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Countries mull over incentives for developing antibiotics
World Report
Countries mull over incentives for developing antibiotics Governments are considering which financial incentives will be the best to boost research and development for much needed new antibiotic drugs. Tatum Anderson reports.
GIPhotoStock/Corbis
The prospect of slipping into a deadly, post-antibiotic era is prompting countries across the world to work out when and what they are willing to pay drug companies to develop desperately needed antibiotics. Governments have commissioned academics, economists, business analysts, and global health experts to scour the world for different financial incentive models. The European Union and the European Federation of Pharmaceutical Industries and Associations (EFPIA) have put together the DRIVE-AB research group, which met earlier this year, to whittle down 35 models. Its choices will be published in June. UK Prime Minister David Cameron has commissioned ex-Goldman Sachs economist, Lord Jim O’Neill—who coined the term BRICS (Brazil, Russia, India, China, and South Africa)—to recommend models within his antimicrobial resistance review due to be published later this month. Everyone from the London School of Economics to WHO, think tank
1894
Chatham House, and the World Bank has pondered the problem too. Experts have looked at theoretical economic models, international collaborations, such as the Large Hadron Collider, and existing health-care incentive models, including the US Government’s Generating Antibiotics Incentives Now (GAIN) Act. It is hoped that countries might back the financial incentives they favour at the next G20 leaders’ summit in Hangzhou, China, in September, and perhaps this year’s UN General Assembly in September, says Lord O’Neill.
“The most radical of ideas floated would get governments to collectively reimburse pharmaceutical companies for the cost of developing a prized drug.”
A failing market The aim is to save a broken market— at a time when resistance to existing drugs is rising, antibiotics research and development (R&D) departments have closed, and no new classes of antibiotic have been discovered for 25 years. The value of new antibiotics to companies is tiny. By contrast, the value to society is huge because modern medicine—from paediatrics to surgery and oncology—would not be possible without them, says Kevin Outterson of Boston University, Boston, MA, USA, who has contributed to the US Government, Chatham House, and Drive-AB reviews. “This is the most valuable drug class in human history [and] has extraordinary value to society but the way everything else is structured, the incentives for any company to produce more of it is limited”, he says. Today’s system actually encourages companies to hold off developing
new antibiotics. That’s because cheap generic antibiotics are widely used, so there’s no incentive for pharma to work on new ones until resistance has already emerged. But by waiting, there’s a lag time of years before new drugs appear. If companies developed drugs before resistance emerged—as a kind of insurance—they might not be used until decades after they were created and would certainly never recoup costs during a patent period. Fixes to the market aren’t simple. Making drugs more expensive to recoup costs has been rejected by the Chatham House group because they would reach even fewer people in lowincome and middle-income markets; more than 1 million children already die from untreated pneumonia and sepsis each year. Pharma might also be tempted to market drugs outside limited indications, promoting resistance. Companies can’t flood the market with new drugs either because that would promote resistance. Conversely, stockpiles of new drugs might delay resistance, but would strangle innovation.
Radical ideas The most radical of ideas floated would get governments to collectively reimburse pharmaceutical companies for the cost of developing a prized drug. That way any money made has no link to how much is sold. This so-called delinkage idea is gaining ground; 85 drug companies surprised many by supporting it at this year’s World Economic Forum in Davos, Switzerland. The details are being hammered out such as whether or not countries should buyout the intellectual property completely so they can commission generics companies to manufacture drugs, thereby controlling sales and distribution. www.thelancet.com Vol 387 May 7, 2016
World Report
Another delinkage idea lets companies keep the intellectual property on condition that they restrict sales. That scenario would obviate the need for a global body to manage intellectual property, sales, and distribution. There’s also overwhelming support for smaller financial incentives throughout the lifecycle of a drug. Prize funds at early stages are popular. More grant money for basic research could uncover novel drug classes. Ideas for clinical trials rewards include 50% refundable R&D tax credits, similar to those provided under the existing US Orphan Drugs Act, which promotes research into drugs for rarer diseases. Reviewers of incentives would like to see the antibiotics public–private partnerships run by the European Union’s Innovative Medicines Initiative and US Biomedical Advanced Research and Development Authority financed for several more years.
