Without significant realignment of research and development resources to address bacteria resistance, much progress could yet be unravelled.

Could Netflix-Style Pricing Spark A Renaissance in Antimicrobial Research

BY Daniel Sutcliffe - 4.24.19

The discovery of penicillin heralded the first in a series of victories in the war against disease, providing the foundation for advances in surgery and medicine which would have been impossible were it not for efficacious antimicrobial agents. Yet despite early successes in antibiotic development, it has proved difficult for the pharmaceutical industry to keep abreast of the challenges posed by antimicrobial resistance. Between 1940 and 1980 over 20 classes of antibiotics were brought to market; however, since then, only two new classes of antibiotics have achieved regulatory approval, and analogue development has stalled significantly since the 1990s. The threat posed by antibiotic resistance has now progressed to such an extent that pathogens are being detected which are resistant to even ‘last resort’ antibiotics. Indeed, recent projections indicate that by 2050, antimicrobial resistant bacteria will overtake cancer, ischaemic stroke, and heart disease to be the leading cause of death worldwide, with 10 million deaths annually and a cumulative GDP loss of $100.2 trillion.

Without significant realignment of research and development resources to address this issue, much progress could yet be unravelled as the healthcare industry sleep-walks into uncertainty: a post-antibiotic future where even common infections can be fatal.

Figure 1 –Initial discovery of antibacterial drugs and classes

Despite the magnitude of the issue and widespread consensus regarding the unmet need, current development and market access structures do not reward pharmaceutical companies for antimicrobial innovation. Indeed, the area of infectious diseases could well serve as a case study for sub-optimal pharmaceutical incentivization, with payer evidence requirements and value assumptions misaligned to the unique clinical development challenges facing emerging antimicrobial therapies.

For such therapies, it is practically and ethically infeasible to demonstrate evidence through a head-to-head superiority trial in a heterogenous patient population afflicted with multi-drug resistant infections. Therefore, non-inferiority trials are the norm, which compare emerging antimicrobial therapies against established (often generic) treatments in non-resistant populations. As a result, new antimicrobial therapies are supported by clinical data which is not representative of the intended patient population. This is a crucial point which can significantly impact the outcomes of market access negotiations; as clinical trial populations and outputs influence the eventual marketing authorization, a major consequence is that HTA bodies are only able to evaluate antimicrobial therapies within their specific licensed population. A further limitation of the HTA evaluation process is that submissions are compared against historical evidence for current standard of care. This is an appropriate process for other products and indications, but for antimicrobials, such comparisons do not reflect the value of new antibiotics. Such therapies are unique among pharmaceuticals in that the more efficacious a medicine is, the less willing physicians will be to prescribe it; therefore, the value of a product is not linked to sales. The real value of a new antibiotic, in alignment with antimicrobial stewardship, is to maintain stocks so that effective antibiotics are available when needed.

Clearly, the current development and incentivization model for antimicrobials is no longer sustainable, but what are the alternatives? Recently, proposals for the ‘nationalization of antimicrobial research and development’ have been received with great fanfare, and some scepticism; however, can single nations acting alone expect to significantly alter global trends in addressing an issue which some academics regard as similar in scale to that of climate change? Whether nationalized pharmaceutical research and development could bear fruit is indeed up for debate, but in the absence of global leadership, are there less radical alternatives which could kick start research and development for these much needed products? Can the current pharmaceutical market access model be modified to effectively address this global issue?

As a result of the ongoing pricing negotiations between NICE and Vertex, regarding the new Cystic Fibrosis drug Orkambi, we saw NHS England propose an unprecedented ‘medicines by subscription’, or the so-called ‘Netflix’ model. Under such an approach, markets would receive unlimited access to a portfolio of medicines in return for regular and pre-defined payments totalling £1 billion locked in over the course of 10 years. Whilst NICE and Vertex were unable to agree on an access arrangement using such an approach, the fact that this model was initially proposed by NICE signals to the pharmaceutical industry that payers are willing to contemplate new methods of reimbursement and access.

The use of ‘medicines by subscription’ models are not limited only to orphan diseases; in March 2019, the state of Louisiana announced that they were nearing an agreement with Asegua Therapeutics to provide unlimited access to the Hepatitis C medication Epclusa, in return for an exclusive 5-year contract, for an as yet undisclosed financial figure. Under such an arrangement, it is anticipated that Louisiana will greatly expand Hepatitis C therapy to the estimated 39,000 Medicaid patients who are unable to access the medication under current pricing arrangements.

Could such a subscription model be used to incentivize new antimicrobial investment? In September 2018, FDA Commissioner Dr. Scott Gottlieb announced his intention to develop a new subscription-based payment model that would require hospitals to pay a flat rate for access to a certain number of doses of new antibiotics. Speaking in Washington D.C., Dr Gottlieb stated “If we want to maintain a robust pipeline for antibiotics, it is necessary to change the perception that the costs and risks of antibiotic innovation are too high relative to their expected gains”. More recently in January 2019, NICE and NHS England announced a new 5-year action plan for tackling antimicrobial resistance. The report outlined the intention to implement a new value-based license model for the reimbursement of antibiotics within 6 months of publication.

Long-term subscription-based access arrangements for antibiotics, perhaps linked to clinical outcomes, would minimise risk for both payers and pharmaceutical companies whilst signalling to the industry that payers recognise the need for such therapies. If such an approach was used at-scale and internationally we could be looking at a completely different treatment landscape in a decade from now. Could a subscription-based model be used to ignite a renaissance in antimicrobial research? A few years ago this would have seemed an unlikely proposition, but with precedent now set in disease areas such as Hepatitis C, and with value-based license agreements for antibiotics anticipated in the US and the UK, payers may be evolving their thinking on how best to tackle the elephant in the room: the emergence of antimicrobial resistance.

Daniel SutcliffeAssociate, Pricing & Market Access


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