Urgent - Time to Act!

For those of you who have not been following this story closely, the market entry rewards we have been discussing that are intended to fix the broken antibiotics market are not currently part of the Pandemic and All-Hazards Preparedness Reauthorization Act.  This legislation was our best hope of getting something in the budget. I have it on good authority that we should write the following congressional representatives in this regard. 

Rep. Doris Matsui (D-CA) megan.herber@mail.house.gov

Rep. Anna Eshoo (D-CA) rachel.fybel@mail.house.gov

Rep. Brett Guthrie (R-KY) sophie.trainor@mail.house.gov

Rep. Chris Collins (R-NY) charlotte.pineda@mail.house.gov

Rep. Marsha Blackburn (R-TN) meghan.stringer@mail.house.gov

Some talking points for you are included below. 

The antibiotic market is broken. The problem, from the private market view, will not be addressed anytime soon.  

In the meantime, antibiotic resistance is not going away.  The CDC estimates that we lose 23,000 American lives every year and $20 billion in excess costs to the problem of resistance.  Most experts, myself included, believe this is a vast underestimate. The O’Neill commission in the UK estimates that globally we lose 700,000 lives a year today to resistance.  They noted that if current trends continue, we will see over 10 million deaths and one hundred trillion dollars in lost GDP globally by 2050.  Ultimately, we will end up in a world where simple surgery, cancer chemotherapy, wounds of war and routine medical treatment will become dangerous because of the lack of antibiotics available to treat common but resistant infections.

At the same time, investment in antibiotic research and development is at an all time low. Between 2000 and 2010 all but a few large pharmaceutical companies had jettisoned their antibiotic research efforts. In recent years, Astrazeneca, Sanofi, and J&J all followed suit. The Medicines Company and Allergan disinvested within the last year and more companies are likely to follow soon. This is mainly due to lack of market incentive to pursue antibiotic research. Private investors have heard this message and consequently private funding of biotech is in danger as well. 

Even though public funding of antibiotic research has increased, there is no way to bring any resulting products to market without the participation of the private markets. 

To solve this impasse, government must act. The GAIN act did not work because extending exclusivity on a non-profitable product is not an incentive. Some sort of market entry reward is required to fix the broken antibiotic marketplace and re-incentivize private investment in antibiotic research. Most experts estimate the cost of this to the US would be something like $20 billion over ten years.  The consequence of not acting is too horrible to contemplate. 

I am happy to discuss this with you or your staff at any time.  Other experts you can contact include Kevin Outterson, John Rex and David Shlaes. 

Allergan Bails!

NEW FLASH!

I hate being right when it comes to pharmaceutical companies abandoning antibiotic R&D.  But Allergan just announced that they are putting their infectious diseases unit up for sale as I predicted might happen back last November. They seem to be concerned about their falling stock price according to the Reuters report. But finding a buyer at the right price in the current market atmosphere is not going to be easy.  The most logical customer would be Pfizer since they own the rest of world rights to Allergan’s North American antibiotics Teflaro and Avycaz. But rumors suggest that Pfizer is not happy with the antibiotics market either. 

Once again we will have antibiotic developers retiring, unemployed or working in other therapeutic areas. Once again, the world of potential investors in antibiotics will be shivering in their closets. 

Until governments take concrete steps to shore up the failing antibiotics marketplace, we will continue to see companies abandon the area.  We may see biotechs fail simply because they are unable to garner the private investment they need or have no buyers for the products in development. 

With every incident such as this one, we take another step closer to that post-antibiotic era that we all dread so much. 

Paul Krugman, Nabriva and the Antibiotics Market

What does Paul Krugman, the Nobel Laureate in economics and New York Times columnist have to do with Nabriva and antibiotics?  While I don’t pretend to be nearly as smart as Professor Krugman and I certainly don’t understand economic theory, I do know something about the pharmaceutical marketplace. Krugman recently wrote an editorial where he claimed that any change in drug pricing, such as might be achieved if US Medicare negotiated prices, would simply be made up by a larger sales volume. He argued, therefore, that pharmaceutical companies should not be afraid of this strategy.  

