The New Antibiotic Paradox

For the past decade or more the Wellcome Trust, BARDA and others have been funding antibiotic research at various levels from early discovery through preclinical and clinical development. Some of these projects have poor commercial potential.  This is clear from the products that are highly specific for only one species such as Pseudomonas aeruginosa or Acinetobacter baumannii with the latter being even more commercially challenging than the former.

Projects like this might include antibody therapies (used for therapy rather than prophylaxis), virulence inhibitors such as those that might target the type III secretion system or quorum sensing mechanisms or directly acting antibacterial small molecules such as Polyphor's POL7080. All of these are high risk since none of these approaches have resulted in a marketed antibacterial product. In general, such projects are undertaken in academic labs or by biotech companies and start-ups. As projects advance, they become more expensive. They ultimately require investors to put down 10s of millions of dollars.  These investors know that putting up even more money to support pivotal clinical trials will be even more difficult. They almost always want to have the prospect for acquisition by or at the very least partnering with large pharma. But given the commercial potential for these highly specific approaches, large pharma will balk.

At the same time, such products apply less pressure to the microbiome simply by virtue of their specificity – the very property that decreases their commercial potential. They are less likely to select for resistance at least among organisms other than those specifically targeted. This is a good thing.  This selectivity leads, by definition, to good stewardship. We all want to see better antibiotic stewardship both in the hospital and in our communities.

Of course, we all shout, small companies don’t need to make the same profits that large pharma needs. $100 million in peak year sales might be enough for biotech especially if the bulk of the development costs comes from non-dilutive funding from the Wellcome or BARDA. But will they even make that much?  The recent experience with Avicaz in the US market gives everyone pause.

We can readily see the paradox for these putative new research efforts even if they could ever result in a useful product. The characteristic for which they are being sought, specificity, is the very one that will lead to their commercial demise.

The resolution to the paradox is simple. Money. We need a new business model for antibiotics.  Many have been discussed in my blog and most recently in an editorial in the New York Times. Entities like BARDA and Wellcome will have an increasingly difficult time funding research into new antibacterial strategies that provide for good stewardship but where putative products are also commercially questionable unless we can find a way to provide some sort of commercial path. These could even include government purchases such as those that have already been carried out for potential pandemics or for biothreat agents. For this, though, we need funding.  And, as I noted previously, we certainly need it here in the US.

My own belief is that without a commercial solution, our government and private investments in antibacterial research and development will, of necessity, disappear for lack of success in bringing products to market. No one wants us going in that direction. Speaking for us aging boomers – the sooner we fix this the better!

Funding the New Business Model for Antibiotics - USA.

As we’ve discussed previously, Europe should have an easier time funding new business models for antibiotics.  They already have the structures in place, given their socialized system, to provide insurance payments or market entry rewards (for background – see this blog). But here in the US – the only model we know is – pay a high price.

There are a number of problems with this US price-based model. First, it is not at all clear that it will work for antibiotics.  The test currently being carried out by Allergan has not yet been an overwhelming success. I would like to explore various ways that we in the US could approach new business models for antibiotics and how we could fund such approaches.

First, though, perhaps we could dispense with ideas that won’t work.  The first of those is an extension of patent exclusivity on the new antibiotic.  This has already been accomplished with the GAIN Act. OK – if there are only a few years left on its patent life, such an extension might be of interest.  But otherwise, the out years are so heavily discounted for inflation as to be meaningless. This explains the lack of success of the GAIN Act in terms of financial incentives are concerned.

The most clear-cut model to me is to simply provide a large government purchase of the new antibiotic, a market entry reward or payments along the lines of the insurance model.  All of these could be implemented by a targeted increase in budget for BARDA. The big question is – how would we pay for this. The funds would come from tax revenues.  To avoid increasing the deficit, we could tax high-earners and corporations just a little more.  We’re talking about several billion dollars in additional monies per year – not so much given the size of the US budget ($3.9 trillion in 2015).  This would be the most progressive approach and will probably be shunned by our current and near-future government.  If we tied the new money for antibiotic market entry rewards to allowing Medicare to negotiate drug prices for seniors, the savings would more than pay for new antibiotics.  Again – this is unlikely to see the light of day in congress.

  

Another approach is to tax pharmaceuticals per se. Its regressive since it would be like a sales tax.  Even if we just charged corporations this tax based on their sales, it would be a pass-through to the consumer. The US pharmaceutical market in the US in 2015 was $425 Billion.  To get $4 billion per year to fund new antibiotics via a market entry reward, we could charge a 1% tax on every prescription sold. To make it more fair, we could add nutritional supplements to the list of taxed items. That would add an additional $37 billion to the total making our requirement less than 1% in tax.

