Antibiotic Research and Development - Public vs. Private Funding

Over the past decade, pull incentives as a solution to the broken antibiotic market have been proposed to entice companies into antibiotic research and development.  These incentives would essentially provide a market, and therefore a return on investment for pharmaceutical companies. Almost all of today’s inadequate antibiotic pipeline is provided by biotech and small pharma.  All are threatened with loss of investor interest because of the failed marketplace and many are experiencing difficulty in raising funds either from public or private markets.  One alternative to providing money to the “evil” pharmaceutical industry via a substantial pull incentive is to create publicly funded non-profit organizations or public-private ventures that would essentially replace the industry in antibiotic research, development and commercialization. Two proponents of this approach are Lord Jim O’Neill (of the O’Neill Commission or Antimicrobial Resistance Review fame) and Ramanan Laxminarayan of the Center for Disease Dynamics, Economics and Policy and of GARDP. Both, clearly, are key thought leaders in the area. 

The proposal sounds great. Who wants to give the pharmaceutical industry money, after all? But I find myself scratching my head about this. How, precisely, would this work? I presume we’re talking about government funding for an antibiotic R&D organization. In the US, would this be the National Institute for Allergy and Infectious Disease?  They have a strong track record in vaccine and in antiviral research – but antibiotics – not so much. Commercialization of products - not at all. In the UK would this be the Medical Research Council?  In Europe would it be the European Commission?  None of these august bodies have the experience required to establish a successful antibiotic R&D organization (in my humble view). The Innovate Medicines Initiative, an EU-funded public-private venture, has had mixed success tackling small pieces of antibiotic R&D but has not delivered a product to market and was not designed for that purpose. Then are we talking about establishing an independent organization with government funding? Who would decide who would lead the group? (On the positive side, there are lots of available antibiotic researchers available for hire.) To whom would the organization be accountable?

In addition to the questions posed above, we should all recognize the precedent this approach could set. Just think.  We could solve the entire pharmaceutical pricing problem with publicly funded R&D efforts – not just for antibiotics, but for all therapeutic areas. We could eliminate the evil pharmaceutical industry altogether.  Do we want to go there?

My experience suggests that it would take several (2-3) years just to get something established on paper and then bring it online.  Then we can count on about 5-10 more years to identify antibacterial lead compounds and then 10-15 more years to get something through clinical trials and to the market. So . . . maybe 20 years with some luck. During all these years, funding requirements would escalate enormously.  As more early leads are identified, it will take more scientists to move all of them to some go-no-go decision point. As more preclinical leads come online, the costs increase further. Finally, clinical development costs will become predominant – phase 3 trials are not cheap. The advantage of this program is that, at the beginning, the costs are relatively low - $10s of millions. But by the end, we’re in the $100s of millions per year assuming multiple clinical development projects. 

As an example, Achaogen, a small biotech in California, invested over $400 million in public and private funds to get plazomicin to the market and to carry out discovery and development programs for other lead compounds.  The company started in 2002 and plazomicin was approved in 2018. It earned about $1 million during its initial launch leading to its bankruptcy. A larger organization with multiple lead compounds, which is what we will need, will be much more expensive. 

While I’m not against establishing a publicly funded or public-private non-profit antibiotic R&D organization, I need to have a much better understanding as to how it would be established and what the funding needs would be. And I am very skeptical that government is willing, interested or even capable of carrying out this task. 

I believe that the two approaches, pull incentives for the existing industry and establishing a publicly funded non-profit, are not mutually exclusive. We could consider doing both – but we have to do it right! Pull incentives need to be substantial so that they actually work to replace the broken antibiotic market. A publicly funded entity must have the right leadership, the right accountability and adequate funding. Then, over time, perhaps the publicly funded entity could replace the industry in antibiotic R&D – if that’s what we really want. But again, color me skeptical in the extreme. 

(Email queries to the AMR Review and to CDDEP went unanswered).

Innovation - response to comment

Google blogger no longer allows me to respond to comments in my own blog.  I am obliged to respond, if needed, in a separate blog . . . .Progress!

I wanted to respond to the anonymous correspondent to my previous blog who suggested that the recently approved antibiotics were just incremental improvements over previous drugs and therefore that they deserved the market response they achieved. 

