Losing the War on Antibiotic-Resistant Infections Because of Market Forces
According to the World Health Organization (WHO), about 700,000 people die each year from bacterial infections. In the U.S. alone, about 23,000 people die each year from antibiotic-resistant bacterial infections. There’s clearly a need for new antibiotics to fight these infections.
If so, why are so many companies in the space abandoning it or going out of business?
Take, for example, Achaogen. In 2018, the U.S. Food and Drug Administration (FDA) approved its Zemdri (plazomicin) to treat drug-resistant infections. Analysts at the time projected sales of $500 million per year. In June 2019, the company, after filing bankruptcy, sold off almost all of its assets for $16 million.
In 2018, Novartis closed its infectious diseases drug research unit. Theravance Biopharma abandoned an experimental antibiotic and sold its FDA-approved antibiotic. In November 2018, antibiotics company Melinta Therapeutics cut its staff, stating at the time, “In the face of an extremely challenging time for the antibiotics industry, Melinta has made the difficult decision to significantly reduce our investment in discovery research and are currently looking for strategic partners to take on these activities, located at our New Haven Facility.”
And these are just a few examples. Big pharma has largely gotten out of the antibiotics business, with about 90% of research on new antibiotics being conducted by small biotech companies with market caps of less than $100 million, more than half pre-revenue.
It's not the science. The science is there. It’s the market.
A Wired article, “The Antibiotics Business Is Broken—But There’s a Fix,” noted that since it takes 10 to 15 years and at least $1 billion to develop a drug, companies need to charge a high enough price to sell enough of the drug to earn back the R&D expenses, reward investors and be profitable.
“That math works for most of the products of the pharmaceutical industry, from old drugs that people take every day—antidepressants, beta-blockers, statins—to the newest cancer therapies known as CAR-T, which can cost almost $500,000 per dose. But antibiotics don’t fit that equation. Unlike cancer drugs, most antibiotics are inexpensive; the few with high price tags are reserved for rare hospital use. And unlike drugs to treat chronic diseases, people take antibiotics for only short periods of time,” Wired wrote.
There are also reimbursement issues, as the San Francisco Business Times reports. Government reimbursement programs and private insurers reimburse hospitals for antibiotics as a bundle rather than separately. The less a hospital pays for the components of the bundle, the more likely it is to cover its costs or be profitable.
“They might not ever be reimbursed, so maybe they don’t buy it,” Heather Shane, a consultant and former biotech corporate lawyer, told the San Francisco Business Times.
Still, companies continue to work toward new approaches with the hopes of getting lucky and supplying a medication for a largely unmet need. Some, however, shift their focus to higher-paying approaches. A Bay Area company, SciBac, for example, recently shifted its “bugs-as-drugs” technology, using bacteria to deliver antibiotics, from a C. diff focus toward drug-resistant bacteria seen in chronic cystic fibrosis (CF) infections. The company believes there will be less competition for this application. It also believes it will get more interest from venture capital firms.
Other companies, such as MicruRx, are reaching out to foreign investors, such as China, for funding. The company’s product is a longer-lasting formulation of contezolid, and recently completed a Phase II trial for acute bacterial skin and skin structure infections.
“When none of the companies feel they can at least recoup their investment, then there’s no research,” Zhengyu Yuan, president and chief executive officer of MicuRx told The San Francisco Business Times. “Then all of society will suffer.”
The U.S. government isn’t oblivious to the problem, although the plans often seem to get bogged down in politics. There is a Senate bill that would, according to the Times, “carve out a new hospital-payments bundle for antibiotics and throw an additional 2% atop those costs, for example. Another plan would create a $1 billion to $2 billion fund—a ‘market-entry reward’—to bridge select antibiotics from FDA approval through their first few years on the commercial market.”
And the U.S. government does fund quite a bit of research into anti-infectives, largely through the Department of Defense and Health and Human Services’ Biomedical Advanced Research and Development Authority (BARDA). Moderna, for examples, receives quite a bit of funding for its mRNA vaccines and anti-infectives programs, as well as the Bill & Melinda Gates Foundation, which invests heavily in companies working on vaccine and antibiotics research.
CARB-X is a program led by Boston University and funded by BARDA, the Wellcome Trust, the Gates Foundation and U.S. and European government agencies. Between 2016 and 2021, CARB-X plans to invest more than $500 million into vaccine and antibiotic research and has already made 44 awards totaling $126.1 million. But already, 11 of the 44 grants have ended for a variety of reasons, including one that belonged to SciBac, which was part of the reason for shifting the focus of its research efforts.
Other governments are funding programs as well. The UK recently launched a pilot program to pay antibiotic companies upfront based on the value of the drug, rather than on volumes sold.
But will it be enough and is there a real solution?