UK Antibiotic Subscription Pilot implies Pull Incentive of up to $4b across the G20

Note that there is a follow-up newsletter that covers a post-webinar FAQ. After reading this newsletter as introduction, please go here for the follow-up newsletter.

Dear All (and with thanks to Kevin Outterson for co-authoring this newsletter),

Prior newsletters have covered the antibiotic evaluation procurement pilot being run by NICE and NHS England (go here for the most relevant note), and the team held a webinar on 25 March in which they provided the most detailed insight into the project yet made public. There are several key documents to share (most notably, the slides from webinar), all of which can be found below the signature block.

The very quick summary of the project is that the UK Government, along with NICE, NHS England, and NHS Improvement, are creating the world’s first fully delinked antibiotic pull incentive. Our analysis suggests that NICE/NHS are proposing — if the rest of the G20 pays their fair share — a global pull incentive of up to $4b for significant antibiotic innovation. 

As their contribution to this pull incentive target, NHS England will pay an annual subscription fee up to £10m/year for a decade for each of two new antibiotics covering WHO priority pathogens (go here to see the WHO list as well as related priority pathogen lists) whether the antibiotic is used or not. This annual payment is meant to reward the innovator for both the value-in-use (when treating a patient) and the value-in-existence (insurance value, etc.) of a new antibiotic. This project builds upon the insights generated by DRIVE-AB on ways to create a meaningful pull incentive (link to a newsletter that provides an in-depth survey of the IMI-sponsored DRIVE-AB project).

The target value of £10m/yr is a very interesting and important benchmark. Clearly the UK should not pay for the entire global value of new antibiotic: £100m over a decade is just England’s “fair share” of the cost of antibiotic R&D. The full details of the logic are not yet public, but a simple analysis would be to scale based on England’s GDP being 3.5% of the G20’s total GDP. Another approach is to note that England constitutes about 2% of global drug revenues (link).

Let’s combine these figures to say that England’s fair share is ~3% of the global total. Scaling from 3% (by multiplying by 33 if the G20 follows suit), that £100m over a decade in turn becomes ~£3.3b (US$4b) in total. Of course, not every country will participate at the same level, but a £10m annual subscription payment from NHS England sets a benchmark for the G20 to collectively create a Pull incentive at the upper end of the $2-4 billion target range estimated by most models.

If you want more details, please download the files below the signature block and then read the accompanying slide-by-slide commentary on the webinar slides. 

Wow! Overall, we see this as an outstanding step forward. We should all be very grateful to the UK Government, NICE, NHS England, and NHS Improvement for their leadership and for taking this important first stop to test a way to deliver an incentive that rewards the fire extinguisher (🧯) value of new antibiotics … especially in the wake of the recent bargain sale of Tetraphase. (link).

There are of course a few further points for debate or consideration (see also the blow-by-blow after the signature block). The critical ones to our eyes are:

  • For clarity, note that this effort is by NHS England and NHS Improvement. Scotland, Wales, and Northern Ireland may join later, but because England is about 85% of the UK economy, this project captures the bulk of a contribution from the UK as a whole.
  • For this model to work, the G20 needs to follow suit with a proportionate action that considers all the value of innovative antibiotics. If G20 countries skirt their responsibilities and try to free-ride, the NHS subscription will not succeed as a pull incentive.
  • The R&D community should also pay particular attention to the way the evaluation system focuses on the WHO priority pathogens and favors coverage of high-end Gram-negatives (Slide 25). There is also an encouragement for novelty and lack of cross-resistance, but spectrum and utility are given more weight.
  • If you have further comments for the NHS England team, you can send them to by 13:00 on Friday 17th April 2020.

While we have some concerns and questions (see the by-slide commentary below), they are small beer by comparison to the HUGE step being taken here. No one else anywhere in the world is taking such substantial steps to reward antibiotic innovation. The bold effort to set out concrete metrics and estimate value is inspiring. Well done to the team at the UK Government, NICE, NHS England, and NHS Improvement!

All best wishes, –jr

John H. Rex, MD | Chief Medical Officer, F2G Ltd. | Operating Partner, Advent Life Sciences. Follow me on Twitter: @JohnRex_NewAbx. See past newsletters and subscribe for the future: All opinions are my own.

Kevin Outterson, JD, Professor of Law, Boston University & Executive Director, CARB-X (these views are personal and do not necessarily reflect the views of CARB-X or any of its funders) @koutterson

PS: Resources for COVID-19 research continue to expand. The 2020 NIAID Omnibus BAA has updates for COVID-19 proposals for Research Areas 003, 004, and 005 in Amendment Ten (10). Go here for more.

