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Government Investment and Policy Environment Reforms Urgently Needed to Incentivize Antibiotic Innovation, Avoid Future Superbug Pandemic

Jul.10.2020

The COVID-19 pandemic provides a small glimpse at the type of devastation that could emerge as a consequence of antimicrobial resistance (AMR). Indeed, if left unaddressed AMR has the potential to lead to even greater and more frequent global public health crises. On July 9, 2020, a group of 20 multinational pharmaceutical companies announced the establishment of a $1 billion fund to support start-up biotechnology companies with advancing promising new antibiotics. The AMR Action Fund aims to help bring 2-4 new antibiotics to the market by the end of the decade. This is a positive step forward by the pharmaceutical industry and other philanthropic and multilateral partners, however, governments need to take further action to address the investment gap in antibiotic R&D. Experts estimate that at least $40 billion is needed over 10 years to adequately address the global AMR problem (a small amount compared to the projected $100 trillion in economic losses if AMR is not addressed). Governments need to step up to address this investment shortfall. 

Crowell & Moring International has worked with industry, governments, and academia over the past decade to elevate dialogue on the need for policy action to address the AMR crisis. In multilateral fora such as the Asia-Pacific Economic Cooperation (APEC), we have welcomed the APEC Guideline to Tackle Antimicrobial Resistance in the Asia-Pacific Region and convened policy dialogues aimed at mobilizing a multi-sectoral response in support of domestic AMR action plans; strengthening AMR surveillance and laboratory capacity; and developing strategies to scale up patient access to novel antibiotics and vaccines. These collaborative efforts by industry and government provide a useful foundation and help set an agenda that can only be realized through necessary policy reforms and focused engagement to secure a sustainable antibiotic pipeline.

The AMR Crisis

AMR happens when bacteria become resistant to antimicrobial drugs used to treat the infections that those bacteria cause. Fortunately, governments, policymakers, and the global health community are already well aware of AMR and what they need to do to stop it. But we are running out of time; AMR is not years away, it is already here. AMR causes at least 700,000 deaths each year, and experts predict the world will see 10 million deaths each year due to AMR by 2050.

AMR is on the rise for a number of reasons, including the improper and overuse of antibiotics throughout the world. Uncontrolled use of antibiotics is rendering many drugs useless against the bacteria they are meant to kill. As a result of resistance, bacteria are instead feeding off the drugs intended to kill them and are evolving into “superbugs”. 

Are New Antibiotics Being Developed to Help Solve the Problem?

Unfortunately, there are few antibiotics in the drug development pipeline, and the discovery of new antibiotics has not kept up with the pace of emergent drug resistance. All the antibiotics brought to the market in the past 30 years have been variations on existing drugs discovered before 1984. The newest class of antibiotics, capable of addressing the highest-priority AMR threats, was discovered nearly 60 years ago.

Most pharmaceutical companies stopped investing in antibiotic R&D years ago due to market failures which undermine a viable market for such products. The current market-based innovation system has insufficient incentives to attract investment in antibiotic R&D. Unlike most drugs, antibiotics are intended to be taken for only short periods of time. This makes them less lucrative than drugs taken for long periods of time, such as drugs for diabetes or heart disease. Furthermore, clinicians are discouraged from using the latest and greatest antibiotics as they are intended to be administered only in desperate cases to prevent further resistance in the superbugs. It is in the interest of society to keep new antibiotics on the shelf as a last resort. Without a viable market for new antibiotics, most pharmaceutical companies are turning away from antibiotic development and focusing on more profitable areas, such as oncology and rare diseases. 

What Can Governments and Society Do to Attract Investment in Antibiotic R&D?

New and innovative incentives are needed to attract pharmaceutical companies to invest in the development of new antibiotics. These incentives are classified as either “push” or “pull” mechanisms. Push incentives address the cost of R&D through funding or in-kind support from governments, either through direct funding of research (e.g., contracts, grants), public–private partnerships, and/or tax credits. Pull incentives are intended to be established by governments to reward the successful development of a new antibiotic. Examples of pull incentives include higher reimbursement (based on value or diagnosis confirmation); market entry rewards (milestone or prize payments); patent buyouts; advanced market commitments or purchase options; and regulatory incentives such as tradable patent extensions, priority review vouchers, and extended market exclusivity). Until we have robust push and pull incentives in place, we will continue to lose time addressing the growing global threat of AMR.  

International Collaboration to Develop Innovative Policy Solutions

While investment in R&D is crucial and urgently needed, addressing the current market failures through policy reform is imperative to build a viable market for new antibiotics. Governments around the world should start taking steps to reform their reimbursement systems to address the market failures for antibiotics. The United Kingdom is currently piloting a “delinkage” model wherein the National Health Service pays companies according to its value to the health system, rather than by the volume of the product used.

Collaboration and exchange of new and innovative models for reimbursing new antibiotics is necessary. International platforms such as Asia-Pacific Economic Cooperation (APEC), the Organization for Economic Co-operation and Development (OECD), and the G20 could help mobilize support for the innovative policy reforms needed to build a sustainable market for new antibiotics. These global fora could review the current policy landscape and work with their members governments to identify opportunities to incentivize antibiotic R&D in the near term. These international institutions could also challenge their member governments to take immediate action on developing economic incentives in close cooperation with the pharmaceutical industry, non-governmental organizations, academia, and clinicians.

CMI is pleased to have contributed to APEC’s efforts to address antimicrobial resistance over the past decade through the APEC strategic action plan to control and prevent AMR in the Asia Pacific region. In 2018, APEC Health Ministers recognized the growing challenge of AMR in the APEC Region and its negative impact on the health of people and animals, food safety and security, the environment and the economy. They agreed to prioritize action in the following areas: (1) increasing public and stakeholders’ awareness and understanding of AMR; (2) strengthening surveillance for better information sharing and action planning; (3) improving infection prevention and control; (4) building research capacity together with policies to incentivize development of novel products; (5) ensuring rational and responsible use of antimicrobials; and (6) taking steps to promote access to effective, affordable and quality-assured antimicrobials. Ministers also encouraged economies to implement their domestic AMR Action Plans, and to continue working closely with relevant sectors and institutions using the “One Health” Approach.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Michael E. Schmitz
C&M International Director – Washington, D.C.
Phone: +1 202.508.8965
Email: mschmitz@crowell.com
Patricia L. Wu
C&M International Vice President and Managing Director – Washington, D.C.
Phone: +1 202.624.2963
Email: pwu@crowell.com
Ryan MacFarlane
C&M International Director – Washington, D.C.
Phone: +1 202.624.2575
Email: rmacfarlane@crowell.com
Christopher Pinto
Associate – Washington, D.C.
Phone: +1 202.624.2708
Email: cpinto@crowell.com
Mitchell Hightower
C&M International Associate Consultant – Washington, D.C.
Phone: +1 202.508.8842
Email: mhightower@crowell.com