David's New Book

Monday, April 5, 2021

Pull American - Why Not?

 In a sleepy moment I had an inspiration. Funding a pull incentive for antibiotic R&D in the US (like a market entry reward for example) would be more attractive to our representatives in congress if we required that all manufacturing and supply chains for the beneficiary product be physically located in the US. Great idea, right?  Not exactly.

 

I raised this with two biotech CEOs. Both, politely, told me I was out of my mind. The US currently does not have a sufficient small molecule manufacturing infrastructure to either provide for the entire manufacturing chain from API to finished product nor do we have sufficient availability of raw materials here. This is an especially acute problem for the manufacture of B-lactams (like penicillins and cephalosporins) which must be physically separate from all other drug manufacturing facilities because of concerns over allergic reactions.

 

This then leads to another thought. The US needs to invest in pharmaceutical manufacturing infrastructure. Now there’s a novel idea . . .. (??). The investment must include everything from provision of raw materials to manufacture of finished drug product, packaging and labeling. When I first started working in the industry in the 1990s, we were actually able to do this for some drugs, but rarely for B-lactams. My understanding is that today, as a result of competition from places like India, China and even the UK and Europe, US small molecule pharmaceutical manufacturing is nothing like it was 25 years ago. Of course, the problem is not just an antibiotics issue – this problem extends to all drug classes. And the US is not the only country that wants its drug supply chain to be domestic – India and China often insist on it. The global experience with the manufacture and distribution of vaccines for covid have emphasized the urgency of this problem. 




 

 This topic has been the subject of a number of articles (1,2,3) and of a report from the FDA.  Last year, the FDA released data on drug manufacturing. Only 28% of API (raw drug powder) for the US market is manufactured in the US while the EU, China and India account for most of the rest. I have not seen data on the global distribution of the supply of raw materials for API production – but I suspect that again there are few US suppliers. Forty-six percent of the final drug product (the pills or vials that are actually used) for the US market is made in the US.  I have not seen similar data specific for antibiotic manufacture, but I suspect the situation is no better and may be worse. 

 

Of course, adding US manufacturing capacity to bolster our domestic drug supply chain is a good idea.  All that is required is money.  In the case of antibiotic manufacture, the need may be even more critical. 

 

 

 

 

 

Friday, March 12, 2021

The Pew Trust Analysis of the Antibacterial Pipeline

 



The Pew Charitable Trust just posted their analysis of the antibacterial pipeline.  They provide two separate analyses, one for antibiotics and the other for non-traditional therapies. 

 

I will ignore entirely whether the pipeline products were considered to be innovative or not since I am focused solely on their potential clinical utility. 

 

Of 43 antibiotics in development, 17 are phase 2 and beyond. Of those, only five target resistant Gram-negative pathogens. One compound in phase 3 is solithromycin, an old and controversial ketolide antibiotic being investigated for treatment of gonorrhea.  Another more innovative compound in phase 3 for the treatment of gonorrhea is zoliflodacin.  (I was on the advisory board for GARDP, a co-developer of the compound). Of the six antibiotics in phase 2 development, five target C. difficile. 

 

For those antibiotics that target resistant Gram-negative pathogens, what will their ultimate market look like? Some have already suggested there is really only room for one such compound given the number of patients available for treatment. I can’t help but wonder what the investors in these companies and independent market analysts think about their chances of commercial success.  Or is everyone betting on a significant pull incentive for their product? 

 

The same comment might apply for all those phase 2 compounds targeting C. difficile.  Here the market probably revolves around efficacy in preventing recurrence following initial therapy. But how many products can this market support and at what price? Again, I am curious to understand the thinking of these companies, their investors, and market analysts.

 

The non-traditional therapies include 19 products in phase 2 or beyond. One is an interesting immunomodulator from AtoxBio for the treatment of sepsis and organ failure in patients suffering from necrotizing fasciitis. The company has filed an NDA based on somewhat mixed data.  To me, this is potentially the most interesting, novel and more importantly, useful of the late-stage non-traditional pipeline products. (I used to consult for them). Two compounds are lysins targeting S. aureus infections. Two are orally non-absorbable antibiotic inactivators to prevent C. diff or other resistant infections. A number of antibodies targeting bacterial virulence or toxins are on the list. Five compounds modulate the microbiome – but to what end? Of the 19 non-traditional products in late-stage development five target resistant Gram-negative infections. 