Incremental, apparently, is in the eye of the beholder. During my early years as an infectious diseases physician, a new B-lactam (but a B-lactam nevertheless) was undergoing phase 3 clinical trials.  My surgical intensive care unit was closed because of an outbreak of Gram-negative (Serratia) infection resistant to all marketed antibiotics except colistin. I was able to procure this new B-lactam (imipenem) under a compassionate use program at Merck.  It was miraculous and saved lives that would have otherwise been lost.  But it was just another B-lactam – or was it?  Is a new B-lactam-B-lactamase inhibitor combination active against KPC-bearing carbapenem-resistant Gram negative pathogens incremental?  Is a non-B-lactam B-lactamase inhibitor not innovative?  I would also note that the most innovative antibacterial compounds and strategies will be the most challenging to develop from both a regulatory and a commercial point of view (see this link). 

Antibiotics, Investors, Where we Go from Here

What do investors think about antibiotics companies?  Not much. Paratek, at a price of just $5.42 has a 36% short ratio.  That is, 36% of is tradable shares are being shorted by skeptical investors. Market caps under $200 million do not bold well either. Melinta is selling four antibiotics – they made $96 million in total revenue in 2018. Anyone who doubts that the antibiotic market is broken need only ask the investors.

As I noted in my previous blog, it is unlikely that we will see a significant pull incentive this year. Investors, I’m told, prefer a direct reimbursement above the DRG for expensive new antibiotics as described in the DISARM act of 2018. But hospitals may well balk at being reimbursed for an expensive product they may not use. I’m not sure the investors have asked the hospitals what they think. In the UK, meanwhile, they are still considering the added value of antibiotics to their healthcare system. But, it seems, they have already decided on a value or on the price of a market entry reward, or whatever pull incentive they may or may not apply.  I first heard this number from folks at Wellcome last fall – £50 million. By strange coincidence, in the recent opinion piece by Jeremy Farrar of the Wellcome Trust, he notes that the fair share for the UK of a $1billion reward would be 5% or $50million (that’s even less than £50million).First – I believe a more workable number for a market entry reward is $2 billion, especially if we want to attract large pharma and investors back into the space. Secondly, I’m not sure that a $50 million contribution by the UK would be considered a good thing by investors – that small a number might even be a disincentive. The only way that approach will work is if 20-40 other countries join in – a scenario that seems hardly likely. This approach seems less like leadership and more like something else.

On a possibly brighter note, the WHO recently released a report on the antibiotic resistance crisis. One key conclusion was –

Additional effort, investments and incentives are needed to spur innovation in antimicrobial medicines, diagnostics, vaccines, waste management tools, safe and effective alternatives to antimicrobials and alternative practices, as well as operational and implementation research, in human, animal and plant health. 

In typical WHO fashion, this leaves much to be desired in terms of providing for a significant global pull incentive for antibiotic R&D. 

All of this gets me back to where I was in my last blog. What can we do while we wait for someone to lead with a significant pull incentive?  We lobby the Infectious Diseases Society of America (IDSA) do its job! I’m sorry – but the current situation is simply unacceptable to me as an infectious diseases physician. I just reviewed the IDSA/American Thoracic Society guidelines on treatment of ventilator-associated and hospital-acquired pneumonia. These are remarkably well thought out with a great deal of literature research for the year of their publication -2016.  But much has changed since then.  Would the IDSA/ATS still stand by their statement that “We did not identify any RCTs assessing colistin as empiric therapy for VAP, but a systematic review and meta-regression of observational studies comparing colistin to other antibiotics found no differences in clinical response rates, mortality, or nephrotoxicity [184]?”  (Personally, I have instructed my family to threaten any physician contemplating treating me with colistin/polymyxin with a malpractice suit!)

I worked on guidance from IDSA and the Society for Health Care Epidemiology in the 1990s. The guidance appeared three years after we started our work and was not updated for 10 years. Of course, I like to think our guidance document was so far-sighted that it did not need updating – but that’s just me.  The bureaucratic wheels grind slowly, especially when there are two different organizations trying to get things approved and published. I think the Societies need to find a way to respond to rapidly changing data to update physicians in a real-time way with updated guidance. This would go a long way to alter physician behavior and get our patients the right antibiotics when they need them most.  It would also spur hospitals to have the right antibiotics on their formularies and, in consequence, would provide one step towards improving the antibiotic marketplace.