When I worked in the pharmaceutical industry, I remember detailed price-point studies that sometimes would cost a substantial sum to complete.  These studies attempted to determine the best strategy for obtaining the highest return on investment for drugs about to enter the marketplace. They analyzed potential sales volume at various price levels by interviewing physician experts, physicians in daily practice, decision-making pharmacists, insurance company experts and others.  This was performed in various markets but very intensively in the US since it is there that companies have the greatest choice in pricing. These studies would identify an optimal price-volume point.  Of course, since these were just marketing studies, they did not always turn out to be so accurate when the drug would actually hit the market.  Companies would then make adjustments on pricing as needed. But clearly there is no given specific ratio of price to volume for any drug.  This relationship appears to be a complex one with thresholds. 

Therefore, for the first time since I have been reading Krugman’s editorials, I think he is wrong. But I agree that the US should be negotiating drug prices.  I agree with those that argue that the US has been subsidizing pharmaceutical innovation for the rest of the world.  I do not agree with Trump that the rest of the world will change their behavior.  Why would they do that? If we did negotiate lower prices for drugs in the US, there is likely to be a lower investment in pharmaceutical R&D since companies usually reinvest a relatively fixed percentage of profits in R&D. 

 

Getting back to Nabriva . . . .Nabriva was my first client when I started my consulting business.  I helped them spin out of Sandoz.  They are developing a novel pleuromutilin antibiotic called lefamulin.  It is available in both intravenous and oral formulations. It is active against Gram positive pathogens including MRSA and respiratory pathogens like the pneumococcus, Moraxella and Hemophilus. As I remember it, the oral dose is 3-4 times higher than the intravenous dose because of limited absorption from the GI tract. Before I retired, there was a great deal of discussion on the best clinical trial strategy for the drug.  Since lefamulin would offer another option for the oral treatment serious skin infections with MRSA, I argued that this would be the best way forward and that in this circumstance a high price would be possible – similar to other oral alternatives for treatment of MRSA infections. Others looked at the greater size of the pneumonia marketplace and felt that pneumonia would be the best way forward. They also felt that they could charge a higher price there.  I disagreed since the pneumonia market was mostly generic and cheap.  I felt that in pneumonia a higher price would be much more difficult to justify. I also felt that the safety factor would be a higher hurdle in pneumonia given the other antibiotics sold for that indication. I lost that argument.

Nabriva just released the top line data for their clinical trials in pneumonia. They clearly were as efficacious as their comparator (moxafloxacin), but they had more treatment emergent adverse events during the trials. To me, this is not surprising given the amount of unabsorbed drug that is left in the gut. Thus, in spite of their announcement that their trials were completed and the results were favorable, their stock price dropped. Investors seem to have understood that the adverse event profile plus increasing competition in the pneumonia market will mean that ultimate sales of lefamulin will suffer.  I am still of the opinion that a trial in serious skin infections focusing on oral therapy of MRSA would have been a better option.  There, given other drugs available, some leeway on safety would be expected. Further, it would be easier to justify a high price there compared to pneumonia. 

Will lefamulin be a worthwhile addition to our antibiotic armamentarium?  Absolutely. It is novel and shares almost no cross-resistance with other antibiotics. Its IV and oral dosing is clearly an advantage  - especially in the treatment of serious, antibiotic resistant infections like those caused by MRSA. 

Lefamulin is also an example of the complex volume-price relationship that Krugman failed to consider in his editorial. 

Standard of Care Antibiotics?

