Why pull incentives are key to catalysing private investment into antibiotics (Guest blog)

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Why pull incentives are key to catalysing private investment into antibiotics (Guest blog)

21.03.23

A guest blog by Deepali Patel, Director of International Policy at the AMR Action Fund

The future of modern medicine is at an inflection point. Antimicrobial resistance (AMR) is on the rise, while our ability to protect people from infectious disease, a hallmark of health care today, is rapidly declining. After years of robust debate and careful analysis, policymakers around the world understand that stimulating innovation in research and development (R&D) requires innovation in policy. The G7 has repeatedly called[1] for pull incentives to support the development of new antimicrobials and countries such as Sweden and the United Kingdom have begun experimenting with these policies. Crafted appropriately and enacted in a timely fashion, pull incentives could bring private investment back into this critical field of medicine and spur a level of antimicrobial innovation not seen since the 1960s.

Pull incentives are essential to the future of antimicrobials because of the drugs’ unique risk-reward profile. Like many types of medicines, developing an antimicrobial is fraught with risk: they can require more than $1 billion and take upwards of a decade[2] to move from discovery to market. In just about every other therapeutic area, investors and drugmakers can rely on the market to reward the development of impactful medicines through strong sales. Some of those profits are then recycled into future R&D investments that drive further innovations that benefit patients.

Not so with antimicrobials. To best protect public health, new antimicrobials must be used appropriately and sparingly. While careful stewardship is paramount to containing the threat of antimicrobial resistance, it inherently limits the commercial potential of antimicrobials. At the same time, value assessments consistently undervalue antimicrobials and the broader benefits they bring to health systems. Few investors can justify committing their finite capital to a product that they know will not sell well. That is why venture capital funds—an essential source of funding for small- and mid-size companies across the life sciences industry—have largely stayed away from antimicrobials and put their resources to work in other therapeutic areas, such as oncology, rheumatology, and neurology. Consider that in 2020, oncology companies raised $6.9 billion from venture capital funds in the U.S., 44 times more than antibacterial companies.

This paucity of private investment has stymied innovation[3]. More than four decades have passed since a new class of antibiotics has come to market, and it has been more than 20 years since a new antifungal class has made it from bench to bedside. Even when biotechs beat the odds and bring an antimicrobial into clinical testing—and in some cases all the way through the approval process—the market fails them[4]. One oft-cited case is that of Achaogen, the small biotech that earned approval of its antibiotic plazomicin only to declare bankruptcy soon after. Numerous other biotechs have faced similar challenges, including the French company DeInove which had an antimicrobial compound in Phase II testing but announced this winter it was closing shop.

Pull incentives can revitalise the market and uplift the numerous biotechs across Europe that are doing excellent science in the face of relentless financial headwinds. Through ambitious and forward-thinking policy action, policymakers can realign the intersection of commercial interests and public health needs in a way that accelerates innovation, ensures access to urgently needed medicines, and re-assures investors of the strength of Europe’s life sciences sector.

Already there is some momentum in Europe, but these efforts are fragmented and only address pieces of the problem. In Sweden, for instance, policymakers crafted a partially delinked arrangement to guarantee modest annual revenues and reduce reliance on sales. While a good step forward in addressing short-term market challenges, it does little in the way of incentivising the type of innovation that attracts investors. Other countries have attempted to tackle the value side of the equation; Germany and France, for example, have introduced attempts to account for AMR in existing reimbursement schemes. The UK has gone the furthest[5] by attempting to address innovation, access, and valuation. Ultimately, all of these have so far come up short in terms of addressing the long-term realities of antimicrobial resistance: bacterial and fungal pathogens will continually evolve resistance to new treatments, and the world needs meaningful incentives for a sustainable ecosystem of innovation to flourish.

With the European Union revising its pharmaceutical legislation, member states have a chance to leverage this initial work and harness their collective power to position the EU as hub of antimicrobial and policy innovation. This is a rare opportunity, and any pull incentive must be truly catalytic if it is to attract private investment to the region. This means a pull incentive should be sizable enough to convince investors and drugmakers that developing antimicrobials is worth the substantial risk associated with the products.

Lastly, if a pull incentive is going to elevate the regional biotech sector, policymakers must carefully consider what is feasible and achievable by drug developers when determining which antimicrobials will be eligible for contracts. Small- and mid-size biotechs are responsible for approximately 80 percent of antimicrobials in clinical development, according to the Biotechnology Innovation Organization[6]. Drug development is complex and takes time, and many of these companies have limited resources. Their ambition to develop lifesaving antimicrobials and replenish the pipeline should not be diminished by unrealistic expectations of innovation.

The advent of antibiotics was one of the fundamental drivers of the shift in health care that has dramatically increased life expectancy and improved quality of life. But microbes will always evolve, and so must our policies if we are to stay ahead of the threat they pose.

[1] https://www.g7germany.de/resource/blob/974430/2042058/5651daa321517b089cdccfaffd1e37a1/2022-05-20-g7-health-ministers-communique-data.pdf?download=1

[2] https://www.g7germany.de/resource/blob/974430/2042058/5651daa321517b089cdccfaffd1e37a1/2022-05-20-g7-health-ministers-communique-data.pdf?download=1

[3] https://www.bio.org/press-release/new-bio-report-examines-state-antibacterial-innovation

[4] https://www.bio.org/press-release/new-bio-report-examines-state-antibacterial-innovation

[5] https://www.bio.org/press-release/new-bio-report-examines-state-antibacterial-innovation

[6] https://www.bio.org/sites/default/files/2022-04/BIO-Antibacterial-Report-2022.pdf