The superbug battle: O’Neill plan meets its own resistance from pharma

A new global masterplan has been launched to tackle the looming threat of antimicrobial resistance (AMR) – aka superbugs –which could kill 10 million people a year from 2050. But suggestions that pharma should be levied to pay for a global fund have met their own resistance. Andrew McConaghie reports.

The threat posed by antimicrobial resistance (AMR) has gained considerable media attention over the last few years, yet the scale of the problem remains shocking.

As laid out in last week’s comprehensive report by Lord Jim O’Neill, drug-resistant infections could kill 10 million people a year by 2050, or one person every three seconds, and more than cancer kills today. This is no distant threat – an estimated 700,000 people worldwide already die every year because of the problem.

A former Goldman Sachs economist, O’Neill was commissioned nearly two years ago by the UK government to understand the roots of the AMR problem, and come up with an ambitious action plan for the whole world.

Having consulted with governments, public health leaders, clinicians, pharma companies and many more groups, O’Neill has produced 10 recommendations to tackle the multiple causes of this burgeoning problem.

These recommendations focus on the biggest preventable causes of AMR – misuse of existing antibiotics and poor hygiene in humans and in agriculture. The report also calls for new rapid diagnostics to reduce unnecessary use of these medicines, and the development of vaccines and alternatives. O’Neill has already mobilised global support for the plan, helping to forge a partnership between China and the UK, and is looking to the G20 and United Nations to make it a truly international effort.

Levy on pharma industry

While there has been consensus on most of the action plan proposals, one has been given a definite thumbs down from the industry: a levy on pharma companies to raise money for a kind of global prize fund for new antimicrobial treatments.

O’Neill first put forward this plan a year ago, identifying a ‘market failure’ within the field of antimicrobial research. There is indeed a consensus that this is true: the economics of developing new drugs have become far less attractive in recent decades, which led to a major disinvestment in AMR research in the pharma industry. This has seen a drying up of the antimicrobial pipeline, with very few new drugs in some of the most-needed classes of antimicrobials.

Billions of dollars have been invested over the last two decades to discover new antibacterials, yet no new class of antibiotic for Gram-negative infections has reached approval in over 40 years.

O’Neill’s conclusion is that, without “large-scale intervention”, the commercial rewards needed to reverse the long-term disinvestment from antibiotic R&D will simply never emerge, and thus neither will the right numbers and types of products.

But how to solve this? Ironically, for an economist who studied the behaviour of free markets, O’Neill has proposed a highly structured intervention, which doesn’t try to tweak market forces in order to make them work again, but instead proposes a prize fund, paid for by levies on pharma companies.

“We believe that the most attractive, realistic model for achieving this is a system of ‘market-entry rewards’ – large payments in the order of $800 million-$1.3 billion to the successful developer of a new antibiotic, which meets prospectively-defined criteria of ‘unmet need’,” says O’Neill.

The report identifies a global objective of developing about 15 new drugs a decade to keep on top of antibiotic and Tuberculosis resistance. It recommends around four of these should have novel mechanisms of action, some narrow spectrum, some broad, and estimates that it will cost approximately $16 billion a decade to provide the market-entry rewards to these new drugs.

His argument is that pharma should pay for the fund, although he makes it clear that the idea of a ‘small levy’ on the pharmaceutical sector is just one of the options to raise funding for the market entry rewards for new antibiotics.

If this $16 billion decade-long commitment was shared out equally between 25 companies, the annual levy would be $64 million each.

In fact, his proposal is more nuanced than that, and might be based on a ‘pay or play’ basis, where firms which invest in R&D that is useful for AMR can deduct their investment from the charge owed by all players within the industry.

You can see what O’Neill means by ‘small levy’ – particularly in relation to the cost to the global society of AMR, which he estimates would run into trillions – but the proposal goes against all of big pharma’s instincts.

While welcoming of the report in its totality, the international pharma industry was quick to make clear its opposition to a levy.

Global pharma body the IFPMA put out a joint statement with European organisation EFPIA and the UK’s ABPI:

“The potential imposition of a tax on just one segment of the life sciences sector to fix a supply-side issue will significantly undermine current goodwill, co-operation, and the large voluntary investment and initiatives that are already underway.”

It added: “Ultimately, this approach may lead to less productive collaboration and innovation, and ignores the universal responsibility for finding a solution that all of society relies on. We need to be working towards incentives that support additional investment rather than punitive payments.”

Sir Andrew Witty, Chief Executive of GlaxoSmithKline, commended Jim O’Neill and his team for exploring ways to address the problems, but added: “the journey is far from over.”

He said governments, industry and other relevant groups would have to work together to develop the report’s ideas into practical steps that ensure the supply of effective new antibiotics for future generations.

Perhaps the single more frightening aspect of such a plan is the level of control proposed – the idea of having a global prize fund for new drugs, with R&D directed by a board of experts, is the stuff of pharma’s nightmares.

Even though the proposal relates solely to antimicrobials, it’s clear that pharma would fear this model being transferred to all R&D, which would undermine its established free-market, shareholder-led model.

O’Neill has, in part, anticipated some of the worst fears about such a fund. He says by paying for successful end products, rather than subsidising antibiotic R&D directly, the problems of governments or bureaucracies being asked to ‘pick winners’ are avoided.

Developers would also retain judgement about the scientific merits of a product, as they are best-placed to make such decisions. But O’Neill believes the fund will stop research projects being cancelled because their forecast potential – including their projected volume of sales during patent life – isn’t commercially viable.

Nevertheless, the opposition is clear, even despite O’Neill proposing the prize being a sizeable reward. He states that a market-entry reward of $1.6 billion would have a ‘material impact’ on drug development of antibiotics.

Clearly, the issue is urgent, and the AMR Review has certainly kick-started the conversation.

John Rex, Chief Strategy Officer, AstraZeneca Antibiotics Business Unit, applauded the work of the report, but suggested that creation of novel commercial models (i.e. not a prize fund) to effectively incentivise sustained development of novel therapies would be needed.

One of the central problems to developing new antibiotics is that, by definition, they should be reserved as a last resort.

He pointed out that antibiotics should be seen as the “healthcare equivalent of the fire extinguisher: they must be available on the wall at all times and have value even when used only infrequently.”

He added that the pharma industry was looking at how such models can be set up with governments around the world. One other notable development was the Industry Declaration on Combatting Antimicrobial Resistance released at the 2016 World Economic Forum in Davos earlier this year. This might prove to be a foil to some of the less welcome proposals elsewhere in the O’Neill plan.

Pharma also wants to set the record straight on investment in the field, and is keen not to be seen to have abandoned it. The IPFMA statement says there are currently 34 antibiotics and infection-preventing vaccines in the global pipeline and in 2014 alone the industry spent more than $137 billion collectively on all aspects of R&D, with 3.7% focused on anti-infectives.

It says a ‘sustainable business model’ is needed – which means O’Neill may have to go back to the drawing board to overcome the pharma industry’s own resistance to his plan.

Read the full report from the AMR Review