics themselves. For them, more push and somewhat less
pull (post-market) incentives would probably work well. Other small companies
are funded by investors, especially VCs, who strongly prefer an acquisition as
an exit. While this can occur via a
small company like The Medicines Company, VC investors more often target large
pharma companies. This then takes us
back to incentives for large pharma and to the following question.
If a large incentive paid at the time of approval
were to be made available for new antibiotics active against resistant
pathogens, particularly on the large pharma side, what would be the result?
1. Would
Astra-Zeneca re-start their antibiotic discovery effort? Would they be less likely to jettison their
antibiotic development and sales group?
2.
Would the commercial and development group at
Novartis be more welcoming to new antibiotics?
3.
Would companies on the edge like Pfizer and
J&J jump at the opportunity to re-engage in antibiotic R&D?
4.
Would companies who abandoned antibiotic R&D
over a decade ago like Lilly, BMS, Bayer, Abbott etc. be convinced to get back
in the game?
I would like to get answers to
these questions before we go ahead and design proposed incentives. What about
you?