One of the major arguments against the use of superiority trials for antibiotics goes as follows. Once a new antibiotic has been shown to be superior to a comparator, the new drug must then become the comparator for all subsequent trials. There are probably two assumptions that underlie this argument. There is an ethical concern about treating patients in a trial where the comparator has been shown not to be the “best available therapy.” The other assumption here, I think, is that the world of physicians will immediately turn to using the superior drug and therefore that the new superior drug will become the “standard of care”.  But, in fact, this last assumption appears to be completely wrong!

As I noted in a previous blog, ceftazidime-avibactam has been shown to be superior to other “standard of care” antibiotics in the treatment of carbapenem-resistant infections.  The standard of care frequently included colistin. Meropenem-vaborbactam is also superior to “best available therapy” (frequently including colistin) in the treatment of carbapenem-resistant infections. In spite of these data, colistin and polymyxin are still used in commonly in the treatment of carbapenem-resistant infections.

The figure shows use of ceftazidime-avibactam from its launch in April of 2015 until November 2017 compared to the use of colistin and polymyxin for carbapenem-resistant infections. Clearly, the superior antibiotic is not being used clinically.  There are probably two major reasons for this behavior. Ceftazidime-avibactam is very expensive – around $8000 for a course of therapy – while colistin/polymyxin is cheap. The other reason is that in spite of being launched in 2015, most automated susceptibility testing devices used in hospitals are still unable to test ceftazidime-avibactam (don’t get me started!). 

Based on these data, there is no reason why a second or third antibiotic cannot be compared to colistin/polymyxin-containing regimens in a superiority-design trial since these regimens continue to be “standard of care” in spite of data suggesting that they shouldn’t be. If physicians see no ethical concern in treating patients with an inferior drug in their everyday practice, should we force them into another behavior in the setting of a clinical trial? 

Personally, I think the ethics of continued use of colistin/polymyxin for most CRE infections is highly questionable. But if these drugs continue to be standard of care – then using them as comparators seems reasonable. 

Education for Antibiotic Researchers

The Global Antibiotic Development Partnership (GARDP) has teamed up with CARB-Xto provide training to current and future antibiotic researchers and developers. I have been pushing this since 2004 when I recognized that the continued consolidation within industry and the abandonment of antibiotic research in industry was going to leave us without experienced antibiotic hunters in the near future.  That future has arrived! My experience in reviewing hundreds of grant requests from biotech and academia clearly demonstrates the lack of basic understanding of the fundamentals of drug discovery among today’s generation of would-be antibiotic researchers. A number of us experienced antibiotic researchers are retired, have been fired, or are now working on oncology or autoimmunity or in neurosciences or in diagnostics. Our expertise will be lost if we don’t do something to pass it on to a new generation. I have been trying to find a way forward for this for the last 15 years without success until now. GARDP and CARB-X are stepping up to the plate!

Before I get to the great work by GARDP and CARB-X, I ask – where is the National Institutes of Health here in the US on this? For more on this see one of my blogs from a few years ago. NIH (in spite of their “in kind” participation in CARB-X) is still very much on the sidelines in this educational effort as far as I can tell.

The GARDP-CARB-X effort kicked off last fall at the ASM-ESCMID meeting in Boston with three “bootcamps” for antibiotic researchers (entire talks via the links below). 

Antibiotic Bootcamp: What Makes a Good Hit? Why and How Do You Write a TPP? - https://www.youtube.com/watch?v=FwOtawrQjBs.

 

Antibiotic Bootcamp: Clinical Microbiology for a Development Program - https://www.youtube.com/watch?v=xfkuFhvOXsg.

 

Antibiotic Bootcamp: How Does a Molecule Become a Physical Medicine to be Given to a Human - https://www.youtube.com/watch?v=0IUan9LuDBQ.

 

GARDP and CARB-X just sponsored a symposium at the ECCMID meeting in Madrid, Spain (slides only).

 

Marco Cavaleri (EMA): EU regulatory tools for expedited antibacterial development programmes

 

Sumati Nambiar (FDA): US regulatory tools for expedited antibacterial development programmes

William Hope (Liverpool): PK-PD in support of accelerated programmes: how much is enough?

