Want to protect your kids from drug-resistant bacteria? Open your wallet.
Governments and insurance companies need to commit to paying 10 or 50 times more than they already do if industry is going to put resources into fighting the threat of superbugs.
The Centers for Disease Control & Prevention says that drug- resistant bacteria cause an extra two million illnesses and at least 23,000 deaths in the U.S. each year. “A post-antibiotic era means, in effect, an end to modern medicine as we know it,” Margaret Chan, Director-General of the World Health Organization, said in a 2012 speech. “Things as common as strep throat or a child’s scratched knee could once again kill.”
But when it comes to trying to produce new antibiotics, governments, insurers and hospitals seem anything but serious when they vote with their wallets. The cost of a course of branded, expensive antibiotics costs $3,000 per patient. Meanwhile, Sovaldi, a new Gilead Sciences treatment that can cure hepatitis C in combination with other drugs, costs $84,000 per treatment course. Cancer medicines that add weeks or months of life can cost $100,000 per patient. Drugs for rare diseases now commonly cost $200,000 or more per patient per year, and are seen as a quick way for biotech companies to ramp up sales.
“It’s a major impediment, because there is this institutionalized sense of entitlement that antibiotics need to be cheap,” says Jeffrey Stein, who served as chief executive of antibiotic-developer Trius Therapeutics until it was sold to Cubist Pharmaceuticals for $700 million last July. “Right now we are living with the outcome of that entitlement. It’s the one therapeutic area where prescribing decisions are made based on price rather than efficacy.”
You can see the result in the sales of antibiotics, and in the amount of research and development poured into them. The top two sellers, Pfizer’s Zyvox and Cubist’s Cubicin, generate just over $1 billion in global sales each after a decade of slow growth. Compare that to Gilead’s $84,000 hep C drug, which ISI Group analyst Mark Schoenebaum just said could generate $5 billion this year. Drug companies who don’t develop antibiotics are behaving rationally. It costs roughly the same amount to develop a bacteria-killing drug as many other types of medicine. Why focus on antibiotics if you can get five or ten times the return somewhere else?
Look, for instance, at the career of one of last year’s most successful biotech CEOs, Francois Nader of NPS Pharmaceuticals. While working at the drug giant Aventis, he labored on launching an antibiotic called Ketek; it turned into a giant FDA safety controversy. Last year, at NPS, he launched a $300,000 drug for short bowel syndrome, a rare disease, generating $31.5 million in sales in its first year and sending his company’s stock up 305% over the past 52 weeks. Nader’s conclusion? “For super bugs, a super price.”
Or take a look at cancer drugs. According to a recent analysis in Nature Biotechnology, cancer drugs have only a 12.3% chance of approval when entering early clinical trials, the lowest of any disease area other than heart disease. Yet more drugs are in mid-to-late-stage development for cancer than anything else. The reason comes down to price, the size of the market (Roche’s Rituxan for blood cancer generates $6 billion in annual sales) and the fact that regulators have bent over backward to find ways to get the drugs approved quickly, enticing small biotechs into the field.
In antibiotics, the trend has been in the opposite direction until recently. The controversies around Ketek sent the Food and Drug Administration into a regulatory malaise regarding antibiotics in which it made things tougher, not easier. Drugs were rejected repeatedly, or approved with indications that severely limited their sales. At the same time, the science got harder. Drug companies had expected that DNA sequencing would lead to lots of leads on new antibiotics, and it didn’t happen. The result of harder science, a smaller market, and tougher regulation has been pretty predictable: big pharmaceutical companies continued to abandon antibiotics. Meanwhile, some of the scientists who understood the market literally died off. Francis Tally, who developed Cubist’s Cubicin, died in 2007 of a bacterial infection. “Bacteria put a hit out on him,” his son told the Boston Globe.
Cubist, after working for a decade to turn Cubicin into a blockbuster, is now the biggest company in the antibiotic space. “We’ve established ourselves as the leading investor in serious resistant bacteria in the world,” says Michael Bonney, the company’s chief executive. That’s partly a credit to his management and a stream of recent acquisitions that give Cubist a sizeable pipeline, including not only the drug Stein developed at Trius, which is an heir to Zyvox, but also one of the most promising medicines for gram negative bacteria, a type against which we have few weapons. But it’s also because as Bonney has staffed up with 300 scientists trying to develop new antibiotics, companies like AstraZeneca have cut them in equal numbers. It’s great that Cubist is putting $400 million a year into developing antibiotics. That shouldn’t be all the we are spending.
To Bonney’s mind, he’s already in a premium-priced world. Cubicin costs $2,500 per course to treat methicillin-resistant staphylococcus aureus, a deadly germ. The alternative treatment, vancomycin, costs just $100. But having more patients survive and fewer come back to the hospital is worth the money.
The problem is, no small drugmaker is sitting around thinking, “if I could only be like Cubist.” And the result is that antibiotics are becoming a backwater. That same comparison of price could be true of cancer drugs – old chemotherapies are cheap, too – but what’s happened in cancer is that companies have launched new drugs every year, each one pushing a little at the pricing envelope. Through price increases, even a cancer drug that originally cost $30,000 per year can now cost $90,000 per year. (See: Novartis’ Gleevec.) It’s easy to see that as a process run amok; but the process hasn’t happened at all for antibiotics, which we desperately need. That’s why cancer drugs are probably too expensive and antibiotics are way too cheap.
There are steps in the right direction. In 2012, Congress passed a law called Generating Antibiotics Incentives Now, or GAIN. It provides five years of protection from generics and an accelerated FDA approval process for antibiotics against specific bacteria. The FDA has also streamlined and clarified its guidance to antibiotic companies. Now there is a push to create what are called a limited population antibacterial drug approval (LPAD), which would approve antibiotics against resistant bugs in very limited populations – in which drugmakers could then charge a high price.
But to really get pharma interested there needs to be a clear opportunity, and there still isn’t. What needs to happen: the Centers for Medicare & Medicaid Services, or a large insurer like UnitedHealth or Aetna, needs to publicly commit to paying more for new antibiotic drugs against resistant bacteria. An even better step would be to raise the amount it will reimburse for medicines that are currently on the market. That could get companies interested again, overcoming years of scientific and regulatory missteps.
Other initiatives – like funding drug development at the National Institutes of Health or creating monetary prizes for developing new antibiotics – have their place, too, but we need the full power of the drug industry focused on this issue. Right now, we’re not getting it.
And when trouble comes, it will come suddenly. The difference between having one or two medicines that work against a bacterial strain and none is huge. And as Maryn McKenna noted in a great piece for the Web magazine Medium, the result will be bigger than you’d probably think. Surgeries like hip replacements, bone marrow transplants, and heart bypass procedures would become far more risky, and intensive care units could fill with ventilator pneumonia and catheter infections. We need new antibiotics soon – and that means we need to pay for them right now.