 

For the non-traditional therapies, we come down to two related issues.(See my previous blog on this here).   One revolves around clinical considerations in terms of how these products will be used by physicians to treat infected patients and whether the products offer clear clinical advantages.  This also becomes a regulatory question. Can these products be used as stand-alone therapy? If not, will sponsors need to provide superiority data? Then there is the issue of whether the non-traditional therapy offers clear advantages over other products with similar targets already marketed at a low price. This seems especially important in the case of products targeting C. diff and those targeting Gram-negative infections as noted above. 

 

While I have my own thoughts and biases regarding particular products in the antibacterial pipeline, I want to simply consider here whether this pipeline, given normal attrition rates, is adequate to our needs. If our unmet needs include, most importantly, resistant Pseudomonas and Acinetobacter infections, the answer is a resounding NO! There are only two late-stage antibiotics in the pipeline addressing these infections! Among late-stage non-traditional products, there are virulence inhibitors targeting Pseudomonas and bacteriophage capable of targeting these pathogens. But the use of such virulence inhibitors in clinical practice, for me, remains somewhat opaque.  Bacteriophage therapy seems promising, but so far seems limited to an almost case-by-case custom therapy approach similar to some cancer therapies. So, again, this pipeline, to address Paseudomonas and Acinetobacter, is NOT adequate.  But then,  neither is the market available to support such products without a significant pull incentive.  

 

Am I starting to sound like a broken record?  (You remember vinyl, right?) 

 

 

 

Monday, February 15, 2021

Pull Incentives and AMR - Is Europe up to the Task?





 I have been saying for years that for a pull incentive to actually function as an incentive, it must be large enough to motivate investors and large pharma to get back into antibiotic R&D. This will take a $2 (to $4) billion commitment for each priority drug approved regardless of how this goal is achieved. This could be a market entry reward, a transferable patent exclusivity reward (still my favorite), an antibiotic susceptibility bonus, a subscription payment regardless of use, etc. 

 

Years ago, DRIVE-AB, a European effort looking at potential incentives for antibiotic R&D suggested that countries “pilot” various models.  In fact, several countries are now doing just that.  France has had a DRG carve out for certain hospital antibiotics for years.  Germany just introduced such a carve out last year.  Has this increased the market for antibiotics in either country?  I don’t think so. Sweden is piloting a subscription model – but the money committed is not publicly available.  The UK (no longer part of Europe) is also piloting a subscription model committing up to  £10 million per year for up to 10 years per product.  It is claimed that this will constitute the UK’s fair share of the overall antibiotic market in terms of their commitment to a subscription type pull incentive. Of course – that is only meaningful if many other countries join since the UK accounts for something like 3% of the total market. But what does “pilot” mean exactly.  What is the endpoint?  How will we judge success or failure? Is success defined by the sponsor somehow in terms of market increase? And how would that be defined?  Is success defined by the national authority in terms of value of therapy?  What if the country has very few resistant infections like Sweden?  How will they define “value?” I admit that, at the time, sitting in the DRIVE-AB conference room in the Netherlands, I did not understand this concept – and I still don’t.


The other issue is that each country picks different antibiotics for its incentive. That just dilutes the market and makes no sense. 


In my view, the goal of a pull incentive is to provide a significant return on investment for companies who pursue antibiotic R&D and succeed. This, in turn, will motivate investors to invest in the area. No matter how I look at this problem, it seems like the only way that such a large pull incentive will come to pass is if a region or country takes a leadership position and provides an incentive that will work globally.  Once that occurs, we can work to bring other countries on board.  But until then, I think we are stuck in incentive purgatory. The Table below shows the 2017 (pre-Brexit, pre-Covid) GDPs of Western countries and Europe including the UK, Sweden and Germany. Clearly either Europe as Europe or the US are the best positioned to offer such an incentive just based on the size of their respective economies. 

