Assessing antibiotic value: DTR, fire extinguishers, and a view from Australia

Dear All (wonkish note alert — refresh your coffee before proceeding — with thanks to Kevin Outterson for co-authoring this note!),

The intertwined questions of (i) the cost to develop a new antibiotic and (ii) how much we should pay for such a new antibiotic have been an increasingly frequent newsletter topic, with a real acceleration in relevant activities since the beginning of this year:

  • 14 Apr 2020 (link): “Pull Incentives For Antibiotics: How Much And Why? — A literature survey of estimates to date”
  • 29 Mar 2020 (link, plus link to follow-up FAQ): “UK Antibiotic Subscription Pilot Implies Pull Incentive Of Up To $4b”
  • 23 Mar 2020 (link): “Tetraphase Sold For $14m … And $600m Goes Up In Smoke!” 
  • 6 Mar 2020 (link): “What Does An Antibiotic Cost To Develop? What Is It Worth? How To Afford It?”
  • … for more, see below the signature block
  • 9  July 2020 amend: A further summary is found on Incentives webpage of this website (link)

For those new to the conversation, a succinct summary of the state of play would be:

  1. Cost to develop: Median development costs for a new antibiotic exceed $1b (Wouters et al. JAMA 2020, link; see also this newsletter discussing the Wouters paper).
  2. Cost to sustain an antibiotic in the market after initial approval: The best current estimate is that the sponsor will incur costs of ~$350m to complete post-approval work and manufacture the compound during its first 10 years on the market (link to newsletter on this topic). Stated differently, you need ~$35m/yr in revenue just to reach break even on a cash-flow basis.
  3. Typical sales for a new antibiotic: < $50m/year (Alan Carr’s 2020 market review, link).
  4. # of company collapses following approval of a new antibacterial: With that ratio of cost to revenue, it should be obvious that you can’t possibly repay the $1b+ development costs and the $35m/yr post-approval costs. Hence, it is no surprise that the companies behind 5 of the 15 entirely novel antibacterial agents approved since 2009 have collapsed (23 Mar 2020 newsletter, link).
  5. Nature of the fix required to create a sustainable ecosystem: This has been explored exhaustively and the unanimous answer is that we need Pull Incentives that (i) delink volume of use from reward to innovator by (ii) providing $1-$4b over ~10 years post approval to companies that deliver strong innovation (multiple reports, the most recent is from the US Government Accountability Office (link), see full list below the signature block).
  6. # of governments currently engaged in a concrete effort to create a Pull incentive on that scale: At least one (the UK, link), perhaps becoming two if the PASTEUR Act now being drafted in the US gains traction (link). Note that Sweden has also announced a project focused on antibiotic availability (link) but the scale of the reward to be offered is not clear.

If it feels like this is all very depressing, just keep in mind that 10 years ago we did not have ANY activity at this level. None, zero, zip. Nada. Yes, we had the IDSA calling for action via its “Bad Bugs, No Drugs!” call to action (link) and its “10×20” initiative (link), but did we have the attention of policymakers, of economists, or other key stakeholders? No, not at all. The first step at a government level was arguably the 17 Sep 2009 workshop entitled “Innovative Incentives for Effective Antibacterials” that was hosted by the Swedish government when they held the EU presidency (link). Since then, we have definitely made progress … please don’t despair!

With this as background, let’s now turn our attention to three ideas: DTR (Difficult-to-Treat-Resistance), fire extinguishers, and a view from Australia.

Starting in reverse order with the Land Down Under, we have this fascinating paper (link): Hillock NT, Merlin TL, Karnon J, Turnidge J, Eliott J. Feasibility of de-linking reimbursement of antimicrobials from sales: the Australian perspective as a qualitative case study. JAC-Antimicrobial Resistance. 2020;2(2).

In this paper, the authors have interviewed both policymakers and the pharmaceutical industry in an effort to understand their perspectives on delinked approaches to antibiotic purchases. Here is the key text excerpt and a very telling quote:

  • There was general agreement across stakeholders that increasing AMR will mean increasing costs associated with infections that are more difficult to treat, but drug procurement costs seemed more visible to payers than the consequences of resistance in the future.
  • ‘I think the problem with the de-linked model I guess is finding…a cost-efficient price, and so we could end up just paying a lot more for antibiotics with little benefit’.

