5.2.1. Incentives currently being used

Our analysis shows that there is currently an imbalance in how incentives are used to overcome the multitude of barriers facing antibiotic development. The vast majority (76%) of initiatives employ only push forms of incentivization (Table 9) and the bulk of funding follows these push-based initiatives. This is problematic given that a combination of push, outcome-based pull and lego-regulatory incentives are needed to effectively improve the entire antibiotic pipeline.³⁰

Table 9

Active initiatives and sub-initiatives based on their underlying incentives.

Europe and individual states are relying on the use of traditional methods of supporting R&D, which may not be sufficient in the case of antibiotics. Figure 12 shows that the top three most common incentives are direct project funding, research collaborations and research grants and fellowships for scientific personnel (see Appendix 5 for identification of incentives used by the initiatives). These are valuable incentives, however, as discussed in detail below, they heavily support the early stages of the antibiotic value chain. In contrast, end prizes, prize competitions and AMCs are rarely used, but effectively support the later commercialization stages required to bring an antibiotic into the market. Organizations such as the Global Alliance for Vaccines and Immunizations, also known as the Gavi Alliance, have successfully used pull mechanisms to incentivize development and marketing of drugs for neglected diseases.⁸¹

Figure 12

Distribution of incentives used by antibiotic R&D initiatives.

The ultimate goal is to link various push and pull mechanisms in a hybrid approach, recognizing that no singular method of incentivization will adequately stimulate antibiotic R&D alone.³⁰ As initially put forth by Brogan and Mossialos, a hybrid strategy would provide a tool for early investment and risk sharing, while also ensuring a credible purchase commitment and enticements for firms to actually bring novel antibiotics to market.²⁵ At present, there is minimal synchronization between the limited pull mechanisms available and the multitude of push mechanisms currently applied. Linking push and pull mechanisms will be particularly valuable for major initiatives such as the IMI, BARDA and InnovFin ID, which have the funding and coordination capability for such hybrid incentive strategies.

5.2.2. Incentives that are missing

Based on our assessment of the existing initiatives, there are several key incentives that are missing from the current arsenal, or are under utilized^*. First, there are currently only three prizes offered in return for a marketable product. All three prizes target development of different rapid, point-of-care diagnostic tools – none target antibiotic drug development. The EC’s prize offers €1 million, the UK’s Longitude Prize offers £10 million and the US NIH’s prize competition offers up to $20 million.

If an end prize were to target a novel first-in-class antibiotic, the AMR Review team estimated that the prize would need to be in the range of $1 to $1.5 billion.⁵ This prize needs to be large due to time discounting and to make antibiotic investment competitive with other therapeutic fields. Given the great size of this prize, it would likely need to be offered and managed by a global or European body. Beyond incentivizing antibiotic development, this prize could be used as a method of purchasing the antibiotic’s patent and jointly procuring the drug on behalf of participating countries. Global procurement of novel antibiotics has the benefit of being able to prudently manage the antibiotic’s volume and distribution. The AMR Review further estimates that a fund of $15 to $35 billion would be needed to develop 15 new drugs over the next 10 years.

Also, it appears that pricing and reimbursement incentives are missing from current antibiotic R&D initiatives. Aligning pricing and reimbursement schemes with the public health value that antibiotics provide is important to enticing investment in antibiotic R&D.²⁶ It appears that most countries include antibiotics within their wider pricing and reimbursement policies, which are often specifically tailored to reduce drug costs and procurement inefficiencies. The downward pressure on the prices of antibiotics, which are often lumped together with other drugs, does not reflect their true value. We recognize that national pricing and reimbursement strategies are highly contextual and reflect a country’s individual health priorities and ability to pay. Yet, there still may be a role for medicines with high global health value, like antibiotics, to be priced and reimbursed separately from other health technologies. In conjunction, AMCs should be considered as a method of controlling the volume of antibiotics purchased at value-centred prices. Advanced market commitments could be used by multiple nations to jointly procure antibiotics and regulate the antibiotic’s consumption. Without consumption controls, value-based pricing and reimbursement may lead to high and unnecessary public cost.

Finally, through our analysis we did not identify any tax incentive policies that specifically benefit firms developing antibiotics and related products. Tax incentives can come in the form of tax credits, allowances, or deferrals that reduce a company’s current tax liability.³⁰ In our opinion, there is a role for coordinated tax incentives in Europe that support firms developing antibiotics and potentially other global high priority medicines. Tax incentives do not require upfront payments by governments and can be tailored to benefit both SMEs and big pharmaceutical companies.

Financial incentives could be combined with clawback arrangements that recapture public funding once an antibiotic has successfully made it to market. For example, InnovFin ID debt instruments require project owners to repay the original loan plus interest if the project is successful. Such a clawback arrangement makes sense given that the public ultimately deserves a positive return on their financial investment. Funds generated from clawback agreements could even be reinvested in antibiotic R&D. In the context of taxes, clawbacks may take the form of tax deferrals that are recalled once an antibiotic makes it to market. Alternatively, the public could receive a return on their investment (ROI) through guaranteed lower prices on antibiotics that reach the market. Clawback arrangements such as this could also be linked with monetary push incentives such as milestone prizes or direct funding. This concept of linking antibiotic investment with future financial returns builds off of Brogan and Mossialos’ Options Market for Antibiotics model.²⁵ Governments that invest early in antibiotic R&D can expect larger future clawbacks given that their investment is riskier than if they invested later in the R&D process.

5.3.1. Global antibiotic R&D investment

Based on Kelly et al.’s analysis of EU and JPIAMR national funding of antibacterial research, we can estimate that approximately €147 million^* was annually invested between 2007 and 2013 by European public agencies into the R&D of antibiotics, alterative therapies and diagnostics.³¹ In contrast, we estimate that US government agencies invested approximately $260 million^* (~€234 million) in antibiotic R&D in 2015.⁵⁵,⁸² The US investment in antibiotic R&D is expected grow substantially to $422 million (~€380 million) for 2016 with AMR budget increases to both the NIH and BARDA^**. As can be seen, there is a significant difference in public funding of antibiotic R&D between Europe and the United States (Figure 13). However, it is unclear how the differences in public funding have affected outcomes in the antibiotic pipeline. Thus, there is a need for an ongoing assessment of ROI from public antibiotic funding. Missing in this picture are the antibiotic R&D investments made by other nations such as Japan, South Korea, China and India.

Figure 13

Estimated annual public funding of R&D of antibiotics and related products, EU and the US,,.

Private sector funding is the other part of the antibiotic R&D investment equation. However, we know little about how and how much the private sector is investing in antibiotic R&D. