Wednesday, July 23, 2014

Antibiotics - Misguided and Paralyzed

Back when I wrote my book during 2009-10, I was disappointed and frustrated with the US efforts at antibiotic regulation compared to the rational and advanced view in Europe. Europe made the development of new antibiotics against resistant infections a top priority for their regulatory body – and the EMA (European Medicines Agency) came through. The US had no such stance and it took the frustration of a few leaders in the upper management of the FDA to finally realize that they were driving on the wrong side of the road and taking us into a head-on collision.  Although the results of their “reboot” are not perfect, and there are a number of things I would like to change (particularly their endpoints for trials), I think that as far as regulatory reform goes, we have come a long way since those dark days when I was hammering away at the keyboard.

Our next challenge is to do the best we can to contain resistance and at the same time to be prepared for its inevitable emergence. In facing this challenge, no one, not the US, not Europe, not Asia, no one is anywhere near ready. We have task force after task force working on the problem and mostly coming up with the same old same old. The GAIN act in the US is a great example.  Politicians crow about how they are helping in the fight against resistance while not spending precious taxpayer dollars.  But the GAIN act has not been sufficient to entice large pharmaceutical companies to get back in to the antibiotic R&D effort. And that result was predictable and predicted by yours truly among many others. The best thing about the GAIN act was that it required the FDA to get its act together. But on the business side, it offered only a patent exclusivity extension that was modest at best for antibiotics active against resistant strains.  This benefited only a small number of small companies that had products facing the end of their patent lives when they were introduced to the market.
If we want to restrict the use of antibiotics to avoid the emergence of resistance for as long as possible, the first thing to do is to restrict their use in agriculture.  In spite of statements by the PCAST – I believe this is a no-brainer.  Next - we have to provide a business model that makes sense.  The GAIN act is not going to cut it and the industry has demonstrated that by, for the most part, voting with its feet. Although two companies have re-entered the antibiotics game in recent years (Sanofi and Roche), many more have left. Now we have AstraZeneca threatening to depart as well.

In an article that appeared in the New York Times today, the industry decries the increasing cost of bringing new therapies to market and notes that antibiotics are on the bottom of their priority list because their return on investment is so low.  But it doesn’t have to be that way.  In the same article, the ex-head of R&D at Pfizer, John LaMantina says that firms are pursuing niche diseases and orphan indications where the return is lower but where the costs are much lower. Antibiotics of the future are going to fit in exactly that scenario – they will be niche products that will cost less to develop and will bring in less total dollars, but where the value will be attractive.  If, that is, we can get our societal act together and make sure that happens.

What business models would work and how would this effect taxpayers and governments?  First – we all must realize that there is no free lunch.  Either we spend money on antibiotics that can cure resistant infection, or we pay the price in longer hospital stays, more time on ventilators and in lives lost. My choice is the former- I don’t know about you. 

1.  The traditional pricing model.  This is what Gilead is doing with Solvadi – its new drug for Hepatitis C infection. In this scenario, small numbers of patients with demonstrated infection with a resistant pathogen or with a high risk for such would receive an antibiotic active against the resistant strain and pay up to $30,000 for a course of therapy.  The cost would be covered by health insurance, medicare, Medicaid, government and other payers in the US and by the national health authorities in Europe (good luck there).

2.  Guaranteed government purchases.  Here, governments would guarantee a certain upfront purchase of the antibiotic at the time of approval by the regulatory agencies. The price charged per course of therapy in each country would depend partly on the amount of its advance purchase. This serves to de-link the drug to some extent from the need for the company to spend money on marketing.  Marketing costs about 25-30% of total sales of any antibiotic. Also, the guaranteed purchase, coming right after approval, not only saves marketing spend that is normally especially intense at launch, but also increases the overall value of the antibiotic by decreasing its associated costs.

3.  The wild card patent exclusivity.  This is something I pushed with the Infectious Diseases Society during the preparation of their Bad Bugs No Drugs white paper. In this formulation, a drug company that brought forward a new antibiotic would be allowed to have 6 months to two years of additional patent exclusivity on another drug of their choice.  For example, Pfizer might have been able to have additional time to sell its branded Lipitor that was selling $15 billion per year. When the IDSA tried to lobby this in congress, they met a brick wall.  The generic manufacturers, insurers, and almost everyone else was against it. 

But look – we have to pay somehow.  I offer a few choices for how we might pay – but I am sure there are lots of other choices that I have not considered.

Friday, July 11, 2014

Can David Cameron Save AZ's Antibiotics?

It looks like David Cameron is following President Obama’s lead in establishing a task force to address the problem of antibiotic resistance. Of course, as I noted when Obama set up his task force – task forces are mostly a waste of time in my experience. But Cameron’s approach is different.  He proposes to focus on the economics of antibiotic development.  The idea is to identify ways of providing appropriate return on investment for companies who invest in antibiotic research and development. The task force is being headed by an economist, Jim O’Neill. Mr. O’Neill was the chairman of Goldman’s asset management group and is now an honorary professor at the University of Manchester.  He clearly knows economics (he coined the term BRIC).  Even if he doesn’t know much about bacteria or antibiotics, he is probably the right person to lead the task force envisioned by Cameron. Clearly, Cameron and O’Neill recognize that a constant pipeline of new antibiotics will be required to keep us one step ahead of the superbugs.  And they recognize that the only way we will achieve this is to bring more companies into the antibiotics R&D game. I am therefore more optimistic about Cameron’s task force than Obama’s.
And this brings me back to AstraZeneca. As we all know, AstraZeneca is trying to “partner” or sell off their antibiotics unit since they view it as being unable to provide a suitable return on investment.  They have probably the best antibiotic pipeline in the industry and some of their projects have clearly slowed as a result of AZ’s hesitancy to invest further in antibiotic R&D.  This remains one of the great tragedies of our time.

AZ also recently escaped a takeover by Pfizer – a company who abandoned antibiotics R&D recently – partly with the help of the British government.  AstraZeneca is headquartered in Britain. Hmmmmm.  1 + 1 is . . . Could this be a signal to Pascal Sirot, the CEO of AstraZeneca that abandoning his antibiotics effort at this point might not be the best idea in the world?

Aside from the potential importance of the British effort for AZ specifically, I do have a major concern about all of these efforts. The analysis and suggested solutions must be GLOBAL.  The UK alone and possibly even Europe alone will not be enough.  The economic or business models proposed must be realistic and implementable in all areas of the world including the US and Asia.  Currently, the entire antibiotic market is being buoyed by Asia (outside of Japan). This is partly because of a lack of new products being introduced into the major markets (US and EU) and partly because of improving economic conditions in Asia that provides for a growing population that can afford to pay for internationally branded products.  Which of these two factors is more important – I can’t tell.

So – that leaves me with two suggestions.  (1) Prime Minister Cameron and Mr. O’Neill – first job – please speak with M. Soriot at AstraZeneca. (2) Please make sure your effort is truly a global one.

Thursday, July 3, 2014

Vaccines - Paying the Price

In an article in the New York Times today, Elisabeth Rosenthal  does a nice job of demonstrating the rising price of vaccines and how it is affecting the ability of health care professionals to provide these essential medicines to the children who need them. She quotes a vaccine researcher at Cincinnati Children’s Hospital, Dr. Steven Black, as saying that, “You have to make back your investment and pay your shareholders, but at what point do you say, ‘Look, you’ve had your steak, gravy and potatoes and this is enough?’ ”  She then provides information from Pfizer, the maker of the most expensive vaccine, Prevnar 13 at $136 per dose for four doses per child in the US ($544 total).  They note that this is an extremely complicated vaccine that requires two years to manufacture to say nothing of the many 10s of thousands of patients that were included in the vaccine trials to prove safety and efficacy for the FDA.

I was at Wyeth when the original Prevnar 7 vaccine was being developed. IF you can get through your trials successfully, and IF your vaccine is felt to be important enough to be recommended for all children (in whatever country), you can devise a price based on a cost-benefit analysis and get that price guaranteed (almost).  The birth cohort in the US is around 4 million.  You do the calculations. When the vaccine group would present their forecasts for Prevnar, I was flabbergasted.  How could a vaccine be a billion dollar blockbuster even in the first year of sales?  But I was the only one in the room to raise his eyebrows and roll his eyes.  Everyone else, from the CEO on down was nodding his or her head in agreement. As it turns out, they were all right and I was wrong (no surprise there).  

But Rosenthal points out that the companies frequently raise their prices after the vaccine has been approved and recommended for all children and after an initial price has been agreed.  What is happening there is a constant negotiation based on new data of efficacy and other factors that might enter into the cost-benefit equation. The other thing that is happening is that the US is subsidizing the rest of the world in this regard.  As Rosenthal correctly points out, prices in the US tend to be substantially higher than those in the rest of the world. Every other country in the world has a national negotiation and sets a single price for the entire country.  Not the US.  The CDC negotiates their contract, private insurers do the same, the military might do the same – and they all end up with different prices and all are more expensive than those outside the US.

