Monday, December 30, 2019
The widely predicted bankruptcy of Melinta has arrived. This was the result of meager sales of four antibiotics, unsustainable debt and high costs of marketing.
Delafloxacin is an IV/oral fluoroquinolone with activity against MRSA. But it appeared on the market at the same time as other new orally available anti-MRSA antibiotics and also had to contend with generic linezolid. In addition, many physicians are trying to avoid using fluoroquinolones today because of their association with C. difficile infection. A number of us warned the company early on that delafloxacin was a flawed strategy. One-year sales through August = $11 million.
IV minocycline is a product widely marketed throughout the world, but that had never been marketed in the US. Melinta saw an opportunity to market the agent in the US as a therapy for resistant Acinetobacter infection. But minocycline had few advantages over tigecycline which became generic in 2015. One-year sales through August = $11 million.
Oritavancin is an IV product for the treatment of MRSA and other Gram positive infections that can be used as single dose therapy. Of course, it had to compete with less expensive therapies and dalbavancin – another single dose IV therapy for similar infections. (I have no sales data).
Finally, Melinta marketed meropenem-vaborbactam that targeted carbapenem-resistant Gram negative infections. But there are just not enough infections to drive this market and ceftazidime-avibactam got there first. One-year vabomere sales = $11 million.
Many would conclude that Melinta got what it deserved. Regardless of whether that is an accurate assessment, investors will still accelerate their abandonment of the area based on Melinta’s demise. We can look forward to other antibiotic biotech failures in the new year. None of this is good news for antibiotics and our future. The only thing that will save us will be some kind of significant pull incentive for new and needed antibiotics.
Now, I want to change subjects and discuss the $2.6 billion. In a recent New York Times article, I was accurately quoted as noting that the average cost of bringing a drug to market today is $2.6 billion. That number comes from a paper by Dimasi and colleagues published in 2016. I think that it is worthwhile to put that paper in perspective. To arrive at this number, the authors surveyed 10 randomly chosen pharmaceutical companies ranging in size from the top 10 to below the top 25 in terms of size (the specific companies surveyed is confidential). The survey included 106 investigational compounds of which 87 were small molecules. The costs were weighted by stage of development and then extrapolated to the entire Tufts database of over 1400 compounds in development between 1995 and 2007 globally. Of these, 103 were approved for the market. Based on all this, they then estimated the out of pocket cost for each approved compound - $1.5 billion. Then they examined the costs of capital required to finance R&D including that for failed drugs. This accounted for about $1.1 billion leading to a total of $2.6 billion in costs per drug.
It is not clear to me that these numbers would apply to the current pipeline of antibacterial drugs since 90% or so come from biotech. The development costs of antibiotics have diminished since 2012 and the success rates seem better than those for other therapeutic areas. I would guess since development costs are lower, the capital required and therefore the cost of that capital would also be lower than the numbers cited in the Tufts study. Nevertheless, the economic challenge for these antibiotic biotechs, especially given the state of the antibiotics market, must be greater than that for other therapeutic areas.
The next blog will explore the potential for BARDA to provide some pull incentive for antibiotics.
Tuesday, December 17, 2019
Looking back on 2019, it has been a year of climate change for antibiotics. If you are easily depressed – maybe you don’t want to continue reading this “grim-gram.”
The regulators are working hard to come to grips with how to manage small data sets. This is especially a problem for the FDA where “adequate and well controlled” is the law. Have we made progress here? I certainly don’t know. But without progress, pathogen specific products, microbiome products and others will never make it to market.
Of course, even if these products do make it, will they be welcomed? The bankruptcy of Achaogen either woke us from sleep, deepened our nightmare or demonstrated that the market works – or maybe all of the above. Depending on your point of view, no good deed goes unpunished or Achaogen got what it deserved (see this blog). Regardless of your viewpoint here, it is clear that several other biotechs will face Achaogen’s fate in 2020 baring some miracle.
And what miracle might that be? There is the UK’s effort to provide value-based pricing with a pre-purchase of needed new antibiotic(s). This will be based on the UKs perceived need in terms of patients requiring such treatment over time. But there are not enough such patients to actually make a market and the UK’s contribution to the market will not be enough to provide a return on investment for companies brining needed new therapies forward. What if every country did what the UK is doing or at least something similar such as the DISARM act? (DISARM would provide for payment for high priced antibiotics for US patients in need). But even if this became a global effort, there are still not enough such patients to support more than one or two products. These are baby steps, not miracles. As I keep saying, we need substantial pull incentives to “pull” this off.
The view of various countries seems to be that they somehow should only pay their share based on their needs. But we know that will not be sufficient – so what’s the point? What we need here is true leadership and sacrifice. We need a country or region (think Europe or even North America) to provide the entire pull incentive for the world – and then bring in the followers through negotiation later. Unfortunately, like the situation with climate change, I see no such leadership emerging.