That’s certainly the problem in a nutshell. And it is interesting to think about it in COVID-19 or SARS terms. What would you (we) have been willing to pay last summer for a SARS or COVID-19 therapy? Not much … but right now, such a therapy has a value to the global economy of billions (if not trillions) of dollars.

So, we move now to idea #2: Antibiotics are the fire extinguishers of medicine. Kevin and I first wrote about this in 2016 (link) and we’ve continued to find this metaphor to be useful. Just like fire extinguishers, antibiotics appear to have zero value until suddenly a fire (an infection) appears before your eyes. At that point, there is not time to waste … and the building will burn to the ground (the patient will die) if you only then begin designing and manufacturing fire extinguishers (discovering and developing the needed antibiotic).

The quote above from Hillock’s paper is really instructive: we somehow don’t mind paying to have a fire department (and not having our house catch on fire) but the idea of paying to have an adequate antibiotic on hand is disturbing. It’s easy to understand this perspective … when you pay for something but don’t use it, there is a tendency to feel that you’ve been duped. In many ways, this is reminiscent of criticisms that governments had overreacted during the 2009 swine flu pandemic (link).

A useful variant of this idea is to think about life insurance. Do you have it? Did it pay off today? How do you feel about that? Hmm…

With all of this in our heads (inhale, exhale, get more coffee now!), we at last come to idea #3: Which fire extinguishers should we buy? Because we do have a reasonable number of antibiotics at hand, including some that can be used for very difficult infections, any given new antibiotic needs to offer something special. Stated simply, this is the problem of defining adequate innovation.  

Innovation is a surprisingly tricky concept for antibiotics. The list of target bacteria is finite, as is the list of common infections. Themes of novel structure, novel target, and novel mechanism are easily proposed but amazingly difficult to define.

As a possible path to resolve this complexity, Ursula Theuretzbacher proposed 2017 that innovation could be defined functionally “… by focusing on the impact on resistance: a drug that lacks cross-resistance with existing drugs and has a low potential for high-frequency high-level single-step resistance.” This approach (link) has an intuitive appeal and has been used in recent WHO pipeline analyses (2018: link, 2020: link).

As a very different approach, let us now consider the idea of DTR (Difficult-to-Treat Resistance) as proposed by Kadri and colleagues. Previous newsletters have reviewed this idea relative to the ideas of MDR, XDR, PDR, and UDR (13 Jan 2019: link and 20 Feb 2020: link). The key papers by the Kadri group are here:

  1. (link) Kadri SS, Adjemian J, Lai YL, Spaulding AB, Ricotta E, Prevots DR, et al. Difficult-to-Treat Resistance in Gram-negative Bacteremia at 173 US Hospitals: Retrospective Cohort Analysis of Prevalence, Predictors, and Outcome of Resistance to All First-line Agents. Clin Infect Dis. 2018;67(12):1803-14.
  2. (link) Kadri SS, Lai YLE, Ricotta EE, Strich JR, Babiker A, Rhee C, et al. External Validation of Difficult-to-Treat Resistance Prevalence and Mortality Risk in Gram-Negative Bloodstream Infection Using Electronic Health Record Data From 140 US Hospitals. Open Forum Infect Dis. 2019;6(4):ofz110.
  3. (link) Strich JR, Warner S, Lai YL, Demirkale CY, Powers JH, III, Danner RL, et al. Needs assessment for novel Gram-negative antibiotics in US hospitals: a retrospective cohort study. The Lancet Infectious Diseases. 2020.
  4. (link, editorial comment on #3) Fitzpatrick MA. Real-world antibiotic needs for resistant Gram-negative infections. The Lancet Infectious Diseases. 2020.

In paper #1, DTR is defined as lack of susceptibility in vitro to both the fluroquinolones and to all beta-lactam categories (including carbapenems). The key idea behind DTR is that “nonsusceptibility to all first-line, high-efficacy, low-toxicity agents very often leads to both discordant empirical regimens and subsequent reliance on less effective and/or more toxic ‘reserve’ agents.” Patients with DTR GNBSIs (Gram-negative Bloodstream Infections) had a 40% higher adjusted mortality risk than those with nonresistant GNBSI.

In paper #2, the authors verify these findings by showing that DTR was associated with nearly a 2-fold greater mortality risk, even after adjusting for critical pathogen-, facility-, and host-level factors, including baseline severity of illness. 