Yes, the pharmaceutical companies need to be able to provide a return to shareholders.  But why should the US provide a greater share of the profits?  Why shouldn’t this be better distributed among the entire developed world?  Until we learn some of the positive lessons from our more socialist neighbors, American consumers and taxpayers will continue to subsidize vaccines for babies in London, Brussels and Geneva.

PS – the same is true in general for drugs . . .

Wednesday, July 2, 2014


The President’s Council of Advisors on Science and Technology (PCAST) has been busy preparing a report on Antibiotic Resistance and what to do about it.  Maryn McKenna wrote a summary after one of the PCAST meetings earlier this year.  Another meeting is about to take place on July 11. Basically, the PCAST has been saying things similar to what we have all been hearing either at Pew or at Brookings or almost anywhere else.  Some of the things we have to do are completely obvious, even if hard to achieve in practice.

1.     Regulatory – Clinical Trial designs for antibiotics meeting unmet needs (treating highly resistant bacterial infections).  As PCAST and everyone else, including the regulators, has signaled, the trials must be feasible, small and rapid.  We all recognize the increased risks associated with this approach (smaller numbers of subjects means less sensitivity to detect adverse effects).   But I think we can all agree that the alternative – having no antibiotic with which to treat such infections – is the greater evil. Even though the FDA and Europe have made tremendous strides over the last few years in providing guidance on this subject, what kinds of trials they will actually accept remains somewhat obscure. Will they truly accept the kinds of externally controlled trials (historical controls of various sorts) that most of us in industry believe are the only feasible designs possible, or will they insist on concurrent controls that will render the trials impossible?  We probably have to wait and see – but a word from PCAST in this regard couldn’t hurt.
a.     In addition – can we please have less restrictive use of prior antibiotics and more clinically relevant endpoints for our traditional trials?  Is that too much to ask?
2.     On the Regulatory front – what about banning the use of antibiotics as growth promotants?  It is so obvious that this is what has to be done that any further debate seems political. Any argument to the contrary is based on pseudoscience.  The vast weight of scientific evidence demonstrates that antibiotic use in animals, whether for prophylaxis, for treatment or for growth promotion selects for resistance.  And the evidence is clear that these resistant strains or the resistance genes involved can be transferred to humans and human pathogens. Why we have waited since 1976 to do this is beyond my comprehension (other than the politics involved).
3.     Money – Economics.  For me, this is the final frontier. As they might say in French – there are not 36,000 ways to solve this problem – and a problem it is and PCAST has recognized it. If antibiotics to treat highly resistant infections are going to have to be priced to compete with generic antibiotics, we should prepare for the post-antibiotic era today because it surely will follow. The industry as simply got to be able to see that they will be able to make a reasonable return on their investment in new and effective antibiotics. The reason AstraZeneca, with its sparkling pipeline of new antibiotics for resistant infections continues to look for ways out of its antibiotic research and development enterprise is that the company (the CEO specifically) does not believe that they will ever be able to achieve such a return. The same is true for every other company that ever abandoned the field and that has not yet returned to the fray – and that is the vast majority of large pharmaceutical companies.
There are several ways to address this economic problem. One is with higher prices. In the US system, this might be the best approach. The question is, what data will payers want to see, either within the context of the feasible trial designs that we will conduct or in addition to trial data in order to agree to pay these prices (up to $30,000 for a course of therapy)? An executive order requiring CMMS to add the cost of these higher priced antibiotics (that don’t exist yet) to the usual DRG reimbursement for hospital stay might be in order.  There is a bill in Congress (DISARM) but since nothing will pass this session anyway – an executive order might help.  Legislation in this case is better because it will have an effect beyond the Obama administration – but let’s stay real here.

Another approach would be to establish an alternate business model for the industry.  In this case, governments would guarantee a certain amount of pre-purchase.  The greater the purchase, the lower the price the companies would be required to charge to make their investment. This approach leaves open the possibility for higher pricing, but softens it with the government purchase.  In the US, this could be achieved via the Veterans Administration and via BARDA for those drugs with implications for use in the case of bioterror attacks.  In any case, I suspect that, again, legislation might be required – but the White House will be able to figure this out (I guess).  This approach might work better in Europe. 

A disadvantage of the government purchase is that the urgency for stewardship will be diminished.  When an antibiotic is costing $30,000 for a course, believe me, the antibiotic police will be at the bedside even over the weekend.

The problem is, I’m not sure everyone actually understands that if they want these antibiotics, they will have to pay – one way or another.  Without them, the price will be something no one will want, but that we will be stuck with for decades to come.  Lets not go there!

4.  For other suggestions, see the article by Matt Metz in AAC.