 

 

GDP by country

 

               Country/Region 2017 (Trillion USD)

USA                19.5

Europe (pre Brexit) 13.0

UK                          2.6

Sweden                  0.5

Germany                  3.7

 


This brings me to a discussion of the possibility that Europe will take on this task. And every time I think about this, I go back to Flora Lewis’ book, Europe, A Tapestry of Nations. And there is no better example of the contemporary issues facing Europe’s ability to bring together its national authorities than their botched approach to providing covid vaccine for their population.  This problem has been analyzed in detail by Politico Europe and their analysis should be a wake-up call to all in Europe as to the continuing shortcomings of the alliance. According to the article, Europe was late coming to the table.  They even supplanted an alliance of four national authorities who had already begun negotiations for vaccines for their countries to restart negotiations for Europe. This resulted in further delay.  Then they negotiated a price well below what the US, Israel and others were paying – which may have dropped them further down the priority list for vaccine suppliers.  This is to say nothing of their clear preference for Europe-based vaccine companies like Sanofi that ultimately were unable to provide any supply in time. Then there were delays in approvals based on delayed applications to the European regulatory authority by sponsors (a frequent event since the US is a bigger market).  Even though Europe was quicker to approve than the US once having received the submissions, the delay based on delayed submssions was still present. Then there was continued bickering among the diverse national authorities in Europe.  Hungary, for example, recently approved and is administering Russia’s Sputnik and China’s Sinopharm vaccines. 

The recent experience of biotech attempting to market their new antibiotics in Europe is also cause for serious concern.  In at least two cases, the European regulators insisted on post-market commitments that would have been more costly than the total potential market in the region. Neither drug was ultimately marketed in the region. 

All this makes me less than optimistic about Europe’s ability to get a true pull incentive for antibiotic R&D together in any reasonable time frame. So – that brings us back to the US. The United States, in my view, is the only country capable of pulling this off. We have the PASTEUR Act on the table – which I think would work (given clarification around a number of questions). I think it is there where we need to focus our efforts. 

 

 

Monday, February 8, 2021

Covid vaccines compared to AMR

 






I never dreamed this would be possible. Of course, so many things are possible today that I thought were impossible that I’m almost embarrassed to admit it (but I have no pride). Twenty-five years ago I thought that an immunologic approach to cancer would never work because cancer cells are, after all, self. My excuse is that I am neither an immunologist nor an oncologist and many of my oncologist friends agreed with me. But to think that one could go from the SARS-COV-2 viral nucleic acid sequence to a marketed vaccine in less than a year – I’m sorry – but that was science fiction, Star Wars, warp speed. Plus – mRNA instead of a killed virus or protein or conjugate antigen?  mRNA – the epitome of instability? Come on!

 

Beyond the technology though, there was the desire, based on a lethal danger to the population posed by a pandemic virus, to get to this goal of a vaccine that is safe and effective and that can be distributed in record time. To accomplish this required an enormous investment in manufacturing – at risk. This investment came either from government (us taxpayers), from private industry (large and small) or from both.  And, at the end, governments are paying for the final product – although some vaccines are being sold at cost (not for profit). This plan required a strong will, a strength of steel, and an organization and expertise that we have rarely seen anywhere before. It’s almost enough to give one confidence in government again – since without government intervention, this could not have happened.  The plan also should make us stand in awe and gratitude for the extraordinary efforts of the pharmaceutical industry and their scientists and clinicians and their partners and stakeholders without whom this would never have happened. The industry should no longer be viewed as evil incarnate!

 

Compare and contrast. Antibiotic resistant infections have been killing people since the dawn of the antibiotic era. According to the CDC, the use of seat belts saved 13,000 lives in 2009. Compared to the 460,000 Americans killed by covid in this past year, 13,000 seems like a small number.  Does that mean we should forget about wearing seat belts? Again, according to the CDC, antibiotic resistant infections and C. difficile kill 48,000 Americans every year. And most of us think this is a significant underestimate. Should we now relax since this number is almost 10- fold lower than the covid losses to date? Should any sense of urgency to save these lives be somehow lessened because of covid?  Or should we rather look at this lesson from covid and apply it to lethal antibiotic resistant infections? How would we do that?

