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Pharma Industry Calls on Governments to Fund New Antibiotics

Drug-resistant staph on a culture plate.
Drug-resistant staph on a culture plate.
Photograph by James Gathany, PHIL, CDC.gov

Governments must help solve the problem of no new antibiotics by funding and creating incentives for developing new drugs, almost 100 pharmaceutical companies and trade associations say in a statement being released this evening at the World Economic Forum in Davos.

“The value assigned to antibiotics and diagnostics often does not reflect the benefits they bring to society, nor the investment required for their creation,” they say. “We call on governments to commit to allocating the funds needed to create a sustainable and predictable market for these technologies while also implementing the measures needed to safeguard the effectiveness of antibiotics.”

The Declaration by the Pharmaceutical, Biotechnology and Diagnostics Industries on Combating Antimicrobial Resistance commits the companies—which include both the largest, such as Merck & Co. and Pfizer Inc., and many small biotech firms and makers of diagnostic devices—to a common set of global actions to combat resistance. Those include reducing overuse, encouraging the development of diagnostic devices that can keep the drugs from being overused, and conserving antibiotics in a manner generally called “stewardship”—which, by keeping critically needed drugs on the shelf, can cut into company profits. And it calls for governments and others funders to join the companies in pursuing new drugs to solve what’s known as the “pipeline problem.” That is the difficult reality that antibiotics manufacturers practically abandoned the field after about 2000, because the relatively low retail prices of their drugs (compared to cancer drugs, for instance), coupled with the advance of antimicrobial resistance, turned making antibiotics into an unrewarding move.

Since the Infectious Diseases Society of America flagged the problem of “bad bugs, no drugs” in a revelatory report 12 years ago, policy makers have argued over how best to lure drugmakers back into the market, proposing price hikes, patent extensions, prizes, up-front payments, and a variety of other incentives. What should be offered to companies to bring them back is a matter of intense debate, captured in this issue brief by the Center for Disease Dynamics, Economics and Policy and this Chatham House analysis by Kevin Outterson of Boston University. The issue is at the heart of three pieces of legislation, the GAIN Act of 2012, the ADAPT Act of 2013, and the PATH Act, introduced in the current Congress. Last summer, the Review on Antimicrobial Resistance, a two-year project created by UK Prime Minister David Cameron to investigate solutions to the global crisis, proposed a program of supports for innovation and early-stage research, and also mammoth payments that would effectively free a company from having to earn its investment back via sales.

Declining antibiotic approvals by the FDA, by year. from idsociety.org; original here
Declining antibiotic approvals by the FDA, by year. from idsociety.org; original here

The declaration made this evening (Thursday morning, in Europe) will be housed on the site belonging to the Review on Antimicrobial Resistance — but its chairman, economist Lord Jim O’Neill, said in an interview that it should not be construed as the Review’s work. “This is a statement coming from industry,” he told me. “We are pleased to see it happen. But our own final recommendations, which are 4-5 months off, may differ. Part of their declaration is a call to governments to give them the incentives they want. But it might well be that in the range of recommendations we make will be that the industry itself may have to make significant contributions.”

The declaration does not specify which incentives the industry prefers to receive, though it mentions the lump-sum purchases examined by the Review, technically called market entry rewards; “insurance-like purchase models”; and enhanced intellectual property protections. It also does not mention any numbers. But it suggests increases in reimbursement for antibiotic and diagnostic-device purchases—while being careful to mention that entities should not be rewarded “for prescribing of antibiotics in greater volumes” (which would raise company income but increase the risk of resistance).

Dr. John Rex, a senior vice president and chief strategy officer at drugmaker AstraZeneca Inc. and one of the strategists behind the declaration, told me:

“The irresolvable tension is, if we prevent the spread of resistance, we won’t use the drugs very much. And if the revenue to the manufacturer depends on sales for use to treat infections, the manufacturer doesn’t have any revenue, doesn’t recoup costs and can’t maintain its supply chain. So I come back to two fundamental questions: What is antibiotics’ value, and how should we buy them?