John Rex: Alternatives to (classical) antibiotics: what will it take to convincingly develop a virulence inhibitor or similar indirect agent?

GARDP has started providing a series of webinars. The first three webinars (presented by me) are on Clinical Development and they are specifically targeting scientists and others who are not clinical developers.  The idea is to provide an understanding to discovery researchers of the various development pathways available for new antibiotics and the risks that might be entailed for given types of products. The first webinar, focusing on traditional development pathways (Tiers A and B) has been prerecorded and is available here. A live version will take place on June 13, 2018.  You can preregister to listen and ask questions here.  Two additional webinars in this series will include one on the development of antibiotics targeting specific pathogens and another on enhancers and non-traditional approaches.  The dates for those have yet to be established, but both of them will include a panel of experts to provide information and answer questions. 

GARDP and CARB-X also plan symposia for the ASM Microbe in Atlanta and for the ASM-ESCMID meeting in Lisbon, Portugal later this year. 

I attended the first two bootcamps last year in Boston. I was incredibly impressed with the quality of the presentations, the speakers and the slides.  I am also extremely grateful that all of this is publicly available for anyone who wants to view the program now and in the future. I believe that all of the programs coming from GARDP and CARB-X will provide a similar high level of quality.  What I do not guarantee is that all of the experts will agree with each other on all topics. It’s going to be your problem to work your way through any controversies.  But at the very least, we will all start with a more advanced understanding of the subject.  

Many many thanks to GARDP and CARB-X for taking up this gauntlet and meeting the challenge head on!

 

 

 

Generic Antibiotics on the Edge

Many thanks to Lew Barrett for pointing me to this article. 

In the struggle to control drug prices, the rapid entry of new drugs into the generic marketplace is a key step.  This was emphasized by the National Academies of Science, Engineering and Medicine in their recent report on drug prices and shortages. 

Lets talk about generic medicines (even though I’m not an expert here). My understanding of the commercial aspect of selling generic drugs is basic. You work hard to identify the cheapest route to manufacture that you can. You set a price to maximize your margin.  You understand that as more manufacturers enter the field your sales volume will drop. So you keep working on that chemical synthesis and on your suppliers and supply chain to maximize efficiency.  This allows you drop your price while still maintaining enough margin to compensate for your decreased volume of sales. Is there a limit to this strategy? Apparently. 

A 10 day supply of trimethoprim-sulfamethoxazole (Bactrim, Septra, generic) costs from $.4.00 to $15.00 depending on your pharmacy.  That is $0.20-.75 per pill. A “Z-pack” of generic azithromycin runs $7.00-25.00 for the six tablets. According to the article by Cynthia Koons of Bloomberg Business, 90% of drug prescriptions in the US are filled with generic medicines. Generic drug prices are falling about 11% a year according to Koons. This is partly fueled by the domination of only a few giant drug purchasers in the US.  These large purchasers continue to pressure generic manufacturers on price. The generic manufacturers are, in turn, forced to compensate by selling drugs where margins are higher.  Antibiotics are apparently not among this group. Brendan O’Grady noted that Teva, where he is Executive VP for their North American business, still makes antibiotics – but Teva wonders why.

At the same time, drug pricing has become a hot-button political issue here in the US. The price gouging by Mylan for their Epi-Pen and, of course, that of the now infamous Mr. Shkreli and his $750 per pill price for the antiparasitic pyrimethamine used to treat opportunistic infections in immunocompromised patients, have inflamed public opinion.  Congress is not in the mood to support higher drug prices. Yet some reasonable strategy for drug pricing is required and this strategy might involve assuring some minimum value-based price for important drugs like, say, penicillin. This recommendation was, in fact, one of many from the National Academies.

Unfortunately, though, if Congress does not take this seemingly counter-intuitive step, we will continue to suffer more and more drug shortages. As the National Academies report notes, “drugs that are not affordable are of little value while drugs that do not exist are of no value.”  

