What are the economic barriers of antibiotic R&D and how can we overcome them?

KEYWORDS:

• Antibiotics
• drug discovery
• drug development
• incentives
• antimicrobial resistance
• health policy

1. Introduction

There was an explosion of antibiotic drug discovery and development between 1940 and 1990 [1]. Pharmaceutical companies generated the majority of our current antibiotic arsenal as they leveraged early scientific breakthroughs in return for lucrative patents. Any sign of drug resistance could be mitigated by the entrance of a new, more effective generation or class of antibiotic drug. The market became saturated with clinically interchangeable antibiotic products. After 1990, research and development (R&D) focus shifted away to other more profitable therapeutic ventures and developers exited the antibiotic space. The number of antibiotics marketed each decade has since dropped, and no novel classes with distinct chemical structures have reached the market [2]. In parallel, antibiotics have been chronically overused and poorly regulated in both human and agricultural settings, which has enabled the sudden and exponential spread of drug resistance. Between 2000 and 2015, global antibiotic consumption increased by a staggering 65%, mostly driven by low and middle-income countries [3]. Potential and existing developers now face steep economic barriers to R&D of novel antibiotics and a prospective market that is small and unreliable.

We will discuss what causes the ongoing economic dysfunction of the antibiotics market and what programs have been implemented to address some of these economic barriers. While there has been notable progress in stimulating R&D, the drug pipeline still does not come close to matching the clinical need for novel antibiotics. We put forth a couple of tangible recommendations for how to address the most pressing economic problems within the antibiotics market.

2. Economic barriers to antibiotic R&D

Reinvigorating antibiotic R&D has proven to be challenging due to a myriad of economic, regulatory, and scientific barriers. However, it is the economic issues that permeate throughout the entire value chain, appear to cause the greatest distress to developers, and are amplified by the regulatory process and scientific challenges. This section will introduce the key economic barriers inhibiting the discovery and development of novel antibiotics, as well as highlight how scientific and regulatory challenges in the field contribute to these economic barriers.

The first obstacle to antibiotic R&D is that the basic science of identifying new antibacterial molecules and mechanisms of action is difficult. The first- and second-generation discovery methods that studied natural antimicrobial activities and used high throughput biochemical assays have become less fruitful with time or have been ineffective [4]. Consequently, the scientific talent pool in antibiotic discovery has steadily shrunk with the closure of research centers and divestiture of pharmaceutical companies that have been dissuaded by repeated failures. There is now a shortage of experts qualified to lead research programs employing promising new antibiotic discovery methods such as whole-cell activity screening with profile targeting.

The preclinical phase of R&D has been termed the ‘valley of death’ as drug candidates coming out of basic science frequently never reach clinical trials [5]. Basic science is usually conducted by academic researchers funded publicly, while the more expensive clinical trials are operated by private pharmaceutical companies. As a result, there is a break in funding and appropriate actors to transition candidates from basic science to being tested in clinical settings. This encourages insulated and weaker efforts in the preclinical stages undertaken by both private and public parties, predisposing the process to inefficiency, duplication of work, or loss of valuable candidates [6]. From a scientific perspective, there is a shortage of well-defined preclinical models of drug resistant bacterial infection [4]. This makes it difficult to extrapolate the human safety and efficacy of a preclinical candidate in the context of drug resistance and may contribute to clinical trial failure rates and higher costs.

The next major hurdle is funding the clinical trials of a prospective antibiotic. The operational costs of an antibiotic’s Phase I to III clinical trials are estimated to be upwards of $130 million with post-approval follow-on trials often amounting to an added $146 million [7]. Only a small portion of clinical trials will yield a marketable product [8]. Small- and medium-sized enterprises (SMEs), which have taken over the antibiotic development space, are often unable to raise the capital to invest in promising candidates. Coordinating and recruiting patients to antibiotic clinical trials is logistically problematic because treatment periods are usually short and there are few effective rapid diagnostic tools to identify eligible participants. In addition, antibiotic clinical trials usually rely on non-inferiority trials, which have high patient recruitment cutoffs despite the relatively small patient populations with resistant infections [9]. The technical difficulties in running antibiotic clinical trials translate to a higher development cost and protracted timeline.

The few successful drugs from clinical trials must then navigate through the licensing procedures of different drug authorities. Regulatory agencies such as the US Food and Drug Administration, the European Medicines Agency, Health Canada, the Japanese Pharmaceuticals and Medical Devices Agency, and the China Food and Drug Administration all have distinct procedures and requirements for patient selection criteria, clinical endpoint definitions, specifications of statistical parameters, and rules on expedited approvals. This contributes to an increased expense for the licensing company and cuts into the effective patent period of the product.