“As a metaphor for value, I think of the fire department. We are surrounded by fire-prevention services: smoke detectors, fire stations, firemen, the water supply. Most of us never have the misfortune of needing them, but in a very real sense we use them every day. You would not stop paying for them because you haven’t used them; at the end of the year, you are delighted not to have. Antibiotics in the hospital are like the fire department. They have a value when we treat an infection, but they have a bigger value when you know that you could use them to treat an infection if you needed.”

But how that value is to be priced, and what the mechanisms will be, “will be a project of some years,” Rex said, adding that some incentives will work better in different economies or jurisdictions than others. “I’m looking at the operational goal,” he said. “You don’t start setting up the fire service when the building is already on fire.”

Early reaction tonight to the declaration was enthusiastic but cautious. Ramanan Laxminarayan, the founder of the Center for Disease Dynamics, Economics and Policy—which argues that incentives for new drugs should take a back seat to programs to conserve existing ones—told me by email: “This is a big moment, and a recognition by industry of the huge role they play in conserving the effectiveness of antibiotics we have and in the development of the drugs, vaccines and diagnostics we need. But resources allocated to these needs are still too small, and need to match the scale of the antimicrobial resistance challenge.”

At the Pew Charitable Trusts, which operates projects on antibiotic resistance and innovation, senior director of health programs Allan Coukell said: “Antibiotic resistance is one of the pressing public health issues of our time. This declaration, with its long list of industry signers, affirms not just the need to tackle the scientific and economic barriers to drug development, but the importance of conserving the antibiotics we have today.”

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10 thoughts on “Pharma Industry Calls on Governments to Fund New Antibiotics

  1. Everytime I read a news story about the vast percentage increase in pharmaceuticals, there is always some one defending the drug companies stating that they absolutely need high prices to fund research for new drugs. Government funded public schools provide the foundation of basic science as well as other education. Public Universities provide research as well as science students. In fact the science community in general publishes articles about research they have done which drug companies may benefit from by not going down a path that leads to a dead end, or might give private companies insight into their own research so that they don’t have to do as Edison did by conducting thousands of failed experiments o get to their own lightbulb. Now we read in this article a plea for government to fund research for new antibiotics so some company can take that research and sell it to the public at what I am sure will be more outrageous prices. Maybe we need to stop giving our livestock the same anti-biotics that humans use. Or, curtail widespread administering of antibiotics for ailments ( such as the common cold virus ) not suited for such treatments. AnNother good idea would be an education campaign to explain to people why they should take all their anti-biotics so we don’t keep breeding superbugs that are resistant to the antibiotics that are currently in our arsenal of medical treatment.

  2. The Big Pharma companies need to stop being jackasses and fund it themselves. They already make too much money and the hedge fund manager turned jerk pharma CEO only reveals their true cravenness. Besides, you can’t sell statins and ED drugs to bacterial plague victims.

  3. The pharmaceutical industry drives enormous revenue from sales of drugs for life long illnesses such as cancer and obesity that it could use to offset against shorter term therapeutics such as antibiotics. They’re also already outsourcing all of their R&D to biotechs and university collaborations already, in order to minimize their running costs and maximize shareholder dividends, resulting in thousands of redundant scientists. Government funding for their antibiotics research is just another way of them outsourcing more costs and then hoovering up the profits for more shareholder windfalls. The government already funds huge amounts of medical research, publishing new molecules and drug targets which the pharma industry hoovers up for free to turn out massively expensive treatment regimes designed to maximize their return from the “payers” (as they call them). Now the government will pour even more public funds into antibiotic research at no cost to the pharma industry, for the public to pick up the tab with huge costs at the pharmacy counter.

  4. I find the notion that Big Pharma lacks sufficient funds to research and develop antibiotics laughable. They prey on the American people marketing very dangerous drugs directly to the consumers. They charge whatever the market will bare thus increasing healthcare costs and now they want the fed to do the research for them? I think this demonstrates their top priority is not the patient but their financial portfolio.

