Pharma Industry Calls on Governments to Fund New Antibiotics

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.

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.”

Previous posts:

• Dec. 7, 2015: “Proposal: Set International Targets for Farm Antibiotic Use“
• Sept. 9, 2015: “Can Offering a $12 Million Prize Make a Difference to Drug Resistance?“
• May 23, 2015: “We Need Antibiotics. They’re Not Profitable to Make. Who Pays?“
• Feb. 5, 2015: “How to Fight Superbugs: Start Spending Money“
• Dec. 15, 2014: “The Coming Cost of Superbugs: 10 Million Deaths Per Year“