Step­ping in­to the pric­ing de­bate, FDA chief Scott Got­tlieb pro­pos­es new re­im­burse­ment idea for an­tibi­otics

Scott Got­tlieb

In an at­tempt to make good on its promise to tack­le the su­per­bug prob­lem, the FDA trot­ted out a new idea to­day that it hopes will ad­dress the re­im­burse­ment catch-22 in­her­ent in the in­dus­try. Their idea? Treat drugs like soft­ware, hav­ing hos­pi­tals buy li­cens­es to an­tibi­otics in­stead of re­im­burs­ing on a per-use ba­sis.

Let’s set aside, for the mo­ment, that pric­ing is typ­i­cal­ly not a top­ic the FDA likes to weigh in on. Af­ter all, drug pric­ing is not un­der FDA’s di­rect purview and would re­quire some in­ter-agency col­lab­o­ra­tion with the likes of CMS. But wor­ries around the pace of in­no­va­tion in an­tibi­otics and oth­er an­timi­cro­bial drugs ap­pear to be dri­ving the FDA to ac­tion.

Brent Ahrens

In the agency’s state­ment Tues­day, FDA com­mis­sion­er Scott Got­tlieb ar­gued that the cur­rent drug re­im­burse­ment mod­el isn’t con­ducive to an­tibi­otics R&D. The more an­tibi­otics a physi­cian pre­scribes, the more mon­ey the drug­mak­er earns. But that’s a prob­lem con­sid­er­ing a grow­ing ef­fort to scale back the use of an­timi­cro­bials.

“When such drugs be­come avail­able, we try to use them spar­ing­ly, lest pathogens be­come over-ex­posed to a new mech­a­nism of at­tack and de­vel­op re­sis­tance to it,” Got­tlieb wrote. “So, providers have im­posed un­der­stand­able re­stric­tions on the use of such drugs. While this rep­re­sents re­spon­si­ble stew­ard­ship, it al­so means that a nov­el an­tibi­ot­ic may have a very lim­it­ed mar­ket. If prod­uct de­vel­op­ers know that they will not be able to re­coup their in­vest­ments, there may be re­duced in­cen­tive to in­vest the sig­nif­i­cant mon­ey need­ed to dis­cov­er and de­vel­op such a drug.”

Brent Ahrens, a Canaan part­ner with a long his­to­ry back­ing an­tibi­otics mak­ers like Iterum and Du­ra­ta, said so-called “ef­fec­tive stew­ard­ship” of these drugs is se­ri­ous­ly af­fect­ing ROI in this field.

“If one were to look at the launch­es of the last sev­er­al an­tibi­otics — or some of the ac­qui­si­tions done — very few have done well over the past 15 years,” Ahrens said. “All of that is re­lat­ed to stew­ard­ship and the price point. The in­cen­tive for us to do this just falls apart.”

Jeff Stein

Un­der the FDA’s new idea for re­im­burse­ment, hos­pi­tals and oth­er care fa­cil­i­ties could be re­im­bursed for li­cens­es to an­timi­cro­bials rather than a per-use ba­sis. With­in this mod­el, the hos­pi­tal sys­tems would pay a fixed li­cens­ing fee for ac­cess to the drug, which would of­fer them the right to use a cer­tain num­ber of an­nu­al dos­es.

“This is sim­i­lar to the way that soft­ware of­ten gets re­im­bursed, where in­sti­tu­tions pay a li­cens­ing fee for a fixed num­ber of in­stal­la­tions,” Got­tlieb’s state­ment reads. “We have been speak­ing with our coun­ter­parts at CMS as to whether such an ap­proach is fea­si­ble, whether it can be for­mu­lat­ed as a demon­stra­tion, and as a demon­stra­tion, whether it would have the in­tend­ed pub­lic health ben­e­fits.”

The FDA hopes that such a mod­el would pro­vide a pre­dictable re­turn on in­vest­ment and rev­enue stream for drug­mak­ers. It would al­so put the in­sti­tu­tions ful­ly in charge of stew­ard­ship of the meds.

