Pathogen-Specific Antibiotics - Business Models

I just returned from giving a talk to microbiologists on the issues surrounding the clinical development of antibiotics with activity against specific pathogens – that is – the opposite of so-called broad-spectrum drugs. I used as an example an antibiotic that targets Pseudomonas aeruginosa, Polyphor’s POL 7080.  

Microbiologists play an important role in constraining the use of antibiotics in both the hospital and community settings.  They are interested in the development of antibiotics that are more specific and therefore less likely to engender antibiotic resistance as collateral damage.  What I mean is – when treating someone for a Pseudomonas infection with a carbapenem antibiotic, you may select for resistance in Klebsiella since the carbapenem kills indiscriminately.  At least with a drug that targets only Pseudomonas, you only have to worry about selecting resistance in Pseudomonas.

I pointed out that, at least today, from a regulatory point of view, we still don’t know how to run a feasible trial that will result in marketing approval for such a drug. While I am confident that this problem will ultimately get solved, I am not so sure about the business model for such a drug.

The problem for this sort of antibiotic is that it will be used, at best, only sparingly. From the stewardship point of view – this is the ideal situation. But, if the company marketing the product has to depend on sales volume, it will be even more difficult to provide a return on investment for this sort of antibiotic compared to a broad-spectrum agent that can more easily be used on an empiric basis. Since companies are not in the business of providing for the public health in some sort of charitable way, why would they spend their limited resources on developing this sort of product? We, as a society, need to provide a business model that will work.

In Europe, where most countries already have a form of socialized medicine, the models being discussed all include some sort of market entry reward. In all these models, when a company gets approval to market an antibiotic that meets pre-determined criteria, they receive a payment of some sort.  How this payment is distributed is the basis of the debate on which model to use. Regardless of the model, the payment would be such that it would provide a return on investment for the company. While such a model was about to be put into use, I understand that everything is now on hold awaiting a better understanding of what Brexit will mean for payers in Europe. 

Here in the US, the model that seems to be preferred by people discussing this issue is the so-called patent voucher. In this system, a company that successfully brings a needed antibiotic to market would be rewarded with an additional period of exclusivity on the product of its choice from its portfolio of marketed products.  If, for example, the company were Gilead, it might choose extra time of exclusivity for one of its multi-billion dollar Hepatitis C drugs. This would guarantee a return on investment for the new antibiotic even if it were only used for a small number of patients every year.  The last time this model was discussed by the lobbying group from the Infectious Diseases Society back in 2004-5, the model was dead on arrival in congress partly because of the blowback from both consumers and the generics industry.  How this model will fare under a Trump administration is impossible to predict – but past experience on the Hill is not encouraging.

Some companies, like Merck, have already staked out a position here. Merck seems to want to be able to charge an appropriately high price and have that price be covered by various payers globally.  Merck and other large pharmaceutical companies might or might not be encouraged by the experience of Allergan and ceftazidime-avibactam in the US. Ceftazidime-avibactam or Avycaz was approved in the US in 2015 based on phase II data.  This antibiotic is the only alternative to the toxic and poorly efficacious colistin/polymyxin for the treatment of certain highly resistant Gram-negative infections. These infections remain, happily, relatively uncommon in the US. The label it received from the FDA restricted it to use only when other alternatives were not thought to be available.  The price was set at $12,000 per course of therapy – but payers actually provided something like $8500. This makes it the most expensive antibiotic ever marketed globally. Analysts predicted $300 million peak annual sales for the drug.  The first half of 2016 Aycaz had only $22 million in sales with the second quarter coming in at $13 million. Based on second quarter data and accounting for growth, this year could have seen $60 million.  Two events have altered this landscape.  First, the label for Avycaz has changed and was expanded now that they have an approved sNDA based on their phase III data. How this will affect the price is not yet known.  Secondly, Allergan has experienced manufacturing problems from the GSK supplier that will slow down sales in the latter half of this year.

My own opinion is that we need something beyond price and that Allergan’s experience makes a strong argument for that view. Allergan will now struggle for several years to achieve the analysts’ peak annual sales forecast of $300 million if it ever does so. And this level of sales, albeit it is only in North America, may not be enough for many companies in any case. Other pharmaceutical companies will be watching this closely and they may not be encouraged.  But we need more large companies to join the fight against antimicrobial resistance through the research and development of new antibiotics active against resistant pathogens. The experience of Allergan coupled with continued dithering on the Hill does not bode well for our goal of bringing more large companies into the field.