Resistant superbugs are evolving much faster than we are inventing new medicines to fight back. 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.
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, 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 FY2020, the Centers for Medicare and Medicaid Services (CMS) will allow 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 allow hospitals to fully recoup the cost of newer treatments.
This measure 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.
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. He served in the House of Representatives from 1993 to 2005.