Bones of contention Experts say that at about US$2–4 billion a year, the amount required to turn the market around is affordable for the world’s 20 richest countries or drug companies. Who will pay is now the issue. Donor funding for tax hikes are options but unpopular with governments. Taxing 0·5% on pharmaceutical sales, however, could raise as much as $5 billion a year, say experts. Lord O’Neill thinks drug companies should pay a levy if they choose not to develop antibiotics. Those developing new antibiotics wouldn’t be expected to pay. This so-called pay or play mechanism would ensure that companies chasing high-profit drug classes also contribute to solving the antibiotics problem because it could ultimately affect their ability to sell drugs. “I guess it’s [a] controversial [idea] but one that we are certainly encouraging”, he tells The Lancet. “A lot of the things these pharma guys have got...wouldn’t have any use anyhow if we had complete resistance to antibiotics. It’s in their www.thelancet.com Vol 387 May 7, 2016
own commercial interest to think of an effective way to get the money raised.” The levy idea has made many in the pharmaceutical industry rather nervous, says Richard Bergström, director-general at EFPIA. Companies have proposed a repurposed version of the priority review voucher (PRV), which has already raised hundreds of millions of dollars in the USA. Today, companies in the USA that register drugs against neglected tropical or rare paediatric diseases can receive a voucher that entitles them to a fast-track review of another drug they’ve developed; ideally they’d use the voucher on a more lucrative drug class. Importantly, because vouchers can be sold on—one went for a staggering $350 million—companies might rake in money for new antibiotic drugs.
“Experts say that at about US$2–4 billion a year, the amount required to turn the market around is affordable for the world’s 20 richest countries or drug companies.” Bergström says the voucher could work in Europe, if patents could be extended by months instead of an expedited review. PRVs have been unpopular because they haven’t always incentivised companies to register new or affordable drugs. Before his arrest for securities fraud, the notorious pharmaceutical executive Martin Shkreli, former head of KaloBios, planned to register benznidazole—a 40-year-old drug used to treat Chagas disease—in the USA to gain a voucher. Médecins Sans Frontières worried he would also increase the price of the drug. Those weighing up PRVs for antibiotics worry that they are an inefficient way for governments to raise money. For a start, the market decides how much individual vouchers will sell for. David Ridley of Duke University, Durham, NC, USA, who originally proposed PRVs, worries that
expanding the system to antibiotics may create too many vouchers, which would lower their value and therefore the incentive to create more much needed drugs. Furthermore, the value of the voucher has no bearing on the quality of the drug. Additionally, expedited review or extended patents keeps more lucrative drugs more expensive for longer. That’s paid for by health systems, says John-Arne Røttingen of the Norwegian Institute of Public Health, who has contributed to reviews of incentives. “We don’t know which diseases or patient groups or part of the health system will pay the price”, he says. Tweaks to the PRV system might make it more efficient; governments could cap the amount made from an expedited review or auction vouchers themselves, for instance. Health systems would still have to pay, but perhaps it’s a price worth paying to ensure there are available antibiotics, say proponents. PRVs may be one of several models chosen by different regions to raise funds. Others may choose to tax generic antibiotics or to tax antibiotics in agriculture, which could have the added benefit of discouraging farmers from adding wasteful quantities of antibiotics to feed. Public–private partnership Drugs for Neglected Diseases (DNDI) thinks it’s time to test the models in the real world. With WHO, its global antibiotic research and development facility (GARD) will create treatments that pharmaceutical companies avoid; a more heat-stable paediatric amoxicillin combination or drugs for gonorrhoea are potential candidate projects. But importantly, GARD could pilot prizes and other models being discussed. Jean-Pierre Paccaud, business development director at DNDI, says: “I believe that we need to apply those theoretical models to see if there is a practical approach.”
