David's New Book

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. 






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