Melinta Therapeutics, one of the few companies to recently bring a new antibiotic to market, filed for bankruptcy at the end of December. This news comes less than a year after another antibiotic developer, Achaogen, did the same thing.

More than 90% of antibiotics in the pipeline today are being developed by small companies like these, not by the pharmaceutical giants that once dominated the field. And with antibiotic prices low and profit margins narrow, many small companies just can’t stay afloat.

That’s a big problem — a problem that puts us all at risk.

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Antibiotics are lifesaving drugs that fight infection, prolong life, and underpin almost every aspect of modern medicine, from treating strep throat to joint replacement and other surgeries. But as the global threat of antibiotic-resistant bacteria grows, the drugs we have are increasingly ineffective.

In the United States, the majority of infectious disease doctors report they’ve seen patients with infections that didn’t respond to any antibiotics. The Centers for Disease Control and Prevention estimates that at least 2.8 million Americans get an antibiotic-resistant infection each year, and more than 35,000 people die from them. Beyond the human toll, bacterial resistance to antibiotics is estimated to cost the U.S. at least $20 billion in excess medical costs each year.

Yet just when the world needs more novel weapons in the fight against resistant pathogens, there are far too few in the pipeline. And although there are real scientific challenges in finding new antibiotics, the big drug companies have largely abandoned the field due to the low return on investment in comparison to other products, choosing instead to concentrate on more lucrative lines of work such as cancer drugs and immunotherapies.

Indeed, the combined sales of all branded antibiotics in the United States in 2018 were less than a quarter of the sales of the 20th best-selling drug alone that year. And unlike other new drugs, the best advice doctors are given when a new antibiotic becomes available is, “Don’t use it.” That helps preserve its potency for as long as possible and slows the development of resistance, but it isn’t good for sales.

At a time when Congress is considering ways to manage drug prices, lawmakers should consider antibiotics as a special case. To an extent, policymakers acknowledged this when they included more than $1 billion for combating antibiotic resistance as part of the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3) that passed the House at the end of 2019.

However, they should go a step further by creating targeted economic incentives to invest in discovery and development of these medicines. This isn’t about whether pharmaceutical companies charge too much for antibiotics; it’s about whether there will be any effective drugs available for them to sell.

Recognizing the seriousness of the problem, the Centers for Medicare and Medicaid Services recently finalized its Inpatient Prospective Payment System rule to allow higher reimbursement to hospitals that use new antibiotics when appropriate. This effectively reduces a financial incentive to choose cheaper drugs that are older and less effective. In addition, hospitals can now be paid more for treating patients who have drug-resistant infections.

Taken together, these two moves will help increase access to lifesaving antibiotics and provide an opportunity for companies to capture a fair return for these drugs. But these policies alone are not sufficient. Congress must act now to implement what I see as two key policy solutions:

Sens. Bob Casey Jr. (D-Pa.) and Johnny Isakson (R-Ga.) and Reps. Danny Davis (D-Ill.) and Kenny Marchant (R-Texas) have introduced the Developing an Innovative Strategy for Antimicrobial Resistant Microorganisms (DISARM) Act of 2019. It would let Medicare reimburse hospitals for antibiotics above the rates set for a particular diagnosis. Hospitals would qualify for the higher rate if they have an antibiotic stewardship program in place and report resistance data to the CDC. DISARM would partially alleviate the pressure to market new antibiotics at prices that compete with older drugs, which could create an incentive for pharmaceutical companies to develop much-needed new antibiotics.

Numerous authoritative reports and studies have called for “market entry rewards” that give drug companies a monetary payout — likely in the range of hundreds of millions of dollars — for bringing a novel antibiotic to market. There is broad consensus that such a reward is critical to salvaging what’s left of antibiotic research and development efforts and protecting the public health. The Pew Charitable Trusts, together with the Infectious Diseases Society of America, Trust for America’s Health, and numerous U.S. antibiotic developers — large and small — have called on Congress to move swiftly to enact a package of economic incentives to reinvigorate the stagnant pipeline of antibiotics.

No single policy change will stem the exodus of investment from research on new antibiotics. But incentives such as these, combined with existing federal and public-private programs to defray research and development costs, are essential to turning the tide. Of course, such incentives should go hand in hand with policies that help prevent unnecessary and inappropriate use of antibiotics.

The rise of antibiotic resistance is inevitable. Pathogens will evolve to resist every existing drug — and every new one developed. If we allow the pipeline to dwindle, the price won’t be just in dollars, but also in lives.

Allan Coukell directs the Pew Charitable Trusts’ health programs.

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  • I am so glad you have addressed this issue!!! I’ve had mono and chronic Epstein Barr virus since I was 11. EBV gives a strong autoimmune response to any antibiotic taken twice, so I was VERY allergic to all “known” antibiotics when I landed in the hospital, septic, with a fever of 104.5 in 2012. I was on a “new” (to me) intravenous antibiotic, in the hospital, for 2 weeks.

    I have 2 family members with EBV experiencing similar difficulties, and any number of friends. We desperately need pipelines to new antibiotics!

  • I think all 3 companies had enough evidence from actual experience selling to indicate it was not realistic to reach their intial goals. Tetraphase made completely wrong assumptions about how much Xerava they would sell pre-launch. But more than a year after launch, it is completely clear that even if they increase revenues by 10x, they will still be bleeding cash.

  • I would like to understand the thinking of the management teams and boards of Achaogen and Melinta, and maybe soon Tetraphase in not abandoning obviously futile plans to sell their drugs with their own salesforces, and destroying all value for shareholders. Shareholders are being sold out for stakeholders in all of these situations. What makes these management teams think this is acceptable?

    • Do you think their plans for these drugs were doomed from the start, or was their execution poor? How might they have made it to market? For antibiotic companies, is it a macro matter of market size and reimbursement rates, or a more manageable business problem of sales/strategy/tactics?

  • @Coukell
    Why don’t the companies just charge $50,000 for a course of any new patented antibiotic? I would gladly pay that to save my life, and I would be strongly dissuaded from filling a prescription frivolously. Problem solved, right? Are there laws that prevent the market from solving this problem? Why is legislation necessary?

    • Many antibiotics aren’t a prescription you fill at your corner pharmacy, they’re infused medicines generally given in a hospital (for really serious infections). And Medicare (and many private insurers) pay hospitals a fixed fee per hospital stay (fee varies depending on what the condition is).

      If say, the hospital received a fee of $20,000 for treating the patient with the serious infection, but then had to pay $50,000 for the new antibiotic that cures the patient, the hospital loses $30,000 on that patient. That is what Mr. Coukell means by a “financial incentive to choose cheaper drugs that are older and less effective.”

    • So disease-centric price controls on infection treatment are creating an artificial scarcity?

      I believe my grandma’s Medicare pays 10x this sum each year for cancer drugs. I would think that an infection cure yields more quality years of life (per patient) than a typical cancer treatment.

      Perhaps a solution would be to tie medical reimbursement to a life insurance policy. That way different diseases end up being reimbursed by mortality risk, not by arbitrary categories like the duration or location of the treatment.

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