Key documents

  • The slides from the webinar (link)
  • These supplementary files shared prior to the webinar
    • The “Invitation to Participate in Dialogue” (link)
      • This document provides an overview and timelines
    • The qualification criteria in this document (link)
      • Focus here on QQ-9.1 to QQ9.3 on pages 12-14
    • A detailed analysis of scoring criteria: link
      • This document is key and is also discussed in the slide-by-slide comments
  • Added 3 Apr 2020: Post-webinar FAQ (link)
  • You can write to the team at
    • You can request the full set of background files
    • You can provide feedback with this form (link)
    • Send feedback to that same email address by 13:00 on Friday 17th April 2020.

Highlights of slides warranting extended discussion (see also additional slide-by-slide notes below)

  1. Overall comment: The team emphasized that this is a pilot project and subject to refinement. In particular, there is some scope for adjustments to the rules as the evaluation process gets underway — there is certainly a lot to be learned!
  2. Slide 12: Procurement Headlines
    • The basic outline of the project is a subscription for two products at up to £10m/year for each with a 3-year initial contract expected to be renewed for a total of 10 years
      • The annual fee is up to £10m – reductions are possible for various readily understood reasons, including HTA
      • Importantly, the annual fee is a flat fee for any amount of antibiotic from zero to whatever is required.
    • The project needs to communicate fully about the logic behind the global value implied by its pricing model:
      • As noted in the main text, £10m/yr x 10 years scales to ~$4b (£3.3b) if England contributes ~1/33rd of the global value, and the rest of the G20 contributes the remaining 97%.
      • On this point, it is important to note that the £10m is itself a cap (ceiling); the actual negotiated annual payments could be lower, although we expect the initially selected pilot antibiotics to be able to satisfy the QALY hurdles for a full contract amount, subsequent antibiotics could have more difficulty, and therefore could receive a lower annual amount.
      • Also note that the initial term of the contract will be for 3 years. Renewal to 10 years seems likely and would be expected to be the usual outcome but is not guaranteed. And, there are a number of performance requirements which, if not met, could lead to contract termination.
      • Putting it together, the total value could be inadequate as a pull incentive if the 10-year rewards fell substantially below £100m.
      • England cannot (and should not) do this alone … every member of the G20 needs to step up as well! If they do not do this, the total reward will be inadequate to sustain a vibrant pipeline and R&D community.
      • The total contract length of ten years may not be the correct endpoint. Some antibiotics will still have patents + exclusivity remaining at the end of the 10th year, but transitioning to volume-based sales with marketing teams at that point seems counterproductive. Perhaps the total length of the contract could be extended if the antibiotic still had remaining exclusivity, to ensure a smooth transition to generic entry.
      • Those critiques aside, it’s also fair to say that this target (if achieved globally) would be a strong incentive: the income would come as a square-wave from year 1 (there’s no delay in growth to a Peak Year Sales figure). Indeed, this would be the best revenue for an antibiotic since daptomycin!
  3. Slide 25 (minor): Product Selection Criteria
    • An extended commentary is found in the slide-by-slide section below.
    • See further notes in the general notes below.
    • We would have liked to see oral dosing be a distinct feature that can earn points.
  4. Slide 29: The Payment Model
    • The payment is a fixed fee of up to £10m/year for a 3- to 10-year contract
    • £10m/year is a cap, which can be reduced in the negotiations based on HTA
    • The proposed mechanism does not have an adjustment for a spike in product use due (presumably) to an epidemic event. Rather, the manufacturer is expected to provide as much product as needed for the flat fee.
      • Although this might be a rare event, we think there is a need for a mechanism to achieve break-even supplemental payments if usage greatly exceed the volume anticipated by the contract price.
      • It might be OK for NHS England to use this approach, as they hope usage will remain low, but on a global basis there really would be a need for a stop-loss for the manufacturer if an epidemic event drove substantial use. This idea is certainly consistent with a fully delinked model as the stop-loss does not provide further profit … it just prevents unlimited demand from breaking the model.
  5. Slide 30: Payment Flows
    • Note that hospitals that want to use the drug will buy it at some unit price
      • The amount paid by the hospitals ends up being deducted from the annual fee
      • A standard unit price will be set centrally and used by all hospitals. NHS intends that hospitals who need the drug should purchase it and they want to set a price that encourages appropriate use while discouraging inappropriate use.
      • Based on this, our guess is that the price would be a few % above the price of a comparable generic that you would use for non-MDR pathogens. That is, it would be just enough of a difference to make the generic appropriate for most uses but small enough of a difference to make the use of the high-end drug really just a matter of choosing the right drug.
    • This unit price could have knock-on effects for international reference pricing — It feels like work is needed on how the unit price is set and disclosed, and to prevent parallel imports from delinked regions (like England) to ordinary reimbursement regions (like Scotland or Europe).
    • Hopefully, a list price could be maintained that would not have such knock-on effects.

