Skip to Main Content

LOS ANGELES — Superbugs, and our dwindling arsenal of drugs that can successfully combat them, are a serious public health concern. The private sector, however, is largely unwilling to take on the financial risk of developing new drugs that could help. Those treatments bring little if any profit.

But what if U.S. policymakers upended the incentive structure for developing new therapies? What if, for instance, drug makers were granted additional exclusivity in certain situations?


Increasingly, the idea of rethinking models for antibiotic development is animating industry leaders and policy wonks eager to find new tools to combat superbugs.

“We’re in a time of growing nationalism, but this is a global problem,” said former Food and Drug Administration Commissioner Dr. Margaret Hamburg, who was part of a panel discussion on the issue earlier this week at the Milken Institute Global Conference. “This will require global coordination, and strategic thinking and action.”

The market for combating superbugs, in theory, is substantial. In the U.S. alone, some 2 million people are infected with antibiotic-resistant strains of bacteria annually, and 23,000 people die. Globally, about 700,000 people die each year thanks to antimicrobial resistance, according to a UN committee report. By 2030, the authors believe superbugs may kill up to 10 million people each year.


Yet companies continue to bow out of the antimicrobial field.

“It’s a market failure that companies aren’t investing in antimicrobial resistance,” said Gates Foundation CEO Sue Desmond-Hellmann, who spoke on the issue at the conference.

The traditional drug development pathway doesn’t seem to be sufficient. Take the case of Achaogen, a San Francisco biotech that won one of the first antibiotic approvals in decades last year. Despite its novelty, plazomicin (Zemdri) generated sales less than $1 million; Achaogen filed for bankruptcy just a few weeks ago.

The financial challenges underline one of the ironies around antibiotics: Although they’re sorely needed, they will only be most effective if they’re used sparingly — for the most critical of cases.

“We want biotechs and pharma to create new products, but we don’t want them to sell any,” said Peter Jackson, executive director of the AMR Center, a U.K.-based accelerator to help develop new antibiotics and diagnostics.

Finding new ways to spark enthusiasm — and investment — in tackling these ever-evolving pathogens is still very nascent. But experts agree that it’ll involve a public-private partnership: Government entities, investors, and the industry will have to work together to find better treatments.

The key is to approach the issue of incentivizing biopharma with more ambition, said Amitabh Chandra, director of health policy research at the Harvard Kennedy School of Government.

Companies typically get five years of market exclusivity if they develop a new chemical entity. If a drug treats a rare disorder, however, they’ll get seven. Such incentives could be written into law to help in the case of global public health crises, like antimicrobial resistance.

If a company develops a gene drive to eradicate malaria, Chandra said, saving 500,000 people who might otherwise have died from the disease, give it 30 years of exclusivity on the technology — not just five.

“You need imagination on that scale to reduce the burden of disease,” Chandra said.

Jackson suggested that transferable market exclusivity vouchers may be another tool to incentivize biopharma to reenter the antimicrobial market. That is, if a company develops an effective antibiotic or antifungal drug that can indeed tackle superbugs, give it bonus exclusivity years — but allow it to transfer that to a different, and potentially more profitable, drug in its pipeline.

Chandra suggested, too, that the stipulations for doling out extra market exclusivity could be created in advance by regulators. If a drug reduces overall spending by a predetermined amount, for instance, the market exclusivity could be extended a year. If it improves symptoms of a disease by a certain percentage, perhaps the exclusivity could be extended even more.

The idea, according to the Harvard economist, is that rewarding companies for their drug’s overall efficacy, and broader impact on global health, might allow them to ultimately profit enough that they’ll want to invest in the initial research and development in the first place.

One thing that the experts agree on: Antimicrobial resistance isn’t a problem that industry can tackle alone.

“This really needs a societal approach. It has to be at the top of political agendas,” said Dr. Peter Piot, director of global health at the London School of Hygiene and Tropical Medicine. “It’s a threat to our survival. It’s as simple as that.”

  • “It’s a market failure that companies aren’t investing in antimicrobial resistance,” said Gates Foundation CEO Sue Desmond-Hellmann.

    The “market failure” term is appropriate, but those using it in this column have evidently never studied the economic theory of market failures. They’re applying the term incorrectly, and that error leads them to recommend policy strategies that are bound to fail.

    A pertinent example is national defense. Our nation needs national defense services every year, even more than it needs new antibiotics.

    However, left to their own devices, private companies and individuals would not manufacture aircraft carriers, produce ammunition or serve in foreign wars merely because all Americans need to be defended. The same can be said of every other product or service supplied in a market economy. People do not work for free, nor do shareholders allow the companies they own to work for free on behalf of even the best causes.

    The failure occurs on the OTHER SIDE of the market, where ordinary citizens refuse to voluntarily send their incomes (about $3000 annually for every adult) to Washington to contribute to the defense effort. Those citizens are the ones whose interests would be defended, yet they refuse (or are unable because of the institutional setting) to voluntarily pay for what would directly benefit them. So the market “fails.”

    For national defense, the solution is a broad-based income tax requiring the direct beneficiaries of national defense to contribute their fair share to the effort. A mandatory tax prevents the so-called “free-rider problem” responsible for the market failure.

    In fighting super-bugs, the key beneficiaries of a successful campaign against the bugs are patients in hospitals, the hospitals themselves, and health insurance companies. Without question, a cure for killer microbes would confer the greatest benefits on those specific groups. It is free-riding behavior by those groups — their willingness to benefit, but reluctance to pay — that accounts for the market failure.

    A modest tax on every hospital and health insurance company (based on the headcount of their patients and clients) is the appropriate remedy for the problem. In turn, those operators would pass the costs along to their patients and customers, whose health would have been protected. Then, the market would no longer fail, because plenty of resources would be available to develop vaccines and medications to fight the bugs.

    This is not to say that pharmaceutical companies aren’t engaged in numerous schemes to rig the game in their own favor, because I believe they are. But appropriate responses to those schemes are of an entirely different nature (fraud, antitrust charges) than addressing the free-riding, market failure problem that stands in the way of a cure for killer bacteria.

  • Pharma is spoiled right now. They expect to rake in unreasonable profits and give outrageous compensation to executives because our government allows it, even when a drug was originally developed with government-funded research. I hope this will be fixed soon, and if so, then I’d be sure to only give them a reasonable incentive above what they will hopefully get in future for other drugs. They don’t need any more handouts. We need to take away the ridiculous profits they are receiving from other drugs. Once these are in a reasonable realm again, putting efforts into antibiotics with a small incentive may become alluring.

  • I do not think that antibiotics are the way to fight antibiotic resistant bacteria. First I find that if early experiments found that heat killed viral bacteria genes still overtake antibiotic genome of non viral bacteria to become viral. Then is there a way to nudge that into the reverse. Is there a way to build up the microbiome of the sick person so the threshold is more for the positive microbiome reproduction to the point that only altering the environment slightly will make the viral bacterial ineffective?

  • As the FDA continuously demands more involved regulatory studies, pharmaceuticals meant to treat disease for a short period of time—like antibiotics—can’t recover their development costs. If a company can’t recover its development costs, and continues to lose money by developing a certain class of drugs, it will go out of business. Antibiotics are especially vulnerable because new ones are used sparingly and usually only in desperate cases in order to prevent further resistance in the “superbugs.” If the regulatory process for antibiotics isn’t streamlined, added exclusivity may not be enough to encourage manufacturers.

Comments are closed.