So now we come to paper #3 where we can explore the idea of the need for new antibiotics (new fire extinguishers) for DTR. In this paper, the authors use data from 134 US hospitals to estimate both (i) the frequency of DTR infections and (ii) the volume of use (days of therapy) that would likely be needed for a new agent that addressed DTR infections. Here’s the good news and the bad news:

  • (Good news if you are a patient or caregiver): DTR pathogens are not very common. Across 3 million admissions over a 6-year period, only 1,352 DTR episodes were identified. Scaling to a single year, that’s 225 episodes in 500,000 admissions. Scaling up further to the total 36 million US hospitalizations/year (link), we have ~16,000 DTR infections/year. That’s a meaningful number if you are one of the 16,000 but a small number on a percentage basis.
  • (Bad news if you are the innovator): Sales limited to treating DTR pathogens will generate little revenue. The authors use the # of episodes to estimate the amount of drug that would be needed. As antibiotics work quickly, therapy tends to be no more than 2 weeks in duration. Using both conservative and liberal estimates, the authors suggest that those 16,000 DTR episodes would require 120,000-240,000 days of therapy. Even if a new agent could command $500/day, that’s barely $60m/year in revenue.

The authors repeat this exercise with the more-common but less troublesome categories of carbapenem-resistance (CR) and extended-spectrum cephalosporin (ECR) resistance. Relative to DTR, the # of episodes and days of therapy increase by 2-fold (CR) and 7-fold (ECR), but there are also more existing therapeutic choices in each of these categories and hence less ability to generate revenue.

Aside #1, to developers: The authors also provide an instructive heat map that shows that the big needs are DTR Acinetobacter baumannii, DTR Pseudomonas aeruginosa, and DTR/ECR Enterobacteriaceae (Enterobacterales). Not surprisingly, innovative drugs are needed for the first two pathogens in the lung and the last one in the urinary tract.

Aside #2, to those setting targets: Note also that this is an estimate of DTR today. Given the 10-15 timelines for a new product, a DTR-based value model would require a preclinical drug developer to accurately predict DTR 10-15 years in the future! As it would be a real example of the Illusion of Skill to think we could be so accurate with our crystal ball, we will need to balance the ideas of DTR and innovation in our targets: If we don’t start those programs today, we may spend a decade with untreatable infections (imagine the wait for the COVID vaccine x10). Keeping up with bacteria takes planning and risk (preparedness). 

What does it all mean? First, the idea of DTR provides a pragmatic slant on the problem of defining innovation. The ideas of novelty of mechanism, structure, and target are hard but the idea of “no cross-resistance” also has difficulties as very few things are absolute. The idea of DTR says in effect, “I don’t care how it works, I just want it to be useful.” But, DTR is also not a panacea as it is a relative definition … the instant even a single new beta-lactam appears with coverage of a group of DTR pathogens, the need likewise shifts.

Using both ideas in a definition of innovation for purposes of a Pull incentive would thus seem appropriate. And, in fact we’re seeing that approach being taken by the UK as it defines the process for assessing antibiotics for its proposed pilot subscription model Pull incentive. For more on this, see the discussion of slide 25 in the first of the two 29 Mar 2020 newsletters on the UK pilot (link, search for ‘6000’ to jump straight to the relevant text) for the way the UK gives points for both pathogen coverage and for novelty.

Second, these data reinforce the need to pay for new antibiotics in a very different way. The authors summarize by noting “…even if barriers to prescribing antibiotics are overcome and the preferential use of new drugs is maximised, the universe of treatment opportunities for DTR Gram-negative pathogens is still likely to remain small, and as per our study, specifically amounts to only one in 70 of all treatment opportunities when compared with β-lactam susceptible infections.” Their solution is found at the end of the abstract: “Non-revenue-based strategies and innovative trial designs are probably essential to the development of antibiotics with improved effectiveness for these GNIs.”  In our view, those “non-revenue-based strategies” include delinked pull incentives.

The accompanying editorial by Fitzpatrick echoes this need for a new approach with “… if prevalence of DTR-GNI [Gram-negative infection] remains substantially lower than susceptible GNI, pharmaceutical companies, regulatory agencies, and researchers will need support and incentivisation to develop new DTR Gram-negative antibiotics.”

Whew! Many thanks to these authors for this superb series of papers, all of which are a welcome addition to the insights reinforcing the need to take concrete action to ensure we have the antibiotics we need both now and in the future.

