Don't expect new antibiotics anytime soon

The most read post on my blog is this one from 2014 on the economics of drug development and pricing. Maybe it's time for a follow-up, but this time with a more specific focus, on antibiotics.

The Economist had an excellent (albeit somewhat scary) article last month about antibiotic resistance:

A thorn scratch today seems a minor irritant, not a potential killer. But that may be too sanguine. A study by America’s Centres for Disease Control (CDC) found that the number of cases of sepsis rose from 621,000 to 1,141,000 between 2000 and 2008, with deaths rising from 154,000 to 207,000. One reason for that is the emergence of MRSA (pictured being attacked by a white blood cell)—a variety of Staphylococcus aureus that cannot be killed with methicillin, one of penicillin’s most effective descendants. This could just be a taste of things to come. Three years ago the CDC produced a list of 18 antibiotic-resistant microbes that threaten the health of Americans (see table). Five of them (including MRSA) cause sepsis.

Microbes are increasingly exhibiting antibiotic resistance, not only to first-line antibiotics but to their alternatives as well. Without effective antibiotics, infections that were previously treatable become potentially life-threatening. That makes the development of new antibiotics important and increasingly urgent. However, as I noted in my 2014 post, the cost of developing new pharmaceutical drugs is very large. While pharmaceutical companies hope to recoup that cost through holding a natural monopoly over the drug and charging a relatively high price for it, in the case of antibiotics that is not necessarily assured, because there are already antibiotics that are effective in most cases, which means new antibiotics would only need to be used (hopefully) rarely. The Economist notes:

There are reasons for drug firms not to invest in antibiotics. Such companies increasingly prefer treatments for chronic diseases, not acute ones; the customers stick around longer. And despite the growing problem of resistance, most antibiotics still work for most things most of the time. Given that the incumbents are also cheap, because they are off-patent, new drugs cannot earn back their development costs. Even if they could, it would be poor public policy to let them; much better for new drugs to be used only sparingly, to forestall the development of further resistance. That further puts the kibosh on sales.

This figure (source here) also effectively demonstrates the case against developing new antibiotics:

It takes 23 years for a new antibiotic to break even. By then, the patent has almost expired and the drug will soon need to compete with generic competitors, which severely limits the profits available to the pharmaceutical firm. Most pharmaceutical firms are looking to invest in research that leads to quicker payoffs than that, and they have plenty of other research opportunities that they can invest in.

There are alternatives to the 'traditional' development-patent-monopoly approach. This is what I wrote in 2014, and it still stands:

A better option was laid out several years ago by Nobel Prize winner Joseph Stiglitz. Stiglitz argues convincingly that an alternative to the current intellectual property (patent) based regime is to offer prizes for firms that develop medicines, cures or vaccines for diseases that affect the poorest countries. Stiglitz says:

"A solution to both high prices and misdirected research is to replace the current model with a government-supported prize fund. With a prize system, innovators are rewarded for new knowledge, but they do not retain a monopoly on its use. That way, the power of competitive markets can ensure that, once a drug is developed, it is made available at the lowest possible price - not at an inflated monopoly price."

The trade-off for firms collecting the prize money (which would be contributed to mainly by developed country governments), is that their drug would have to be made available in the public domain (i.e. not patented). Then, generic drug manufacturers would be able to produce the drugs at low cost to provide to poor countries and rich countries alike. One promising example of this approach is the Health Impact Fund. Advance market commitments are a similar idea.

Unless we apply some of these alternatives, the low incentive for pharmaceutical companies to develop new antibiotics will remain. So, don't expect new antibiotics anytime soon. It might be best to try and avoid infections.