 

First, although a vaccine approach to the prevention of resistant bacterial infections is a great idea, and one that has worked for a few selected bacterial infections, I don’t think that we are at the same place with this problem as we were for certain viruses and mRNA technology. We will need other approaches focusing on therapy. It takes us 10-20 years to go from an idea to a new antibiotic.  We could shorten that time by doing more at risk as we did for covid. We could also do a better job of delaying the increase in resistance by doing a better job of restricting antibiotic use to cases where it is really necessary both in humans, plants, fish and other animals. But because even appropriate antibiotic use will ultimately lead to resistance, we still must find new approaches to the treatment of resistant infections.  My personal opinion is that this will most likely involve new antibiotics or new inhibitors of resistance (like B-lactamase inhibitors). But right now, our pipeline is in a disastrous state and any companies still working in the space are facing economic oblivion. One risk we must take is the use of financial incentives to make up for the broken marketplace that is driving investors out of the antibacterial space. Compared to the cost of warp speed for covid at $18 billion, the fix for the antibiotic marketplace would probably be more like $2 billion per new product.  If we awarded one or two new products per year, we’re talking $20 billion over five years maximum.  In any case, I don’t think our current pipeline would get us to 10 approved products in five years at least in terms of our key priorities.  So, new antibiotics for resistant infections – a fire sale! Why can’t we see this?

 

Let’s talk about Europe for just a minute.  Will Europe and its disparate national authorities have learned the lesson of pricing for new products from its experience with covid vaccines?  Will they have learned that their regulatory approach leaves something to be desired when it comes to considerations of feasibility in their demands for new data? Will Europe be left behind again as they have been for covid vaccines if (my lips to God’s ear) the US establishes a market incentive for new antibacterial products? 

 

We need to learn from this pandemic and apply these lessons to our approach to fighting antibiotic resistant infections – and we need to do it urgently!

 

 

 

 

Friday, February 5, 2021

AMR - a Holistic Approach

 



A very important report on the state of antibiotic use and resistance globally has just been release by The Center for Disease Dynamics, Economics & Policy (CDDEP).  Before delving into this topic, I want to explain my long absence from my blog.  I have been ill but am rapidly recovering and am now ready to continue thinking and writing about AMR. 

 

 The report focuses on the relationship between antibiotic use and resistance with a tool that provides an index or score for a given country.  A number of countries are included as examples in a digital dashboard. This tool and dashboard will be helpful for national and international agencies to evaluate and develop policies to address problems of resistance.  The report also notes that among some LMICs, there is a clear issue of access such that patients suffer and die from simple lack of antimicrobial therapy or vaccines more than from resistant infections. A webinar by CDDEP with Ramanan Laxminarayan and Dame Sally Davies and others discussing the report is also available. 

 

While I cannot agree more wholeheartedly that a greater understanding of the “you use it, you lose it” law of antimicrobial resistance is important, it is not the whole story.  As implied, even carefully monitored and appropriate use of antibiotics will still select for resistant variants within microbial populations. There are many examples of this from our experience in hospitals with strong antimicrobial stewardship policies, even given the fact that these hospitals exist within a larger global community. What this means is that, even if we alter our policies and focus our antimicrobial use in animals and in humans to only what is needed, we will still face the problem of resistance.  It is likely that under those circumstances resistance will evolve and grow more slowly – but it is still going to be inevitable. 

 

Therefore, in a holistic approach to resistance, we have to anticipate resistance even to our last line antibiotics. This means that our current antibiotics will yield to resistance over time and that we will need new antibiotics (or possibly other approaches) to deal with these resistant infections. And today, we are nowhere near ready for that eventuality given the perilous state of our antimicrobial pipeline. 

 

Our pipeline depends on the ability of sponsors (for profit or not) to discover, develop, manufacture and distribute new, effective drugs for the treatment of resistant infections. While there is more and more support for discovery and early development, and even some new support for late-stage development, without an ability to manufacture and distribute these putative new products globally, the entire endeavor collapses like a house of cards. And that is exactly what has been happening over the last decade. The clear evidence for this is in the bankruptcy of multiple small companies who engaged in the commercialization of new antibiotics active against resistant infections. To compound this, a number of sponsors have been unable to market their new antibiotics in Europe given burdensome and expensive regulatory requirements or inadequate national pricing proposals. Even if, as some argue, that these products deserved their fate, private investment in antibiotics is getting more and more difficult. 

 

Recent economic analyses by John Rex and Kevin Krause at a meeting of the National Academies (see links here) shed some light on the costs of commercialization – and they are considerable. The problem is that we know what we must do to address the problem.  We have to pay! While some countries (e.g. UK) are trying this by an effort to “pay their share” – this is clearly insufficient by itself. Either we need a more global approach, or some country or region must take a leadership position and provide much more than their “share.” I’m looking at you US and EU! 

 

Without addressing this other end of the AMR problem, our inadequate pipeline, stewardship will only delay the inevitable. 

