Meeting The Antibiotic Pipeline Challenge

By John McManus, president and founder, The McManus Group

December 2013 issue of Life Science Leader magazine

“For a long time, there have been newspaper stories and covers of magazines that talked about ‘The end of antibiotics, question mark?’ Well, now I would say you can change the title to ‘The end of antibiotics, period.’ We’re here. We’re in the post-antibiotic era. There are patients for whom we have no therapy, and we are literally in a position of having a patient in a bed who has an infection, something that five years ago even we could have treated, but now we can’t.”

This is the recent scary report from Dr. Arjun Srinivasan, the associate director at the CDC, told to PBS’ Frontline.  It’s truly incredible we have reached this point, but it’s been validated by many other sources.

Sally Davies, the chief medical officer for England has said, “There is a broken market model for making new antibiotics, so it’s an empty pipeline,” and Dr. Margaret Chan, the director-general of WHO, announced that the “R&D pipeline for new antimicrobials has practically run dry. In the absence of urgent corrective and protective actions, the world is heading toward a post-antibiotic era.”

These health leaders are right — multidrug-resistant bacteria are killing tens of thousands of people every day, while major pharmaceutical interests have exited the business. The Infectious Diseases Society of America reports that the FDA has approved just two antibiotics in the past two years compared to 16 between 1983 and 1987. And even these two products were not meant to combat the most pressing pathogens, gram-negative bacteria that are resistant to most existing therapeutics.

Few Financial Rewards = Less Innovation
It’s not difficult to speculate why companies such as Bristol-Myers Squibb and Pfizer have quit investing in this sector. Maintenance drugs for chronic conditions that require months or even years of therapy can result in substantial returns to a pharmaceutical company. Antibiotics must be used for only a brief duration and on a limited basis, and providers still reserve the most novel products for last-resort-use-only.

Public health advocates, hospitals, and others encourage a fail-first approach with older medications such as vancomycin and penicillin before newer, more powerful antimicrobial agents are applied. There is a legitimate fear that the newer, more effective drugs will be overutilized, and the bacteria will form resistance to these lifesavers.

The CDC report Antibiotic Resistance Threats in the U.S. 2013 notes that more than two million people are sickened every year with antibiotic resistant infections, with at least 23,000 dying as a result. Almost 250,000 people are hospitalized for Clostridium difficile infections, where the use of antibiotics was a major factor leading to the illness.

Yet in the face of this unmet medical need, pharmaceutical manufacturers are bailing out and not meeting the challenge of drug-resistant bacteria. Brad Spell

berg, professor at UCLA and author of Rising Plague: The Global Threat from Deadly Bacteria and Our Dwindling Arsenal to Fight Them, commented, “We have what has been accurately termed on Capitol Hill a market failure of antibiotics. The traditional capitalistic market has not supported antibiotic trials.  It has collapsed.”

“The market for new antibiotics is very small, the rewards are not there, and so the capital is not flowing,” commented Paul Stoffels, the head of pharmaceuticals for Johnson & Johnson. “In cancer, people pay $30,000, $50,000, or $80,000 for a drug, but for an antibiotic it is likely to be only a few hundred dollars.”

Last year, Congress responded by enacting the GAIN (Generating Antibiotic Incentives Now) Act, which expedites the approval of antibiotics by providing applications with priority review and additional nonpatent exclusivity rights. Yet that legislation does not address the fundamental economic challenges in marketing and commercializing novel products in this area.

One such challenge is how Medicare reimburses hospitals for antibiotics. Hospitals are reimbursed a predetermined amount per discharge, based on a patient’s diagnosis and procedures, known as Medicare Severity Diagnosis-Related Groups (DRGs). As new technologies are introduced, DRGs can be recalibrated to reflect increased costs, but that requires time and significant volume use of that technology — two factors absent from the novel antimicrobial marketplace. The present DRG system means that purchase of such products is a financial loser for hospitals. 

Scott Gottleib, an economist at the American Enterprise Institute and former senior FDA official, has suggested focusing on reforming the New Technology Add-on Payment (NTAP) program, meant to integrate technology into Medicare sooner. In its 13-year history, only two drugs have received additional reimbursement under that program. The NTAP application process is convoluted and challenging. Even if a manufacturer is successful, the designation is limited to two to three years, and the program provides only partial assistance — still requiring hospitals to eat part of the cost of the new technology.

How New Legislation Could Help
Therefore, some in Congress are now mulling a legislative solution that would provide Medicare reimbursement at acquisition cost of new antimicrobial products provided in the inpatient setting for unmet medical needs. Enactment of such a provision means the hospital administrator would decide to purchase the novel antimicrobial on its clinical merits only, and financial considerations would be taken off the table. Because so few products would be affected and their prices are modest, the cost to Medicare would be insignificant. But it would make a huge difference to patients who have run out of options.

Now some pharmaceutical companies are also considering new methods for leaving the commercialization and marketing of new products to third parties and focusing solely on developing new products and receiving commitments for reimbursement for the R&D costs.

These types of out-of-the-box thinking and market flexibilities are necessary if we are ever going to reestablish a vibrant antimicrobial pipeline. Otherwise the “post-antibiotic era” will be permanent and very dangerous.