At the recent Hamburg summit, G-20 leaders reaffirmed their commitment to addressing antimicrobial resistance as a growing threat to public health and economic growth. Leading organizations including the United Nations, the G-7 and World Health Organization have called for joint action against AMR in recent years. Some have gone so far as to predict AMR will cause tens of millions of deaths and trillions of dollars in economic costs, if left unaddressed. A consistent theme of these analyses is that bacteria are evolving and developing resistance faster than we have been able to discover and develop novel antimicrobials to combat them. In fact, pharmaceutical pipelines consistently show a decrease in antibiotic research and development programs when the need for new medicines is increasing.
To ramp up antimicrobial R&D, innovative financing solutions that will incentivize sustained investment in this field are needed. The current model fails to provide a sufficient economic return to spur the level of R&D investment that society needs. Even when new, effective antibiotics are approved, the return on investment for the developer is generally low compared to other therapeutic areas due to the typically slow uptake of these medicines. New pharmaceuticals that can target resistant bacteria are used only for the most seriously ill patients with the most resistant infections, in order to guard against the development of resistance. In addition, the value that health, economic and reimbursement systems generally assign to new antibiotics undervalues the benefits that they bring. It limits the price that hospitals and insurers are willing to pay for novel antibiotics, reducing the financial incentive of investing in their development.
The role of governments in increasing investment
Governments have taken some steps to start to address the negative economics of antibiotic R&D. Some have established grants that provide support for the early stage development of antibiotics. Legislation has been introduced in the United States to address issues of hospital reimbursement, and the recently issued European Union One Health Action Plan against AMR calls for new efforts to address the valuation of novel antibiotics in health economic analyses.
“To ramp up antimicrobial R&D, innovative financing solutions that will incentivize sustained investment in this field are needed. The current model fails to provide a sufficient economic return to spur the level of R&D investment that society needs.”— Paul Schaper, Executive Director, Global Public Policy, Merck Sharp & Dohme
A key gap is progress on proposals for a sufficiently large, predictable and sustainable outcomes-based mechanism that provides an adequate return on investment to incentivize the private sector to take on the necessary risk and uncertainty that comes with investing in the development of new antibiotics. The antibiotic marketplace presents unique challenges — at the same time that we want to incentivize development of new antibiotics, we must also be careful stewards of their use to slow the pace of emerging antibiotic resistance. A novel R&D incentive mechanism needs to reduce the percentage of the return on investment achieved through sales volume, but it should also harness the ability of existing market-based models that have effectively driven investment and innovation in other therapeutic areas. Given the unique challenges of the antibiotic market, governments have a role to facilitate conditions to enable a sustainable environment for investment in antimicrobial R&D.
The need for incentives
In order to restock our medicine chest with effective antibiotics, novel incentive structures are needed. These can and should incorporate market-based mechanisms to more effectively and efficiently allocate limited resources, attract sustainable private sector investment and reward successful innovation. Grant-based push mechanisms and public-private development partnerships have had mixed success in delivering tangible results for the public resources invested. Novel incentive mechanisms, such as market entry incentive payments for the development of products that address pathogens prioritized by WHO or the U.S. Centers for Disease Control and Prevention, can play an important role in enhancing the economic feasibility of antibiotic R&D. By incorporating market-based mechanisms, these novel incentives can retain the benefits of market-based private sector investment and competition.
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I’m encouraged by the strides made recently to bring the critical issues of antimicrobial resistance to the forefront and the robust engagement of the private sector. In January 2016, MSD joined more than 100 biopharmaceutical, generic and diagnostic companies in signing a declaration at the World Economic Forum that sets out bold commitments and calls on governments and industry to take joint action against AMR.
The global community must seize this moment and act to ensure a future where, even in the face of the ongoing microbial evolution, we continue to enjoy the health and economic benefits of having effective antimicrobial treatments. With the support of key stakeholders across the globe to stimulate antimicrobial R&D and advocate for innovative financing models, I am confident that we will.
To learn more about the industry’s commitment to addressing AMR, visit the Industry Roadmap for Progress on Combating Antimicrobial Resistance and the International Federation of Pharmaceutical Manufacturers & Associations’ policy position on AMR.
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