 

 

 

 

Monday, October 26, 2020

The Pasteur Act - A View from Industry

Chris Burns


 






Evan Loh







We will continue our discussion of the Pasteur Act as proposed by Senators Bennet and Young. Today I discuss the bill with two biotech CEOs, Chris Burns of Venatorx and Evan Loh of Paratek. Venatorx has a new antibiotic in phase 3 trials and Paratek won approval of their Nuzyra in 2018. Both expressed their appreciation to the Senators for bringing Pasteur forward. 

 

To remind you, a summary of the bill is here and the full bill (as it stands) is here.  As I noted in the last blog, the Pasteur Act proposes a subscription plan not dissimilar to what is being implemented in the UK and Sweden.  The plan will purchase a specified number of doses (or the rights to such) at some price over a multi-year period.  The total commitment proposed over up to 10 years is not less than $750 million and not more than $3 billion! The proposal only covers federally funded programs such as Medicare, Medicaid, VA, etc. There is a statement that encourages HHS to encourage participation by private payers . . .The bill is planned to assure sponsors that they will have guaranteed income in the absence of marketing – a delinkage between sales volume and revenues.

 

Everyone agrees with Chris Burns that waiting for market forces to increase investment and antibiotic R&D is futile. Both CEOs agreed (as do I) that Pasteur does not provide enough specifics for industry to judge how it will affect commercialization of their new antibiotics. They both offered a number of key questions and concerns. 

 

Pasteur does not address the need for hospitals to place the new drugs on formulary and to stock at least a small number of doses. Recognizing that the majority of US hospitals are under 200 beds and that these hospitals are often in dire financial straits, the payment required to stock drug may be too much of a burden. (The same would be true for the DISARM Act by the way). 

 

Chris Burns noted that since the entire subscription contract is with the sponsor, the list of pharmaceutical middlemen with their various price mark-ups is not affected. Evan Loh noted that in DISARM, by contrast, pricing is defined by the drug’s Average Sale Price or ASP. 

 

Chris Burns is looking for more clarity as to whether the subscription is for an actual number of courses of therapy (per year or per award period) or is more for a guarantee that the drug will be commercially and federally available in the distribution chain. He believes it is the latter. In that case, he accepts that if the government makes the annual subscription payments, it wants a “credit” back when it effectively pays a second time through normal distribution (e.g. through Medicare or Medicaid reimbursement).

 

He also pointed out that DISARM might work better IF one can achieve reasonable peak year sales because of the proposed reimbursement. He also notes that DISARM will work better (obviously) for those sponsors whose products might not qualify for the Pasteur subscription based on the proposed committee or panel to make these choices. Evan Loh suggested that this committee plan was, in fact, too opaque and would prefer that all QIDP products approved over the last five years be offered such a subscription automatically. I agree with both CEOs that the panel who makes this decision as to which products are deserving is too vague and will not encourage investors.  We need a much more transparent process such as designating top CDC and/or WHO priorities that are already well defined as criteria which might obviate the need for a panel.  FDA could make this determination. 

 

Evan Loh, as one might guess, strongly prefers DISARM.  His company has carried out interviews with key pharmacists who suggest that a promise of reimbursement would lead to a clear increase in positive formulary decisions for Nuzyra. 

 

Evan views Pasteur as complementary to DISARM depending on eligibility and process. The bill proposes transition measures that might be attractive but more clarity required.  For example, according to Evan, Pasteur should provide for a transition contract for all recent QIDPs in the range of $250 million. This will immediately help save small biotechs from bankruptcy at the moment of commercialization.  Evan suggests excluding big pharma (that we would need to define) from these transition grants. He further suggests that there be a post-acceptance review at some point such as is proposed in DISARM.  Above all, Pasteur must avoid the creation of impossible hurdles. It is clear to both CEOs that investors still lack confidence and it is not clear to them that either of these Acts, should they become law, will provide that confidence until data shows that they can provide for successful commercialization of needed new antibiotics.

 

I asked both CEOs about alternatives to DISARM and Pasteur. Both agreed that contracts for addition to the US strategic stockpile would be viable IF there were enough funds to make a large purchase comparable to the sums anticipated by Pasteur – something that does not appear to be the case currently. 