  5. Wow, I never would have guessed these comments would focus on Villainous Evil Pharma, and why it’s pharma’s fault we don’t have any new antibiotics. Oh, and the side helping of “all the research gets done at universities and biotechs, anyway” is really insightful, and novel too! [end sarcasm]

    Just curious how many of you have spent decades of your lives actually getting educated, getting experience in research science, and then actually inventing new drugs? Oh, I guess that’s a little harder than typing an occassional paragraph or two on how THEY are incompetent and evil…

    1. Ask Congress your questions just after they heard non-testimony from “PharmaBro”.

      “Just curious how many of you have spent decades of your lives actually getting educated, getting experience in research science, and then actually inventing new drugs?”

      Seeing as you’re defending the Pharma Industry, this isn’t you either. If you were, you’re likely not employed, much like the researchers in the Pfizer Complex on North Campus in Ann Arbor, Mi. To put a finer point on it, how many of the CEOs and board members have a doctorate in research pharmacology? Especially the ones who directed the tax inversions that’s all the rage. The Pharma Industry has much to answer for. It’s only a partial recompense for them to develop vaccines on their dime. You should just get out of the way.

  6. In the article Dr. John Rex is quoted as saying,
    “The irresolvable tension is, if we prevent the spread of resistance, we won’t use the drugs very much. And if the revenue to the manufacturer depends on sales for use to treat infections, the manufacturer doesn’t have any revenue, doesn’t recoup costs and can’t maintain its supply chain.”
    Is he saying that if drug companies make effective antibiotics their revenue stream will dry up so they want guarantees from government that they won’t lose money based on this success? Is this a guarantee such drugs can be created? Has the pharmaceutical industry not had a hand in the emergence of antibiotic-resistant bacteria? Who are these people and who are the people who believe them?

    1. Why would you expect a company to invest money to invent and develop a product they hope and expect to NOT sell? Would you want Apple to spend a billion dollars making a new computer that they fully expect the public will never buy?

  7. The graphic in this post—the antibiotic approvals chart from IDSA’s bad bugs report—has been used widely since it was first published, but it’s misleading about the state of the “empty” antibiotic pipeline. First, the final column only includes two years of approvals (03-04), so it looks falsely low compared to the other five-year intervals. Second, it doesn’t include available data since 2004.

    CDDEP has an updated version of the chart, which clearly shows a rise in antibiotic approvals since 2004, and more approvals in the 2003-2007 time period than the original IDSA chart shows. Our chart does include limited data from 2013-2014, though nearly a dozen drugs have already been approved in those two years. The revised chart is available here:


    We used FDA and Nature Reviews data on new molecular entities through 2014 to make the updated version, which clearly shows a rise in approvals. Though CDDEP is keen on seeing new antibiotics produced, as CDDEP Director Laxminarayan mentioned, we’ve written that the empty pipeline argument isn’t as simple as it sounds, and that conservation is the key to the AMR fight.

    The rise is likely in part due to the Qualified Infectious Disease Product program from the U.S. GAIN act, and potentially changes in skin/skin structure infection trial guidelines (Nature Reviews, FDA drug approvals 2014). It also corresponds to the overall volume of FDA pharma approvals in the last 20 or so years. More generally, Kevin Outterson has written about how such charts can be misleading, because many of the earlier drugs have been withdrawn or discontinued (http://cddep.org/blog/posts/high_quality_antibiotics).

    The IDSA chart obviously sends a strong message, but we think the situation is made clearer with data from the last decade. Pharmaceutical companies have made progress in the fight against AMR in recent antibiotic approvals, and we hope that they’ll continue to help the fight by prioritizing antimicrobial stewardship, and including vaccine and diagnostic development in their goals.

  8. It will be interesting to see the recommendations put forth by Review on Antimicrobial Resistance. What is important is to have a global partnership to combat antimicrobial resistance by all parties involved – pharma, physicians and the public, to use antibiotics responsibly and spread awareness because what starts in one part of the world could potentially spread worldwide. I like the fire department metaphor for value of antibiotics in the hospital quoted by Dr.John Rex.

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