The antibiotics R&D effort is broken. Here's one market solution that might fix it
Anyone even slightly familiar with antibiotics R&D over the last 10 years would quickly agree that the system is badly broken.
Big Pharma — with the exception of Roche — largely pulled out of development because the margins are low. The hunt now is for blockbusters. There are plenty of cheap antibiotics to cover most of the market; the niche for new antibiotics remains too small to sustain any major effort needed here. The little biotechs left with the lion’s share find it’s expensive, highly risky and hard to make pay. And that is not a pretty picture.
So now government officials who have been sounding the alarm about the growing risk of drug-resistant bacteria are looking to change the way the market is structured in order to lure bigger and more ambitious players into the game.
That was clear in the UK government’s report, out on Thursday, which outlines a plan to de-couple price from demand and shift to a more value-based approach, where institutions pay fees based on their need for new antibiotics. This is quite similar to the licensing approach that FDA commissioner Scott Gottlieb suggested months ago.
While embedded in a host of suggestions related to ongoing efforts to better monitor and combat drug resistance, the UK report urges a new system exploring how to:
Develop and test new models for national purchasing arrangements that de-link the price paid for antimicrobials from the volumes sold, using a NICE led healthcare technology assessment to support robust stewardship.
Analysts at GlobalData offered a shout-out for the move.
“The UK government’s decision to explore value-based pricing for antibiotics represents an important step away from the traditional approach of directly linking payments to sales volume—a pricing strategy that does not work well for antibiotics as it conflicts with stewardship efforts and ultimately discourages the proper use of both new and well-established antibiotics,” noted their infection disease director Christopher Pace. “From the commercial standpoint, a value-based pricing scheme could also help to stimulate antibiotic R&D as companies will be incentivized to position products for smaller groups of patients where high unmet medical need exists, without worrying about stymieing return on investment.”
We know there’s a massive and growing health problem, but the industry has been deaf to the five-alarm bells that have been ringing. And why not? Charitable R&D for neglected diseases is a branch of research all to itself, where you can choose to spend — or not — as you will. But there’s no marketing glory in it.
Something has to change, and maybe government officials are finally finding a path forward on a critical topic. Right now, there is no market solution.
The other solution that the UK report echoes is a suggestion that companies be assessed a certain amount that they can either spend on antibiotics or pay as a fee to cover the expenses of those who will. We prefer finding a market solution as the only sustainable way to get real R&D programs off the ground and moving fast.