It’s the triple whammy! Congress needs to provide financial support for new research and development of new antibiotics, money to fix the broken antibiotic marketplace, and support for pricing of generic antibiotics. Wow!  And Congress still seems unable to tie its own shoelaces . . . .

Reflecting on Antibiotic R&D and Pull Incentives

Today I would like to reflect with you on what I have heard from investors, Pfizer, J&J and various biotech company executives concerning antibiotic R&D, the antibiotic marketplace and the potential role of pull incentives.  

One major problem is that pull incentives remain hypothetical.  Even in the hypothetical, the value of any potential incentive remains completely unknown.  Because of this, investors are essentially ignoring pull incentives, but are very focused on non-dilutive funding via push incentives. I am hearing that we are now experiencing another down cycle in antibiotic biotech investing in spite of the increasing opportunities for push incentives (CARB-X, Novo, Wellcome, BARDA). A recent survey of biotech investments shows that among the top ten life sciences investors, only Entasis, Spero and Nabriva among antibiotic R&D biotechs were recipients of their investments.  Most money pours into oncology and immunology biotech. A recent conversation with a top antibiotic investor confirms this current down cycle for me.

Biotech executives tell me that pull incentives play no role in their plans nor are they discussed in any serious way by their investors. Non-dilutive funding, however, plays an important role in their considerations. All agree that without more successful antibiotic launches, the investment future for antibiotic R&D will be bleak. Where they disagree is on what type of product will be required for a successful launch. Some say that the only way to go is with a relatively broad-spectrum antibiotic that can be used in empiric therapy.  Others say that a pathogen-specific antibiotic can garner a high price and also be successful. My personal opinion is that the high price strategy has, at least so far, been a dismal failure. (See my blog on price perversion). 

 

From large PhRMA, I have two opinions.  Actually, there is only one opinion and one obfuscation. Pfizer was quite clear. They look at antibiotic investing like any other potential portfolio opportunity. They are clear that they view the scientific risk of antibiotic discovery as simply to high to justify investment even with available push incentives at least given the current state of affairs. They are also clear that a substantial pull incentive will be required for them to invest in late stage antibiotic assets if the assets are to survive their portfolio review process. 

J&Jwas anything but clear. They start with their scientific expertise.  Although I know a number of antibiotic R&D experts who remain within J&J, I am not sure that they have the internal expertise to evaluate antibiotic opportunities.  They seem more interested in “global” needs such as treatment for resistant TB and gonorrhea. And they have demonstrated their commitment to TB with actual products from which they will gain no profits (their priority review voucher notwithstanding). Of course, this is nothing but laudable.  They would not really address any specific issues around what a pull incentive would need to look like for an antibiotic program targeting say resistant Gram negative pathogens to be adopted at J&J.  This makes me believe that such a program has little (but perhaps not zero) chance at J&J regardless of any pull incentive.

The events of the last several years leave me believing that we are standing on a cliff looking into the abyss. Astrazeneca’s spin-off of its antibiotic research assets into Entasis and its sale of marketed antibiotic assets to Pfizer was a beginning. This year we have seen the loss of another large PhRMA company from antibiotic R&D – Sanofi.  This is all the more ironic since they had reentered antibiotic R&D after having jettisoned their assets to form Novexel – the company that ultimately gave birth to avibactam. Once again, Sanofi spun out their assets (while retaining some rights) – this time to Evotec.  Nevertheless, every loss of a large PhRMA hurts because we lose their deep pocket support for the area.  The loss of the Medicines Company, a small pharma company, was especially discouraging since this occurred just after they had won approval for their meropenem-vaborbactam combination antibiotic. I firmly believe that the availability of substantial pull incentives would have altered at least some of these corporate decisions.

I have reason to believe that more losses are coming. Only the successful launch of a new antibiotic or the implementation of substantial pull incentives can keep us from the abyss.