Tatum Anderson 1895
Countries mull over incentives for developing antibiotics Governments are considering which financial incentives will be the best to boost research and development for much needed new antibiotic drugs. Tatum Anderson reports.
GIPhotoStock/Corbis
The prospect of slipping into a deadly, post-antibiotic era is prompting countries across the world to work out when and what they are willing to pay drug companies to develop desperately needed antibiotics. Governments have commissioned academics, economists, business analysts, and global health experts to scour the world for different financial incentive models. The European Union and the European Federation of Pharmaceutical Industries and Associations (EFPIA) have put together the DRIVE-AB research group, which met earlier this year, to whittle down 35 models. Its choices will be published in June. UK Prime Minister David Cameron has commissioned ex-Goldman Sachs economist, Lord Jim O’Neill—who coined the term BRICS (Brazil, Russia, India, China, and South Africa)—to recommend models within his antimicrobial resistance review due to be published later this month. Everyone from the London School of Economics to WHO, think tank
1894
Chatham House, and the World Bank has pondered the problem too. Experts have looked at theoretical economic models, international collaborations, such as the Large Hadron Collider, and existing health-care incentive models, including the US Government’s Generating Antibiotics Incentives Now (GAIN) Act. It is hoped that countries might back the financial incentives they favour at the next G20 leaders’ summit in Hangzhou, China, in September, and perhaps this year’s UN General Assembly in September, says Lord O’Neill.
“The most radical of ideas floated would get governments to collectively reimburse pharmaceutical companies for the cost of developing a prized drug.”
A failing market The aim is to save a broken market— at a time when resistance to existing drugs is rising, antibiotics research and development (R&D) departments have closed, and no new classes of antibiotic have been discovered for 25 years. The value of new antibiotics to companies is tiny. By contrast, the value to society is huge because modern medicine—from paediatrics to surgery and oncology—would not be possible without them, says Kevin Outterson of Boston University, Boston, MA, USA, who has contributed to the US Government, Chatham House, and Drive-AB reviews. “This is the most valuable drug class in human history [and] has extraordinary value to society but the way everything else is structured, the incentives for any company to produce more of it is limited”, he says. Today’s system actually encourages companies to hold off developing
new antibiotics. That’s because cheap generic antibiotics are widely used, so there’s no incentive for pharma to work on new ones until resistance has already emerged. But by waiting, there’s a lag time of years before new drugs appear. If companies developed drugs before resistance emerged—as a kind of insurance—they might not be used until decades after they were created and would certainly never recoup costs during a patent period. Fixes to the market aren’t simple. Making drugs more expensive to recoup costs has been rejected by the Chatham House group because they would reach even fewer people in lowincome and middle-income markets; more than 1 million children already die from untreated pneumonia and sepsis each year. Pharma might also be tempted to market drugs outside limited indications, promoting resistance. Companies can’t flood the market with new drugs either because that would promote resistance. Conversely, stockpiles of new drugs might delay resistance, but would strangle innovation.
Radical ideas The most radical of ideas floated would get governments to collectively reimburse pharmaceutical companies for the cost of developing a prized drug. That way any money made has no link to how much is sold. This so-called delinkage idea is gaining ground; 85 drug companies surprised many by supporting it at this year’s World Economic Forum in Davos, Switzerland. The details are being hammered out such as whether or not countries should buyout the intellectual property completely so they can commission generics companies to manufacture drugs, thereby controlling sales and distribution. www.thelancet.com Vol 387 May 7, 2016
World Report
Another delinkage idea lets companies keep the intellectual property on condition that they restrict sales. That scenario would obviate the need for a global body to manage intellectual property, sales, and distribution. There’s also overwhelming support for smaller financial incentives throughout the lifecycle of a drug. Prize funds at early stages are popular. More grant money for basic research could uncover novel drug classes. Ideas for clinical trials rewards include 50% refundable R&D tax credits, similar to those provided under the existing US Orphan Drugs Act, which promotes research into drugs for rarer diseases. Reviewers of incentives would like to see the antibiotics public–private partnerships run by the European Union’s Innovative Medicines Initiative and US Biomedical Advanced Research and Development Authority financed for several more years.