Jeff Stein, the CEO and pres­i­dent of clin­i­cal-stage an­tibi­otics mak­er Cidara, tells me it’s en­cour­ag­ing to see the FDA tack­le the prob­lem, but he does won­der if the idea would work for hos­pi­tals.

“The ques­tion is — would hos­pi­tals em­brace it?” Stein said. “Will they be will­ing to pay for a drug up­front for a lim­it­ed num­ber of pa­tients?”

Ahrens said he’s al­so skep­ti­cal about how that would play out.

“Hos­pi­tals are re­luc­tant to pay for any­thing — un­der­stand­ably so — and it’s chal­leng­ing get­ting new prod­ucts in a hos­pi­tal,” Ahrens said. Pay­ing a larg­er sum up­front — when there are low-cost op­tions al­ready avail­able — may be a tough sell to acute care fa­cil­i­ties.

Still, both Ahrens and Stein are hap­py to see the FDA take on the re­im­burse­ment chal­lenge, as both con­sid­er it the biggest is­sue fac­ing the space. In­cen­tive pro­grams like QIDP and oth­ers stem­ming from the GAIN act have helped to fu­el in­no­va­tion in the in­dus­try over the past few years, but if com­pa­nies — and in­vestors — don’t get paid for their ef­forts, the space could slow its ef­forts, they said.

“I’d hate to see a cycli­cal ef­fect,” Ahrens said. “But with­out bet­ter re­im­burse­ment, there just won’t be a lot of new de­vel­op­ment.”

Ven­ture Cap­i­tal as a Strate­gic Part­ner: Fu­el­ing In­no­va­tion be­yond Fi­nance

The average level of investment required for a biotech start-up to succeed is increasing every year, elevating the pressure even further on venture capital to make smart financial investments. Financial investment alone, however, does not always guarantee that exciting innovations can be transformed into real businesses that make a meaningful difference to patients.

Beyond just capital

At Astellas Venture Management (AVM) – a wholly-owned venture capital organization within Astellas, headquartered in the San Francisco Bay Area – capital is just one of the ingredients we offer to add value to our biotechnology investments and partnerships. We generally take a strategic investor approach for companies in our invested portfolio, providing access to expertise, technology and/or resources in addition to the injection of finance. An equity investment from AVM can include access to Astellas’ research and development (R&D) capabilities and expertise, and a global network of partner academic institutions and biotechnology companies, to help advance and accelerate the start-up’s innovation.

UP­DAT­ED: Ver­tex joins Mer­ck, Pfiz­er — re­vamp­ing multi­bil­lion-dol­lar tri­al strat­e­gy as biotech R&D crum­bles

You can add Pfizer, Merck and — as we found out Friday morning — Vertex to the growing list of pharma giants hitting the pause button on a range of clinical trials. But not everyone in R&D is getting a red light.

Vertex says that it’s doing its best to keep working its pipeline strategy, coming up with a plan “to enable virtual clinic visits and home delivery of study drug to ensure study continuity and medical monitoring, and to facilitate study procedures.”

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 76,800+ biopharma pros reading Endpoints daily — and it's free.

Covid-19 roundup: In­ter­cept, blue­bird and a grow­ing list of biotechs feel the pain as pan­dem­ic man­gles FDA, R&D sched­ules

Around 100 staffers at Boston area hospitals have now tested positive for Covid-19, spotlighting the growing risk that the pandemic will sideline many of the most essential workers in healthcare as caseloads peak in the US and around the globe. With more than 3,400 deaths, Spain has become the latest country to surpass the official death count attributed to the new coronavirus in China, where the outbreak originated. As of Thursday morning, confirmed global cases had crossed 470,000 and the death count eclipsed 21,000.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 76,800+ biopharma pros reading Endpoints daily — and it's free.

Af­ter crit­ics lam­bast­ed Gilead for grab­bing the FDA's spe­cial rare drug sta­tus on remde­sivir, they're giv­ing it back

Two days after Gilead won orphan drug status for remdesivir as a potential treatment for Covid-19, they’re handing it back.

