Wednesday, July 19, 2017
Antibiotics - Incentives Meet Reality
There are many important developments occurring on the antibiotics front. Progress in regulation, especially by the FDA, continues. Push incentives are gaining even more steam. GARDP recently announced an agreement to pursue a novel therapy for Neisseria gonorrhea infection. But I am staying focused like a laser on the issue of pull incentives because I consider this our greatest and most urgent challenge.
Recent data suggests that recently approved antibiotics are not earning anything like the kind of revenues that new products in other domains such as neuroscience (multiple sclerosis, Alzheimer’s) or oncology currently garner. $80 million per year seems good for these new antibiotics. According to the Boston Consulting Group's report for the GUARD initiative, for recent antibiotic launches, the net present value projected over 10 years is estimated at minus $500 to minus $100 million. This compares to minus $450 million to plus $8.2 billion for recently launched oncology products. Obviously, for antibiotics, this makes no commercial sense.
DRIVE AB, an effort funded by the Innovative Medicines Initiative – an effort jointly funded by the European Commission and the European pharmaceutical industry, just published a commentary in Lancet Infectious Diseases (subscription required – why??!! – sorry) where they provide a hint as to what will be appearing in their final report. The final report is expected sometime around September this year. The commentary, published a week ago, is in the form of an open letter to the G20, whose meeting recently ended. They suggest a market entry award that is fully or partially “de-linked” (from marketing requirements) in the amount of $500 million to $2 billion paid out over 5 years would be a sufficient pull incentive. The range exists because they would deduct any research and development funding the company had received for the product prior to launch. There could also be deductions (or rewards) depending on the innovativeness of the new compound or how well it fits into current medical need priorities. They promise that their full report will provide a rationale for this. I’m not sure that anything less than $1B will work under any circumstances – but that’s just me.
In their open letter, DRIVE AB asks the G20 to establish market entry reward trial programs or pilots to better understand how different models would work on implementation. I’m at a loss to see how one could set up a “pilot.” I think you would have to fully fund several different programs to see which one would attract the most or best candidates or which one would best motivate the industry to remain in or restart antibiotic research. But we await Drive AB’s final report here.
The G20’s response on pull incentives (page 8)? -
Concurrently, in collaboration with relevant experts including from the OECD and the WHO, we will further examine practical market incentive options.
It seems like the G20 will fall back on the “we need more studies” response that was enshrined in the plan recently released by the European Commission (see my last blog). I guess that was predictable.
But here is the problem. Given the persistent market failure as documented by sluggish sales of new antibiotics that are active against resistant pathogens, pharmaceutical companies that are still active in antibiotic research are surely having second thoughts. We may see more departures. Investors, seeing this market failure, are going to become more reticent again after a recent resurgence of interest fueled by optimism regarding both push and pull incentives.
We need to act now. Not in ten years. Lets not wait for another global pandemic such as the one we experienced with MRSA. Please. I ask all of you to write your representatives in government. In Europe – this means your parliamentarians, your executives, your health authorities, and anyone else you can imagine. In the US – talk to your representatives, your senators, Tom Price at HHS. Let’s get the Infectious Diseases Society even more active than they already are. Let’s start publishing our own open letters that speak to the urgency of this issue.
We need to start drowning our governments with our sense of urgency here before we fall further into the abyss.