Global survey of novel antibiotic reimbursement models / PASTEUR Act introduced to US House

Dear All (wonkish alert, but the details are fascinating … and with thanks to Kevin Outterson for co-authoring!),

Two related items of note for today.

First, the PASTEUR Act was introduced today (press release from Rep. Doyle; press release from Rep. Ferguson) into the US House of Representatives by the bipartisan team of U.S. Representatives Mike Doyle (D-PA) and Drew Ferguson (R-GA):

• As discussed in a prior newsletter, PASTEUR was introduced to the Senate on 30 Sep 2020 and (if enacted) would create a predictable path to rewarding new #FireExtinguishersOfMedicine for their value to society via a subscription contract that prepays for all US federal use of the drug.
  • Critically, PASTEUR offers a predictable path to $750m to $3b for the creation of an impactful new antibiotic. Starting at IND, the developer can apply to HHS and receive a certificate that precisely lays out the subscription amount that will be received if at FDA approval the compound works as predicted.
  • In addition, there is upside potential. These awards represent the floor: the developer still has additional upside potential from US private sales and ROW.
• There is still a long way to go and success is not certain, but introduction into the House is a key next step in the US legislative process: A bill must be passed by both the House and Senate in identical form and then be signed by the President to become law.
• Many thanks to Reps. Doyle and Ferguson for their bipartisan focus on this meaningful legislation!

—
Second, a WHO-based team has this month published a superb survey of antibiotic reimbursement models:

• Gotham D, Beyer P, Moja L, van der Heijden M, Paulin S, Smith I. Reimbursement models to tackle market failures for antimicrobials: Approaches taken in France, Germany, Sweden, the United Kingdom, and the United States. Health Policy, 2020 (in press).
• https://www.sciencedirect.com/science/article/abs/pii/S0168851020302980

This is an excellent paper and you are encouraged to read it. As a preview, here are the key points

• Following a succinct but comprehensive summary of the broken economics of antibiotics and the many calls for delinked models (see also https://amr.solutions/incentives/), these interventions were reviewed:
  • France and Germany have implemented limited DRG carveouts for antibiotics and also have a pricing mechanism that permits exceptions for setting antibiotic prices that are akin to new exceptions for antibiotics not having to demonstrate superiority for NTAP (see below). For those new to this area, see this newsletter for an explanation of the DRG (Diagnosis-Related Group) system. See also this newsletter for an instructive discussion of how Germany has steadily improved its model. 9 Feb 2021 update: Germany has posted the rules it will apply for identifying exempted “reserve” antibiotics.
  • Sweden is experimenting with an access-focused model in which Sweden contracts for the availability of antibiotics targeting pathogens on the WHO Priority Pathogen List. See this newsletter for a discussion of the Swedish model; see this webpage for a summary of the various priority pathogen lists. While this access model is excellent for getting companies to commercially launch their products in Sweden, there is no component of reward for R&D at present. But as part of the new EU Pharmaceutical Strategy (newsletter), the Swedish method could be scaled to become a delinked pull incentive.
  • The United Kingdom is implementing a ground-breaking subscription-based pilot that is the first project to propose delinked reimbursement for the full value of a new antibiotic. See this newsletter for details on the UK pilot; see also this talk by Kevin Outterson on Pull incentives from the superb August 2020 AMR Conference.
  • Building on the 2012 GAIN Act (Pew Trust webpage), the United States has multiple activities underway:
    • Via the IPPS FY2020 Final Rule, the US Centers for Medicare and Medicaid Services (CMS) proposes a way to recognize the overall cost of managing drug-resistant infections via new DRG codes and an adjustment to the NTAP (New Technology Add-on Payment) system. See this wonkish newsletter for details (if you are following all the links, this is the same newsletter as cited above to explain the DRG concept). See also this excellent summary by Kevin Outterson in Nature Biotech.
    • The DISARM Act proposes a further tweak to the NTAP and is working its way through the US legislative process. See the IPPS FY2020 Final Rule links just above for more on DISARM.
    • The very exciting PASTEUR Act, as discussed at the top of this newsletter.
    • It’s not a government-level action, but Civica Rx is a non-profit generic drug manufacturer formed by a group of 7 health provider networks to create a pooled demand that ensures long-term supply of generic drugs, including antibiotics. Civica Rx currently contracts for vancomycin and daptomycin.
  • It’s not in the paper by Gotham et al., but we’ll also remind you of this newsletter on calls in Japan for Pull incentives. We don’t think these calls have progressed to legislative activity, but it’s great to see the conversation start.
  • And finally, the UK assumes the Presidency of the G7 on 1 Jan 2021! Dame Sally and Team UK will surely keep AMR on the front burner!

Having surveyed the landscape, Gotham et al. then offer this instructive 3-part critique of the actions to date:

1. “Most interventions form exceptions to general rules. Reforms in Germany, France and the US are relatively small adjustments to national reimbursement systems to provide more tailored approaches for antimicrobials, or specifically antibacterials, mainly through creating specific exceptions to existing cost containment measures such as the DRG reimbursement system.
2. “Interventions differ from one market to another. This increases the translational costs for companies. Companies will have to individually assess opportunities in each market and find their way through national mechanisms that take the form of exceptions to the general rules. This fragmentation may be particularly challenging for SMEs, which are currently driving the antibacterial development pipeline. This has to be considered against the fact that some of the newest antibacterials have not been registered in the European market at all, ostensibly due to the investments required to enter the market.
   • Our view: The newly announced EU Pharmaceutical Strategy & HERA (EU’s parallel to BARDA) have a real opportunity here to cut through the red tape in each EU nation (newsletter for more). And for more on those delays in antibiotic availability, see this newsletter.
3. “Financial impact remains unclear. The fragmentation of the markets and different antibacterial-directed mechanisms makes it difficult to assess the potential financial impact. Due to the arguably incremental nature of the interventions in the US, Germany, and France, we would expect the impact of those interventions on the incentives for antibacterial development to be limited.”
   • Our view: Given the fact that global sales of branded antibiotics are under $1B (newsletter), small tweaks to reimbursement are welcome steps but are unlikely to provide the level of company revenues needed to ensure that products are brought to (and then stay on) the market.

The article then closes with an extended discussion of the issues that arise when attempting to implement stronger Pull incentives.

Very, very well said and many thanks to the authors for this excellent update! There is very little about the year 2020 that has been fun or uplifting, but seeing this summary gives cause for hope. Although the progress is slow, there is progress. We weren’t having ANY of these conversations 20 years ago and we still struggling to formulate the key ideas 10 years ago. Impressive!

Ho, ho, ho! John and Kevin

John H. Rex, MD | Chief Medical Officer, F2G Ltd. | Operating Partner, Advent Life Sciences. Follow me on Twitter: @JohnRex_NewAbx. 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

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