 

I specifically proposed a Hybrid Market Entry Award of ~$2 billion provided over the first five years post approval of a new antibiotic addressing CDC’s high priority pathogens. In this case the sponsor would be limited to charging a low (to be defined) price during those first five years. After that period, the sponsor would be allowed to gradually increase the price over the life of exclusivity of the product. The idea would be to provide a motivation for generic manufacturers to enter the marketplace after the end of branded exclusivity. Chris Burns thought that this would work much better than Pasteur, but noted that it is much less politically palatable. Evan Loh was skeptical that a sponsor would be able to increase prices enough to achieve the stated goal. 

 

Evan suggested a small, initial government investment that would be enough to get the sponsor to profitability after 2-3 years.  At that point the government could charge the sponsor a royalty such that the originating fund could become evergreen. Personally, I am skeptical that this would work in the absence of many more patients with resistant infections.

 

Conclusions:  There are too many questions around key aspects of Pasteur for industry to have confidence that it would work as intended according to both the CEOs I interviewed. However, both CEOs look forward to more development of the concept.

 

 

I am grateful to both Evan Loh and Chris Burns for spending the time with me to help clarify industry concerns around recently proposed government aid for the suffering antibiotic R&D community. 

Tuesday, October 13, 2020

Introducing the Pasteur Act for AMR

 


WARNING - This is long!

 

Today, I discuss the Pasteur Act, a new bill proposed in the US Senate by senators Bennet and Young, with Ryan Cirz. You can find a summary of the bill here and the full bill (as it stands) here. The Pasteur Act proposes a subscription plan not dissimilar to what is being implemented in the UK and Sweden.  The plan will purchase a specified number of doses (or the rights to such) at some price over a multi-year period.  The total commitment proposed over up to 10 years is not less than $750 million and not more than $3 billion! The proposal only covers federally funded programs such as Medicare, Medicaid, VA, etc. There is a statement that encourages HHS to encourage participation by private payers . . .The bill is planned to assure sponsors that they will have guaranteed income in the absence of marketing – a delinkage between sales volume and revenues. But, will it actually work that way?

 

Ryan Cirz:  We have a math problem in the field.  Revenues are limited by price x volume.  Durations of therapy are generally short, so volume is ~ number of patients.  Either price or number of patients must go up for products to be sustainable in the marketplace.

 

Enabling higher pricing is the focus of the DISARM act (an Act I believe is needed to make the PASTEUR act function properly and drive optimum behavior).  The low number of patients can be solved two ways:  just wait until there are more patients, or artificially bolster the economics by ‘buying’ access to more drug than you need at that moment in time – the latter is what I perceive PASTEUR as attempting to do. 

 

I’m sure some readers are thinking ‘if there aren’t that many patients, maybe there’s no need and we shouldn’t spend taxpayer money on this!’ – hey, maybe that’s correct.  I will say 37 years ago we decided <200,000 patients/year didn’t make a market, but we didn’t want to leave those patients without treatments – hence the Orphan Drug Act.  Here we are talking about a current market size where there are only 10,000 or 50,000 patients – and antibiotics cure people fast (unlike most orphan drugs) – so it’s no wonder the market is breaking.

 

If you are in the camp that you’d rather just wait until there are sufficient patients for the market to solve itself, it’s important to remember the vast majority of patients’ experience with an antibiotic is during its much longer lifespan as an inexpensive generic.  If you want those generics to exist in the future, there must be a way to reward the innovator companies (more importantly, their investors) during the short, branded years after launch – then 10-15 years later, when the market is big, society gets cheap access ad libitum.

 

There are other examples of this in the US.  One is the State of Louisiana’s subscription for HCV therapeutics for their Medicaid population. In that case, Louisiana guarantees a purchase of a specific number of doses of these drugs at a negotiated price (lower than the usual retail price). The company is guaranteed revenues upfront. The State saves money over the number of patients treated and – therefore – can treat more patients.  This is a win-win for taxpayers, patients and Louisiana.

 

1.     The subscription is for government payers only.  While this is a large number of very key payers (VA, Medicare, Medicaid etc), it does not include private insurers. The bill encourages HHS to encourage private payers to participate, but how will this work exactly in your opinion?