Lastly, the financial justification for developing and commercializing a novel antibiotic does not reflect its public health value or the investments made into its R&D. Sales volumes are limited by the short treatment duration inherent in antibiotic therapy, and local antimicrobial stewardship programs are increasingly restricting the use of antibiotics. A truly novel antibiotic would likely be reserved for rare infections caused by the most highly resistant strains of bacteria. Sales could be further threatened by incoming rapid diagnostic tools that would limit the need for empiric treatment. Also, existing generics place downward pressure on the prices of new antibiotics because there is often significant overlap in their clinical indications. Without market intervention, the net present value of the average antibiotic R&D project has been estimated to be −$50 million as compared to +$1150 million and +$720 million for musculoskeletal and neurologic R&D projects, respectively [10].

3. Recent developments in antibiotic R&D

Encouragingly, governments, non-governmental organizations (NGOs), and industry have come together to form or expand numerous major international and national programs to fund, coordinate, and support antibiotic R&D projects [11,12]. There are now over 58 different initiatives that incentivize the development of antibiotics, operating either at global, European Union (EU), or national levels [13]. Some of these initiatives would include: The Joint Programming Initiative on Antimicrobial Resistance (JPIAMR), the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator (CARB-X), the Global Antibiotic Research and Development Partnership (GARDP), the Global Antimicrobial Resistance Innovation Fund (GAMRIF), the EU’s Innovative Medicines Initiatve and its subsidiary New Drugs for Bad Bugs (ND4BB) Program, and the US’s Biomedical Advanced Research and Development Authority (BARDA). In the last few years, multiple new and promising antibiotic drug candidates have been added to the development pipeline and are progressing toward market approval [14,15]. Progress is also occurring in the world of alternative therapies such as bacteriophages, lysins, antibodies, and peptides [15,16].

However, the current pipeline is not nearly robust enough to match clinical need and counter the rising rates of resistance [14]. There are now 33 antibiotics in clinical development that are active against a World Health Organization (WHO)-designated priority pathogen: 14 drugs in Phase I clinical trials, 7 in Phase II, and 12 in Phase III [14]. Phase III drugs are 3–5 years from possibly reaching the market, but Phase I and II drugs have development timelines of at least 5–10 years and successful commercialization is highly uncertain. In total, the entire pipeline is optimistically expected to yield 10 new approvals. Problematically, almost all the pipeline drugs are redevelopments of classic antibiotic compounds or are combination therapies of existing antibiotic molecules, making them prone to developing cross-resistance. The pipeline for alternative therapies lags behind that of antibiotics and faces an even tougher battle to secure financing and resources to move projects forward [15,16].

4. How to overcome the economic barriers of antibiotic R&D

While the initiatives fostering antibiotic R&D are commendable, there are notable gaps in the back end of R&D incentivization [11]. The antibiotic pipeline can be further improved by ensuring that an organized continuum of incentivization is offered and which addresses all the barriers in the antibiotic value chain. The most constructive starting points for achieving this continuum would include: (1) increasing funding of antibiotic clinical trials to support drug candidates reaching regulatory approval submission and (2) implementing a Market Entry Reward (MER) or Options Market for Antibiotics (OMA) to encourage commercialization and distribution of novel antibiotics.

Additional direct project funding and support, often referred to as push incentivization, is most needed in the clinical stages of antibiotic development where costs are greatest. Yet, approximately 85% of European national-level public funding of antibiotic R&D is directed toward basic science [17]. Many international funding programs like JPIAMR and CARB-X also strictly focus their financing on the early stages of antibiotic R&D. This could be relieved by expanding programs such as BARDA and the ND4BB COMBACTE projects which specifically fund and support clinical development. Additionally, it may be beneficial to pool disparate early-stage R&D funding and reallocate it toward the later phases to ensure that viable antibiotics move to the market approval stage [11,18]. Many of the antibiotic projects in phases I or II, often run by SMEs, would immediately benefit from a boost in project funding.

Next, there still remains no long-term, reliable economic incentive for companies to commercialize, as well as equitably and sufficiently distribute a novel antibiotic. This is known as pull incentivization. To solve this issue, numerous experts have recommended the implementation of a global MER program [13,19–22]. An MER is a monetary prize awarded to a developer of a successfully licensed novel antibiotic that meets predefined product criteria and upholds post-market authorization conditions related to sustainability and patient access. An MER would roughly mimic the traditional financial payout of commercializing an innovative, patented drug while reducing the usual market-based incentive for developers to drive up sales volumes for profit. There are many possibilities for how this MER could be specifically designed regarding the degree of delinkage, payout size and timeline, access and stewardship stipulations, and other requirements [19]. For an MER to be effective, prizes would need to be approximately $1–2 billion per first-entrant drug in a new class. The entire MER program requires funding of $10–30 billion to pull 10–15 novel antibiotics into the market. Realistically, an MER program of this size would need to be funded and coordinated internationally.