Bones of contention Experts say that at about US$2–4 billion a year, the amount required to turn the market around is affordable for the world’s 20 richest countries or drug companies. Who will pay is now the issue. Donor funding for tax hikes are options but unpopular with governments. Taxing 0·5% on pharmaceutical sales, however, could raise as much as $5 billion a year, say experts. Lord O’Neill thinks drug companies should pay a levy if they choose not to develop antibiotics. Those developing new antibiotics wouldn’t be expected to pay. This so-called pay or play mechanism would ensure that companies chasing high-profit drug classes also contribute to solving the antibiotics problem because it could ultimately affect their ability to sell drugs. “I guess it’s [a] controversial [idea] but one that we are certainly encouraging”, he tells The Lancet. “A lot of the things these pharma guys have got...wouldn’t have any use anyhow if we had complete resistance to antibiotics. It’s in their www.thelancet.com Vol 387 May 7, 2016
own commercial interest to think of an effective way to get the money raised.” The levy idea has made many in the pharmaceutical industry rather nervous, says Richard Bergström, director-general at EFPIA. Companies have proposed a repurposed version of the priority review voucher (PRV), which has already raised hundreds of millions of dollars in the USA. Today, companies in the USA that register drugs against neglected tropical or rare paediatric diseases can receive a voucher that entitles them to a fast-track review of another drug they’ve developed; ideally they’d use the voucher on a more lucrative drug class. Importantly, because vouchers can be sold on—one went for a staggering $350 million—companies might rake in money for new antibiotic drugs.
“Experts say that at about US$2–4 billion a year, the amount required to turn the market around is affordable for the world’s 20 richest countries or drug companies.” Bergström says the voucher could work in Europe, if patents could be extended by months instead of an expedited review. PRVs have been unpopular because they haven’t always incentivised companies to register new or affordable drugs. Before his arrest for securities fraud, the notorious pharmaceutical executive Martin Shkreli, former head of KaloBios, planned to register benznidazole—a 40-year-old drug used to treat Chagas disease—in the USA to gain a voucher. Médecins Sans Frontières worried he would also increase the price of the drug. Those weighing up PRVs for antibiotics worry that they are an inefficient way for governments to raise money. For a start, the market decides how much individual vouchers will sell for. David Ridley of Duke University, Durham, NC, USA, who originally proposed PRVs, worries that
expanding the system to antibiotics may create too many vouchers, which would lower their value and therefore the incentive to create more much needed drugs. Furthermore, the value of the voucher has no bearing on the quality of the drug. Additionally, expedited review or extended patents keeps more lucrative drugs more expensive for longer. That’s paid for by health systems, says John-Arne Røttingen of the Norwegian Institute of Public Health, who has contributed to reviews of incentives. “We don’t know which diseases or patient groups or part of the health system will pay the price”, he says. Tweaks to the PRV system might make it more efficient; governments could cap the amount made from an expedited review or auction vouchers themselves, for instance. Health systems would still have to pay, but perhaps it’s a price worth paying to ensure there are available antibiotics, say proponents. PRVs may be one of several models chosen by different regions to raise funds. Others may choose to tax generic antibiotics or to tax antibiotics in agriculture, which could have the added benefit of discouraging farmers from adding wasteful quantities of antibiotics to feed. Public–private partnership Drugs for Neglected Diseases (DNDI) thinks it’s time to test the models in the real world. With WHO, its global antibiotic research and development facility (GARD) will create treatments that pharmaceutical companies avoid; a more heat-stable paediatric amoxicillin combination or drugs for gonorrhoea are potential candidate projects. But importantly, GARD could pilot prizes and other models being discussed. Jean-Pierre Paccaud, business development director at DNDI, says: “I believe that we need to apply those theoretical models to see if there is a practical approach.”
Tatum Anderson 1895