Full disclosure:  I have no idea how this will work – related though - I prefer a system with a de-linked incentive and a natural competitive market. My fear is, without some sort of competitive market, there will be regression to minimum standards to be eligible for a subscription contract.  There are infinite parameters that can be dialed when designing and developing a drug and without market forces, the pressure to strive for the very best you can achieve will be absent.  So I’m open-minded as we start to really experiment and get specific with these pieces of legislation but hoping we have a stabilized base of revenue from a PASTEUR-type system and perhaps leave the private payer market separate so there’s reason to compete to make the very best product – even within the subscription tiers – TBD as things unfold

 

2.     If I am a hospital pharmacist, when I order an antibiotic covered by Pasteur, will I need to pay the upfront price to stock the drug before being reimbursed by a payer one patient at a time?  I don’t know the answer to this and neither does Ryan (apparently). But I suspect that hospitals will have to pay upfront to stock the new drug.

 

3.    If I am a sponsor, will I need to work to get my product on the formulary (assuming I have to pay to stock the drug)? How much will this interfere with the presumed delinkage of the model?

 This is a great question because it costs a lot of money to support formulary review.  Pharmacists often depend on the sponsor to generate additional data beyond what’s in the approval package – sometimes even assembling the information for the hospitals.

DS here – In my view, Pasteur will have to have a contractual mechanism obligating sponsors to support formulary decisions in hospitals.

4.     If I am HHS, how will I determine how many doses to order and how do you see price negotiations progressing?

This is an open question I have – and where I could see things breaking down if there isn’t a normal competitive market to supplement the subscription.  The only super clear number to me is there will be an annual payment and the totals for all payments will range from $750M - $3B.  Also, revenues from federally insured will be subtracted, but at what unit price?  The only information is a price floor, which I assume is there to avoid enticing use over expensive generics like carbapenems. 

If there is a set number of doses that must be available, that imputes a price per course.  If the number of doses that must be available is determined based on disease prevalence, then could that entice people to go for the rarest condition as long as it qualifies for the highest reward? – why? - if I only have to supply super small numbers – I don’t have to worry about cost of goods, re-stocking, or frequent pharmacovigilance reporting…

It would be important to see just a bit more detail on the proposed mechanics here.  For a number of scenarios I can picture, having some component of a normal competitive market may help counteract some behaviors I could see going awry in a subscription-only incentive world.

6.  If I am a sponsor, how will this effect my development, post-approval development and marketing plans?

If PASTEUR passed tomorrow, for me at least - I’d say no change right away to the pipeline focus.  It will take quite a bit of time to spin up the committees and see how the different tiers are defined.  There’s even some funding to bridge that initial period – Pandemic stockpile purchases and contracts that could provide post-market development support.

 We need to see how this committee values different attributes – of course we can all predict the types of things that would drive value of an award.  HABP/VABP label > cUTI/cIAI; including non-fermenters is a higher value tier. (From DS – an oral cUTI drug active against high priority pathogens would also be1st tier I would think).  But nuances around narrow vs. broad spectrum (do I just need 1 non-fermenter or many?), what discounts apply to the almost infinite spectrum of safety considerations, and my fear novel mode of action, and not novel spectrum of activity will be the definition of novel could swing the incentive structure quite dramatically.

 So I’d do what I’ve always done – keep a diverse pipeline of assets at different stages of maturity so you can pivot as the rules change.  Perhaps some pipeline programs that clearly have no hope in the current reimbursement environment (say a narrow-spectrum inpatient only program) you might push a little further along at risk if legislation passes – but otherwise no immediate change until we see how value is defined.

 Post-approval plans – it seems obvious that one of the goals of PASTEUR would be to provide some incentive for label expansion.  While it’s not explicitly stated, there is language around ‘upgrading’ your subscription tier at a later date.  So for example if I come up with a drug active against CRE/CRAB/CRPA and initially develop it in cUTI, say that gets me the middle tier – but if I get a HABP/VABP indication later, I get the higher tier.  I do like that it creates incentives to keep studying the drug post approval – I know physicians want this.  It will be interesting to see if that could incentivize any adverse behaviors – for example delays to market:  HABP/VABP labels typically come several years after initial approval – so is it better to delay approval 5 years for 5 more years of top tier payments or get my 5 years of cUTI payments and then take 5 of the top tier?

 Again in the immediate term, it looks like there will be PBS-style contracts to bridge those companies that are nearing approval now – so I’d focus on making sure I’m in position for those as the idea is they’d cover the post-approval costs and purchase some drug to bolster initial revenues while we sort the rest of this out!