The OMA model takes the MER one step further by combining the pull-based prize of an MER with an antibiotic’s push-based R&D funding under one incentivization mechanism [23,24]. Developers could sell ‘options’ on their drug candidates for upfront payments to fund its R&D. In return, developers must sell a prespecified volume of their antibiotic at a discounted price to the option holder should the antibiotic reach the market. The OMA could allow governments and NGOs to fund all stages of antibiotic R&D and ensure that successful antibiotics are then purchased at a fair price, rationed appropriately, and distributed equitably. Unlike with MERs, purchasers of options are rewarded with discounted prices for the significant risk they take with financing antibiotic R&D. Developers benefit from receiving financing for their R&D project and are guaranteed a market for their product upon licensure.

5. Conclusion

Multiple economic barriers, amplified by scientific and regulatory challenges, perpetuate a dysfunctional antibiotics market. The antibiotic pipeline has been improving in response to international and national initiatives that target some of these challenges. But, the pipeline is still insufficient to meet existing clinical needs and overcome the rising rates of resistance. We recommend that antibiotic drug discovery and development could be further supported, and key economic R&D barriers mitigated, by expanding late-stage push funding of clinical trials and implementing a global pull mechanism in the form of either an MER program or OMA.

6. Expert opinion

Not only are antibiotic consumption and resistance rates steadily climbing, but also major pharmaceutical companies continue to exit the market despite recent incentivization efforts. In 2018 so far, several major antibiotic drug-makers have left the market for financial reasons [25]. Novartis closed its antibiotic R&D unit, which had 32 products in development, in July. Sanofi departed from the market by selling its antibiotic program in June. In May, Allergen divested from its $2 billion infectious disease research unit. This is a worrying trend that is alerting us that there is still significant economic dysfunction within the antibiotics market. Even with all the new financial initiatives, most developers still find the market unprofitable.

From our perspective, the two biggest challenges stalling antibiotic discovery and development are the lack of funding and resource support for expensive clinical trials, and more importantly, the lack of a market for newly licensed antibiotics. The solutions to these two key issues have been discussed above and in much more detail in other publications. These solutions have been proposed for many years now and there is overwhelming evidence and expert support recommending them [11,13,19,21–23]. However, the implementation of these programs is the sticking point, as they require international coordination and commitment of national funding. As with most globally shared issues, governments are reluctant to take the lead in tackling antimicrobial resistance and spending millions to billions in tax dollars to solve a problem that is not solely their own. Low- and middle-income countries, where the burden of AMR is greatest, are in the weakest political and economic position to lead the reform of the antibiotics market. Research and political attention must shift from further discussing R&D incentivization solutions toward implementation of proposed plans led by high-income countries.

We would argue that establishing a global governing body would be a realistic and invaluable first step toward initiating remediation of the back-end gaps in antibiotic R&D incentivization. A global governing body could coordinate, prioritize, and mobilize international resources for fighting antibiotic resistance as a whole. One aspect of this organization’s mandate would be to provide overarching guidance to international and national R&D initiatives to achieve a more balanced and efficient global R&D incentive profile [11]. This organization could advocate for national investment, oversee the efficient allocation of pooled funding, manage a future MER or OMA program, and also help ensure that broader antibiotic resistance goals related to sustainability and patient access are reinforced by R&D incentives. In addition, the global governing body could ensure that low- and middle-income countries are incorporated into the solution.

A promising proposal for such a governing body is the Global Antimicrobial Resistance Collaboration Hub, which emerged from the 2017 G20 Summit in Hamburg, Germany [26]. It is intended that the Hub will coordinate efforts to promote antibiotic research and encourage global involvement and investment. Its scope will include all stages of the antibiotic development pipeline, as well as vaccines, alternative therapies, and diagnostic tools. Germany has taken the lead on establishing the Hub with aid from the Bill and Melinda Gates Foundation and the Wellcome Trust, but requires political and financial backing from many countries if it is to become an effective international instrument against antibiotic resistance.

Declaration of interest

The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

Reviewer disclosures

One reviewer declares that they are extensively involved in antibiotic discovery and development, with patents, grants and publications.

Additional information

Funding

This manuscript was not funded.