Further slide-by-slide notes

  • Slide 9: The definition of success for the project is really visionary: (i) an HTA valuation framework, (ii) a payment framework, and (iii) other countries take this on. Excellent!
  • Slide 12: See highlight notes above
  • Slide 15: A process called Competitive Dialogue will be used to pick the two products
    • This starts with a qualification step.
    • Note the graphic at the top of this slide … it will be repeated on subsequent slides and used as the roadmap
  • Slides 16-20: These cover Selection and Contracting … these slides read easily
  • Slide 22: The nitty-gritty … what are the principles of product evaluation?
    • Key qualification criteria launch dates (must be recent, see below), must cover WHO priority pathogens, and must be managed with stewardship in mind
    • If those criteria are met, the product is ranked on clinical, non-clinical, and cost criteria
  • Slide 24: Qualification criteria in detail:
    • One Existing antibiotic (launched in UK between 1 Jan 2017 and 31 Dec 2018)
    • One New antibiotic (launched in UK by 2021)
    • In truth, these are really both quite new products … we can’t get a firm lock on the products that could qualify … does anybody have a table of UK launches? Please let us know if so. The universe of potentially qualifying products within those time windows will be limited
  • Slide 25: See highlight notes above. A key slide … there is a point system for product ranking.
    • As you work through this slide, please also refer to the supplemental document (see link above) with further scoring details)
    • Points for priority pathogens (go here for a list of same): Up to 11,250 points based on:
      • 6000 points for the first Priority 1 pathogen included within the Licensed Indications
      • 2500 points for the second Priority 1 pathogen included within the Licensed Indications
      • 1250 points for the third Priority 1 pathogen included within the Licensed Indications
      • 1000 points if the Licensed Indications include one or more Priority 2 pathogens
      • 500 points if the Licensed Indications include one or more Priority 3 pathogens
    • Unmet need: Up to 6000 points across High, Medium, and Low unmet need
    • Coverage of key resistance determinants: Up to 6000 points based on extent of coverage of pathogens expressing the 4 Ambler classes of beta-lactamases and the non-mutational causes of multidrug resistant (MDR) in Pseudomonas (Porin OprD and efflux pump).
    • Utility in various disease settings: Up to 6000 points for the spectrum of primary care (lowest) to ICU (highest)
    • Degree of novelty: New class (2000 points), New target (1500 points), New Mechanism of Action (1500 points), low rate of development of resistance (1500 points), lack of cross-resistance (1000 points), and Other benefits (up to 500 points)
    • Certainty of supply, Stewardship, and arrangements for Surveillance are each worth up to 5000 points
    • Overall, this reminds us of the point-scoring system that we proposed in 2016 (Lancet ID 16(4):500-505 link). We like the way that the NHS system goes deeply into a number of details.
    • Note how these criteria really favor novelty and priority pathogen coverage
  • Slide 27: The final add-up
    • There is an adjustment for the contract price the company is willing to offer: if the company offers a maximum contract value lower than the NHS England maximum contract value of £10m/year, 2000 points are scored for every £1m/year the company offer is below £10m/year. This is a linear adjustment: £9.75m get 500 points, £9.5m gets 1000 points, etc.
  • Slide 29: The payment Model. See highlight notes above.
  • Slide 30: Payment Flows. See highlight notes above.
  • Slide 36-39: The HTA process will be substantial … 10 experts from NICE plus 6 others.
    • The goal here will be to confirm that the selected antibiotic actually generates enough value to merit the subscription fee. Presumably, this will be done on the QALY (Quality-Adjusted Life-Year) basis proposed in the York EEPRU by Rother et al. Here’s a full list of relevant prior papers:
      • (link) Rothery C, Woods B, Schmitt L, Claxton K, Palmer S, Sculpher M. Framework for Value Assessment of New Antimicrobials. 2018.
      • (link) Sertkaya A, Eyraud J, Birkenbach A, Franz C, Ackerley N, Overton V, et al. Analytical framework for examining the value of antibacterial products. Report to US DHHS. United States Department of Health and Human Services. 2014.
      • (link) Outterson K, Rex JH. Evaluating for-profit public benefit corporations as an additional structure for antibiotic development and commercialization. Translational Research. 2020.
      • (link) Outterson K, McDonnell A. Funding Antibiotic Innovation With Vouchers: Recommendations On How To Strengthen A Flawed Incentive Policy. Health Aff (Millwood). 2016;35(5):784-90.
      • (link) Outterson K, Samora JB, Keller-Cuda K. Will longer antimicrobial patents improve global public health? Lancet Infect Dis. 2007;7(8):559-66.
    • Our sense is that it should easily be able to justify that value for a high-end Gram-negative drug (see the Sertkaya paper for examples of the math) but if the HTA process results in a substantially reduced contract value, the global value estimate of course falls proportionately and could end up being inadequate
  • Slide 43: Your feedback is invited Use the form to send feedback to by 13:00 on Friday 17th April 2020.

Current funding opportunities:

  • Open now through 9 Apr 2020: NIAID Broad Agency Announcement (BAA) soliciting contract proposals for preclinical and clinical development of vaccines, therapeutic, and diagnostics for microbial pathogens. Go here for more.
  • Dates for the 2020 funding rounds for Novo REPAIR Impact Fund will be announced May 2020. Go here for current details.
  • 2020 funding rounds for CARB-X have not been announced.

Upcoming meetings of interest to the AMR community:

  • 30 Mar 2020 (everywhere): Deadline for applications for the Molecular Mycology pathogenesis course at Marine Biological Laboratory, Woods Hole. Now in its 24th year, the hands-on residential course runs 17 July to 2 Aug and gets rave reviews. Go here for more.
  • 28 Apr 2020 (online, 17:00-18:30 CEST): GARDP REVIVE webinar. Title: “Inhaled antimicrobials: Do we get the drug to the bug?” Speaker: Harm A. W. M. Tiddens. Go here to register.
  • 5 May 2020 (online, 09:00-10:30 CEST): GARDP REVIVE webinar. Title: “The challenges and opportunities for antimicrobial R&D in low- and middle-income countries – India case study.” Speaker: Anand Anandkumar. Go here to register.
  • 7 May 2020 (Silver Spring): FDA workshop entitled “Development Considerations of Antifungal Drugs to Address Unmet Medical Need.” Go here to register.
  • 8 May 2020 (Silver Spring): FDA workshop entitled “Developing Antifungal Drugs for the Treatment of Coccidioidomycosis (Valley Fever) Infection.” Go here to register.
  • 18-22 Jun 2020 (Chicago), ASM Microbe 2020. Go here for details.
  • 17 Jul-2 Aug 2020 (Marine Biology Laboratory, Woods Hole, MA): Residential course entitled “Molecular Mycology: Current Approaches to Fungal Pathogenesis.” This 2-week intensive training program has run annually for many years and gets outstanding reviews. Go here for details.
  • 29 Jul-2 Aug 2020 (Philadelphia, PA): Small World Initiative Instructor Training Workshop – training for undergraduate professors and high school teachers in wet lab techniques, parallel curricula, pedagogical instruction to engage students in the hunt to find new antibiotics in soil. Go here to register.
  • 24-25 Aug 2020 (Basel): BEAM-, Novo REPAIR-, CARB-X-, DZIF-, ND4BB-, ENABLE-supported (among a long list!) Conference on Novel Antimicrobials and AMR Diagnostics. Details are here.
  • September 2020. University of Sheffield (UK). Applications are being taken for a new 1-year (full-time) or 2-year (part-time) Masters of Science course in Antimicrobial Resistance. The program runs annually from September and covers microbiology, clinical practice and policy. The course webpage is here.
  • [CANCELLED] 1-4 Sep 2020 (Dublin): Annual ASM-ESCMID Conference on Antibiotic Development #5! Mark your calendar now and go here for details.
  • 9-10 Sep 2020 (Washington, DC): US PACCARB public meeting. Go here for details.
  • 22-25 Sep 2020 (Albuquerque, New Mexico): Biannual meeting of the MSGERC (Mycoses Study Group Education and Research Consortium). Save-the-date announcement is here, details to follow.
  • [REGISTRATION NOW OPEN] 17-25 Oct 2020 (Annecy, France): Interdisciplinary Course on Antibiotics and Resistance (ICARe). This is a soup-to-nuts residential course on antibiotics, antibiotic resistance, and antibiotic R&D. The course is very intense, very detailed, and gets rave reviews. Registration is here and is limited to 40 students.
  • [RESCHEDULED] 26-29 Oct 2020 (Rotterdam), Annual ESPID meeting (European Society for Pediatric ID, #38)
  • 10-13 Apr 2021 (Vienna): Annual ECCMID meeting (#31)
  • [NEW] 20-24 June 2021 (Toronto): International Symposium on Pneumococci and Pneumococcal Diseases (ISPPD-12). Go here for details.
  • 3-7 Jun 2021 (Anaheim), ASM Microbe 2021. Go here for details.


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