And these considerations bring me to the issue of support for research and development. Why, I ask, are we doing this? Why do we support research designed to bring products for extremely limited markets forward when we know that without large pull incentives plus a regulatory path forward, such products and their sponsors are doomed? I have posed this question to funders. They reply with hope for (and a great deal of work to achieve) a better future. How long should we continue along this path? Private funders are voting with their feet. Venture capital and public market investors alike are abandoning antibiotics faster than you can shake a dollar at them. In the absence of sufficient pull incentives in the near future, collapse of these small companies and the pipeline of products they support is inevitable.
As with climate change, we as a global society (is there such a thing?) seem unable to believe existing data and invest now to provide a better tomorrow. We prefer to close our eyes and ears, stick our head in the sand and await either an apocalyptic event or the slow arrival of the inevitable consequences of our inaction.
In the past, this would be the point where I would exhort you to be calling your political representatives to push pull incentives. But my experience over the past year convinces me that there is nobody home. Politicians are all focused on reducing health care costs and drug prices and spending additional monies now to save money in the future is not part of their thought process. Certainly none are interested in providing the kind of global leadership we need.
One way forward, although, again, this might be too little too late, would be to establish a entirely publicly funded antibiotic R&D institute with sufficient funding to bring needed products to market and to support them once they are approved. This would not be a small investment, but it would occur over time. Politicians do seem interested in supporting R&D. While I have never been enthusiastic about this sort of government approach to antibiotic R&D given their track record, it may be that we have little choice at this point.
Monday, December 2, 2019
I spend a great deal of time in Europe. For drug regulation, in terms of approval for market authority, there is a centralized European agency and procedure. I have been involved, at least peripherally, in drug pricing discussions with various European national authorities where each has its own rules, regulations, and policies that govern such negotiations. In 1987, Flora Lewis wrote a wonderful analysis of Europe as it considered its future. The book is entitled, “Europe, a Tapestry of Nations.” When it comes to drug pricing, it is definitely still a tapestry of nations or even the Wild West, and not Europe.
While the European Commission has no direct control over pricing within the various national authorities, it does exercise some control over transparency in pricing considerations within the national authorities. It also has undertaken a number of initiatives over the years thinking (not so much doing) about innovation, access and other common issues. For details, see this link. The World Health Organization recognizes this as a problem in Europe as indicated in this 2018 policy brief. The brief notes that there collaborations already exist among and between various European national authorities in the realm of drug pricing. The brief apparently does not explore the idea of a centralized European process for key medicines.
Given the emerging crisis of antibiotic resistance and the front and center role being played by economic considerations for antibiotics, each European country seems to be taking a different tack. Most are doing little or nothing to solve this economic problem. In the UK, a pilot program leading to upfront drug purchases that will depend on the drug’s value to the UK population, is being undertaken. John Rex has uploaded a recent set of slides from a NICE webinar on their plans for this program.
The problem for me and for all of us is that this may well be too little too late. Even if the UK succeeds in establishing their program, how many other countries will do the same and how long will that take? The time it will take to provide a meaningful return on investment (if that occurs at all) will not save a number of small companies that are currently struggling with impending bankruptcy. A raft of such bankruptcies will probably occur in the near future. This will further aggravate the death spiral of investment in antibiotics R&D.
The other issue I find with all of these efforts is the math. The UK will base their program on the value of products to the UK population (see this announcement). But given the number of resistant infections in the UK, how much money will their upfront purchase entail? How many products for a given type of resistant infection will qualify for the program? The number of resistant infections even taking all developed countries together are not enough to drive a sufficient return on investment for companies marketing these therapies – especially if there is to be more than one product for each key resistance type. For these reasons, I support pull incentives that are somewhat divorced from patient numbers.
Given previous European initiatives, it surprises me that Europe is not playing a more active role here. I could find nothing in the European Charter or elsewhere that prohibits Europe from doing so. I conclude, therefore, that it is the national authorities themselves that are adverse to some centralized pricing procedure even for areas where the marketplace is failing to provide reasonable access to needed new medicines like antibiotics. But if we are to have truly valuable pull incentives, a centralized European approach will be required.
Some, including me, have argued for years that the US, though its irrational drug pricing policies, have supported pharmaceutical innovation for the rest of the world. The US still accounts for about 50% of the total pharmaceutical market and is the largest single country contributor to pharmaceutical company profits in general. PhRMA argues that any change to, say, a US national negotiation for drug prices as is done in most other countries and as has been recommended by many including the National Academies, will reduce innovation. They are correct. Given that large pharmaceutical companies generally base their R&D budgets on yearly profits, a large change in profits as would occur if the US adapts a more rational pricing policy, would result in lower R&D investments and, consequently, less innovation.
I would argue that it should be the turn of other countries, including those in the EU, to better support innovation. One opportunity for Europe to lead in this regard would be to provide substantial pull incentives for needed new antibiotics. This would require a dramatic change in the way EU countries work now, but for the sake of our future I think they should consider this approach. Maybe the US would even follow their lead . . .