My personal favorite would be to pay for the entire expense of a market entry reward or bulk purchase via a tax on only nutritional supplements. This would mean an 11% tax on these items. These products do not have to go through a testing phase like drugs and they can only be pursued for safety concerns if there is evidence that something bad has already happened. They probably don’t really work, they may be mislabeled and they may contain poison.  Lets tax them and bring down their use while funding new antibiotics at the same time!  What could be wrong with that? What are the odds?

The approach that is being discussed currently is that of so called patent vouchers.  We used to call this wild card patent exclusivity. A somewhat similar incentive is used today to incentivize industry to study drugs in pediatric patients and the incentive has been shown to work.  No surprise here.  The way this works is – if you study a drug in pediatrics and get an approval for a clinical indication for your drug in pediatric patients, you get a voucher good for a priority review of the new drug of your choice.  This can accelerate the time to market for that new drug and could be worth billions of dollars.  In the patent voucher, upon approval of your new antibiotic active against key resistant pathogens, you receive a voucher for an additional 6 months exclusivity on another drug in your portfolio of your choice.  Your new antibiotic might sell say $20 million in its first year, but an extra six months on your $4 billion blockbuster before it goes generic is worth $2 billion.  Not bad. When we raised this back in 2004-5, it was dead on arrival in congress.  The generics industry hated it, consumers hated it and congress hated it.  Have things changed?  I’m not so sure.

 

Its time, however, for us to take our heads out of the sand and do something concrete to prevent the antibiotic crisis that will surely

catch up to us if we continue our current course of dithering.

The Perfect Storm Evolves

Here we are in 2017.  Happy New Year everyone!

Once again I find myself with mixed feelings going into the New Year. The perfect storm has evolved to become a mix of regulatory reform and political turmoil. I am optimistic on the regulatory front and on the prospects for government investment in antibiotic development, but uncertain on the future for new business models for antibiotics.

With the passage of the 21^st Century Cures Act, the FDA in the US will now have legislative authority to look at smaller datasets to approve new antibiotics. This could allow for feasible pathways for approval of pathogen-specific antibiotics where the numbers of patients available to enroll in clinical trials will be extremely small and where their underlying illnesses will make these trials extremely challenging. I expect the FDA will respond with new guidance along these lines. In addition, the FDA is looking at the use of real world data (requires subscription) as a way to bolster their views on risk and benefit in a real world setting.  Such an approach could also provide new ways of using external control data to further support regulatory approval of pathogen-specific antibiotics. Given the leadership role that the European regulators at EMA have taken to looking at pathogen-specific antibiotics, I expect that these moves will also be welcomed there. So I expect further progress on the regulatory front during 2017.

BARDA has been very active over the past several years in providing large grants to companies to support the development of antibiotics.  Given their participation in the CARB-X initiative, I expect this to continue. But I do not expect BARDA to be able to participate in establishing a new business model for antibiotics (see below).

Storm clouds that could continue to threaten our ability to have a robust antibiotic pipeline are gathering. First, there is Brexit. I don’t know any better than anyone else whether Brexit will even occur. It looks like this may end up being decided at least in part by the British Supreme Court. But one of the consequences of the referendum is a serious consideration by Europe to move the European regulatory authority, the EMA, out of London where it has been based since its inception in 1995.  There is already a scramble among the other European nations to welcome the EMA.  One of the worries for me in particular is that the current Chair of the Infectious Diseases Working Group of EMA, a real leader in the regulatory approach to antibiotics, would not continue in that role.  This would be a tragic loss if it should occur.

 

The other issue with Brexit is the potential loss of the leadership position forged by David Cameron, George Osborne, Dame Sally Davies, Jim O’Neill and the AMR Task Force, the Wellcome Trust and others in the fight against antibiotic resistance. In so many areas, the United Kingdom has become a world leader in this fight – from showing the way with national antimicrobial stewardship to establishing the O’Neill task force to funding antibiotic research. I don’t see any other country or organization, not the US, not WHO, not the Gates Foundation, not anyone, who can replace this leadership on the world stage. It is impossible to predict what will happen to the UK’s leadership position if Brexit comes to pass.

It is clear that we need new business models to incentivize the establishment of a robust antibiotics pipeline while providing for appropriate stewardship at the same time (1,2). This will require action by various national authorities to actually spend money. I think of this as a capital investment that will save money later on as a way of return on this investment. But like most large companies, governments seem more interested in next year’s budget rather than cost savings over the next ten years. While there has been much more talk about new business models over the last two years, there has been precious little action. During 2016 there has been essentially no discussion of the coming crisis of antibiotic resistance by politicians running for office.  That certainly has been true in the US – but it is also true in the UK, France, Germany and elsewhere.  I’m not sure what is going on in Asia in this regard, but without a global effort, the business model will simply founder. This is a global problem requiring a global solution.  But the global solution requires individual nations to put up money – some more than others. In spite of the recent call by the United Nations, I don’t see progress on the horizon for 2017.

So, dear readers, my advice for 2017 is – fasten your seatbelts.