Commercial incentives can mitigate the threat of antibiotic resistance

Infectious diseases resistant to antibiotics pose a growing global health threat. Therefore, efforts should be made to make it an attractive investment area for the life science industry.

Date: October 28, 2022

Author: Jonas Hink

Published: Dagens Medicin

Vaccines and therapeutic drugs have historically played a crucial role in saving millions of lives, alleviating severe disease courses, and generating substantial commercial success.

The best-selling drug globally in terms of annual revenue from 2012 to 2020 was Humira by AbbVie, used for treating rheumatoid arthritis and other autoimmune diseases. However, last year, in 2021, this nine-year reign was surpassed, and unsurprisingly, Pfizer/BioNTech’s COVID-19 vaccine, Comirnaty, became the top-selling drug.

In the USA, the price of Humira last year was approximately $3,000 per 40 mg syringe. Converted to annual usage, this amounts to around $77,000 or nearly 590,000 Danish kroner.

In comparison, the price for a single dose of Comirnaty was about $20.

Despite the significant price difference, Comirnaty sold globally with a volume of 2.2 billion delivered vaccine doses in 2021, nearly double the sales of Humira, totaling $36.8 billion vs. $20.7 billion, according to Pfizer’s and AbbVie’s annual reports for 2021.

The incentive for developing a COVID-19 vaccine was driven by a significant need, commercial potential, and prestige. In addition to the traditional concept of an unmet medical need, which considers the total number of patients, existing treatment options, and the severity of the disease, there was a substantial societal aspect to the need for a COVID-19 vaccine.

In contrast to the well-established model where the pharmaceutical industry develops new, high-priced drugs targeting smaller patient populations, the development of a COVID-19 vaccine was an innovative product benefiting many at a much lower cost. The potential volume made the development of a COVID-19 vaccine commercially attractive.

Lack of incentives

However, the reality is that there isn’t always sufficient commercial incentive for the life science industry to focus on researching diseases associated with significant societal perspectives and global health challenges. A very relevant example is bacterial infectious diseases linked to antibiotic resistance.

According to an article in The Lancet, antibiotic resistance could be associated with nearly 5 million deaths in 2019, with 1.27 million cases directly caused by it. This makes antibiotic resistance one of the leading causes of death worldwide.

And this number is expected to increase significantly by 2050, leading to a growing healthcare economic burden due to more and longer hospitalizations, as even minor or simple infections can develop into potentially life-threatening conditions. This is particularly concerning with a relatively small group of common bacteria, including E. coli, continually acquiring properties that make them resistant to existing antibiotics.

The challenge is that new antibiotics marketed are not used extensively since the first-choice products are conventional and often cheaper antibiotics.

Typically, new types of antibiotics will only be used when they are genuinely needed, and therefore, they will be reserved for treating patients whose bacterial infections are resistant to first- and/or second-line treatments. Consequently, new antibiotics generally cannot expect substantial sales volumes in the first many years after marketing.

As the development of new types of antibiotics takes a long time, involves substantial costs, and carries high risks, there is no anticipation of a return on investment, discouraging many companies from investing in the development of innovative antibiotics.

Various measures attempted

To address these challenges, different regulatory advantages and market incentives have been established over time.

In 2012, the U.S. Congress passed a program (GAIN Act) that would provide extended market exclusivity for manufacturers of certain types of antimicrobial drugs. However, it has not had the desired effect.

Later, attempts were made to create new subscription-based payment models, such as the UK pilot and the U.S. PASTEUR act, where companies are paid an annual subscription fee to deliver a sufficient quantity of critically needed antibiotics, regardless of the actual demand.

As an additional measure, specific partnerships and investment funds focusing on antibiotic resistance have been established. CARB-X (Combating Antibiotic-Resistant Bacteria) is a nonprofit program that supports the development of new antibiotics, funded through a global consortium of private foundations and public funds.

Furthermore, several international pharmaceutical companies and foundations, including LEO Pharma, Lundbeck, and the Novo Nordisk Foundation, have recently contributed funds to the AMR Action Fund initiative to invest in small and medium-sized biotech companies developing innovative forms of antibiotics. The AMR Action Fund has raised approximately 6 billion Danish kroner, which may sound like a lot but does not guarantee the viability of the companies that manage to bring new products to market.

Denmark is well-positioned

The majority of sales of new antibiotics are in the U.S. market, where the average annual revenue after market registration falls far short of development costs, as well as the costs associated with production and marketing. This has contributed to several bankruptcies among companies that succeeded in getting new antibiotics to market.

Therefore, further initiatives are needed, such as subsidizing the reduction of development costs, strengthening post-market turnover using methods like Market Entry Rewards, or more widespread use of the subscription payment model.

EFPIA (European Federation of Pharmaceutical Industries and Associations) has recently published a report arguing for EU implementation of a Transferable Exclusivity Extension (TEE), i.e., a “voucher” awarded to a company that develops a new and eligible antibiotic. The voucher can then be used by the company to extend the exclusivity of one of its own drugs or sold to another company for similar use.

This is an exciting and necessary proposal. However, with such a solution and without concurrent incentives, there is a likelihood that the pricing of new antibiotics will follow the model for orphan drugs (for rare diseases), which, in extreme cases, can cost millions of kroner for a treatment.

It is evident that there should be international and EU-level efforts to find appropriate solutions to the antibiotic resistance issue. Still, Denmark has good conditions for research and development in this area, and with a concrete and ambitious public-private partnership strategy aimed at new prevention and treatment options, we could all benefit, both in terms of health, healthcare economics, and commercially.

Regardless, this area should be prioritized highly. The need is there, both from an individual and societal perspective. The question remains whether a future cure for a new and threatening antibiotic-resistant bacterial infection in, for example, the respiratory tract, intestines, or bloodstream – if such a treatment ever makes it to market – will be priced closer to Comirnaty or Humira. And, of course, whether it will be accessible to all.