October 25, 2019 at 5:00 am ET
According to a study from Washington University in St. Louis, antimicrobial resistance killed upwards of 160,000 Americans in 2010. The reality is, more and more infections are becoming resistant to antibiotics and antifungals – and while Americans know this is a growing problem, few know how bad it already is.
Resistant superbugs are evolving much faster than we are inventing new medicines to fight back. Indeed, only one truly novel antibiotic has been approved over the past 35 years. Unless action is taken today, superbugs could kill 10 million people annually by 2050.
The reason why so few antibiotics are being developed is simple – the market is broken. Estimates show that it takes more than a decade to develop a new antibiotic or vaccine and can cost more than $1 billion. But even when a product does make it to the market, it might take a whopping 23 years to break even on its R&D investment.
Take Achaogen, a small biotech company that last year received one of the first antibiotic approvals in decades. The medicine’s approval was applauded across the world, but it generated less than $1 million in sales in its first year on the market. The company had spent hundreds of times that in research and development, so ultimately had to shut its doors. And today, the public is at risk of losing access to this innovative antibiotic.
Achaogen isn’t the only firm that’s struggling.
These challenges stem from the unique nature of antibiotics. New products that treat resistant infections are rightly saved as “last resort” treatments in order to preserve their effectiveness. The reason for this backwards marketplace makes sense — the more you use an antibiotic, the less effective it will be over time.
It’s also important to point out that antibiotics are often used in hospitals, where Medicare reimbursement creates additional complexities. As it stands, Medicare pays a flat fee for a bundled set of treatment services like a hip replacement, which means a hospital receives the same payment whether it uses a cheap generic or a higher-cost, new antibiotic. This creates a disincentive for a hospital to pay for newer medicines, even if such medicines are the best treatments for certain patients.
The truth is, there’s little opportunity for a company to recoup its development costs on an antibiotic, let alone make a return on its investment.
Much to their credit, the Trump administration and our leaders in Congress have recognized the gravity of the public health crisis we are facing. In recent months, lawmakers on both sides of the aisle have come together to introduce important policies designed to spur the development of new antibiotics.
For instance, in its rule governing hospital reimbursement for FY2020, the Centers for Medicare and Medicaid Services increased what is known as the “New Technology Add-on Payment” and added antimicrobial resistance as a complication or comorbidity for many bundled services, allowing hospitals to receive higher reimbursement when treating a resistant infection.
In Congress, the Developing an Innovative Strategy for Antimicrobial Resistant Microorganisms Act – DISARM, for short — would create a separate reimbursement payment for antibiotics from Medicare’s bundled payments, allowing hospitals to fully recoup the cost of newer treatments. This measure, introduced in the Senate by Sens. Johnny Isakson (R-Ga.) and Bob Casey (D-Pa.), and in the House by Reps. Danny Davis (D-Ill.) and Kenny Marchant (R-Texas), would ensure that doctors are in the driver’s seat when it comes to determining which antibiotic is best, not cost-conscious hospital pharmacy committees.
It’s encouraging that policymakers are looking for ways to stimulate investment in new antibiotics. But reimbursement policies are only part of the solution. To boost the pipeline of new drugs and products to beat back antimicrobial resistance, a package of policies that include a “pull” incentive that rewards companies for bringing new products to market – irrespective of the volume of product sold – would be a necessary next step.
The need for the administration and Congress to act by helping stimulate innovation has never been more important. We can win this fight by incentivizing innovators to produce new antimicrobials. The recent bipartisan efforts in Washington will help take us closer to this goal.
Jim Greenwood is president and CEO of the Biotechnology Innovation Organization, and represented Pennsylvania’s 8th District in the U.S. House of Representatives from 1993 to 2005.
Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.