All best wishes, John & Kevin

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  

Complete list of prior newsletters on value & incentives

  • 14 Apr 2020 (link): “Pull Incentives For Antibiotics: How Much And Why? — A literature survey” A summary of papers approaching value from the diverse view points of scientific features at baseline, features that emerge, top-down value estimates, and bottom-up value estimates.
  • 29 Mar 2020 (link, plus link to follow-up FAQ): “UK Antibiotic Subscription Pilot Implies Pull Incentive Of Up To $4b”
  • 23 Mar 2020 (link): “Tetraphase Sold For $14m … And $600m Goes Up In Smoke!” 
  • 6 Mar 2020 (link): “What Does An Antibiotic Cost To Develop? What Is It Worth? How To Afford It?”
  • 5 Jan 2020 (link and link, a 2-part series): “Melinta Goes Bankrupt / Never Let A Good Crisis Go To Waste.” Note that part 2 of this series contains the best estimate to date of the post-approval costs incurred by an antibiotic developer.
  • 22 Apr 2019 (link and link, a 2-part series): “Scary, Scarier, Scariest: Achaogen bankruptcy”
  • 17 Feb 2019 (link): “Modeling The Value Of An Effective Antibiotic: Megiddo et al.”
  • 23 Jan 2018 (link): “Push! Pull! Push! Pull! / Highlights From Davos 2018”
  • 11 Sep 2017 (link): “Incentives For Antibiotics: Summary of the insights from DRIVE-AB”
  • 8 June 2017 (link): “Ardal et al. / Pull Incentives For Antibiotics – TATFAR Analysis Of 6 Models”

Reports concluding that a substantial post-approval Pull Incentive is the key to fixing the antibacterial ecosystem

  • 2014: Eastern Research Group for the US Department of Health and Human Services: link
  • 2015: Chatham House in London: link 
  • 2016: UK AMR Review led by Lord Jim O’Neill: link
  • 2017: Duke-Margolis Center for Health Policy (11): link
  • 2018: DRIVE-AB for the European Union: link 
  • 2020: United States Government Accountability Office: link

Current funding opportunities:

  • 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.
  • The Global AMR R&D Hub’s dynamic dashboard (link) summarizes funders and projects by geography, stage, and more.

Upcoming meetings of interest to the AMR community:

  • 9 Jun 2020 (online, 17:00-18:30 CEST): GARDP REVIVE webinar. Title: “Test tube to patient: PK/PD of fixed dose beta-lactam/beta-lactamase inhibitor combinations.” Speaker: Vincent Tam. Go here to register.
  • [NEW] 16 Jun 2020 (online, 17:00-18:30 CEST): GARDP REVIVE webinar. Title: “Bringing new treatments for drug-resistant infections to all who need them.” Speakers: Seamus O’Brien, Francois Francheschi, Sally Ellis. Go here register.
  • [NEW] 25 Jun 2020 (online, 14:00-15:00 CEST): GARDP REVIVE webinar. Title: “Putting children first in the fight against antibiotic resistance.” Speakers: Manica Balasegaram, Hanan Balkhy, Stafan Peterson. Go here register.
  • 30 Jun 2020 (online, 17:00-18:30 CEST): GARDP REVIVE webinar. Title: “Clinical development of antimicrobials – Phase 1 development challenges.” Speaker: Markus Zeitlinger. Go here to register.
  • 9 Jul 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 and Kamini Walla. Go here to register.
  • 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.
  • 4 Aug 2020 (Silver Spring): FDA workshop entitled “Development Considerations of Antifungal Drugs to Address Unmet Medical Need.” Go here to register.
  • 5 Aug 2020 (Silver Spring): FDA workshop entitled “Developing Antifungal Drugs for the Treatment of Coccidioidomycosis (Valley Fever) Infection.” Go here to register.
  • 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.
  • 9-10 Sep 2020 (Washington, DC): US PACCARB public meeting. Go here for details.
  • 26-29 Oct 2020 (Rotterdam), Annual ESPID meeting (European Society for Pediatric ID, #38)
  • 10-13 Apr 2021 (Vienna): Annual ECCMID meeting (#31)
  • 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.
  • 8-11 Oct 2021 (Aberdeen, Scotland): 10th Trends in Medical Mycology. Go here for details.
  • 16-24 Oct 2021 (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] 18-21 May 2021 (Albuquerque, New Mexico): Biannual meeting of the MSGERC (Mycoses Study Group Education and Research Consortium). Save-the-date announcement is here, details to follow.


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