The company was slammed from several sides after Gilead reported that the FDA had come through with the special status, which comes with 7 years of market exclusivity, the waiver of FDA fees and some tax credits as well. Typically, everyone who can get orphan status lands it without much of a fuss, but Democratic presidential candidate Bernie Sanders, Public Citizen and other consumer groups were outraged.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 76,800+ biopharma pros reading Endpoints daily — and it's free.

Mod­er­na CEO Stéphane Ban­cel out­lines a short path for emer­gency use of a coro­n­avirus vac­cine

NIAID director Anthony Fauci has left no doubts that it takes 12 to 18 months to get a new vaccine tested and in commercial use, in the best of circumstances. But in times of a global emergency — like these — maybe there’s another, faster route to follow.

In an SEC filing on Tuesday, Moderna $MRNA staked out a record-setting pathway to getting their mRNA vaccine into the frontline of the healthcare response as early as this fall. The SEC filing notes that CEO Stéphane Bancel told Goldman Sachs that an emergency use approval could allow the vaccine to go to healthcare workers and certain individuals in a matter of months — presumably provided the NIH sees the safety and efficacy data they would need from the Phase I.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 76,800+ biopharma pros reading Endpoints daily — and it's free.

Caught in a Covid-19 mael­strom, Eli Lil­ly locks down clin­i­cal tri­als as multi­bil­lion-dol­lar R&D ops de­rail

The Covid-19 pandemic has derailed Eli Lilly’s $6 billion R&D operations.

The pharma giant reported Monday morning that it has decided to hit the brakes on most new study starts and pause enrollment for most ongoing studies. Lilly adds that it is continuing dosing for ongoing studies, “but with study-by-study consideration.”

The pandemic has severely disrupted healthcare systems around the globe, says Lilly, making it difficult or impossible to conduct studies at many research sites. And there’s no timeline for when it expects to get back on track.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 76,800+ biopharma pros reading Endpoints daily — and it's free.

As share buy­backs come un­der scruti­ny, what's in store for the bio­phar­ma in­dus­try?

Stock buybacks are not to be permitted for companies that will be bailed out in the coronavirus stimulus package, Congressional leaders have signaled. To what degree the biopharma industry has relied on buybacks for earnings growth in recent years, and if the trend continues, are the big questions as scrutiny into the practice heightens and balance sheets weaken with the coronavirus pandemic wreaking havoc on global economies.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 76,800+ biopharma pros reading Endpoints daily — and it's free.

A Sin­ga­pore VC rais­es $200M for a new round, but will Covid-19 pre­vent it from rais­ing the rest?

A top Singaporean biotech venture fund is nearly halfway toward its largest ever fund, but in a sign of what could be in store for VCs amid a global economic freeze, said they could face headwinds raising the other half.

Vickers Venture Partners has secured $200 million out of a targeted $500 million for its 6th fund, first announced in early 2018. They’ve given themselves 13 months to complete the financing, Vickers founder Finian Tan told Deal Street Asia, but the financial frost settling amid the Covid-19 pandemic could slow efforts.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 76,800+ biopharma pros reading Endpoints daily — and it's free.

Strug­gling Unum ex­ecs are ready to con­sid­er a sale, merg­er or any deal that comes its way

Unum $UMRX is working its way through a survival plan of sorts.

After getting hit with a trio of FDA holds in its brief public history and triggering its second pivot to a new lead drug program while laying off 60% of the staff, the troubled penny stock biotech Unum Therapeutics has hatched new plans to secure financial backing while lining up a go-forward strategy for the company.

First, Lincoln Park Capital Fund has agreed to buy up to $25 million of the long-suffering stock, as Unum directs. And the executive team — led by CEO Chuck Wilson — has put everything on the table for consideration: a sale, acquisition, merger, licensing deal, you name it. The ACTR707 program, meanwhile, is being formally wrapped up — their second failed lead program.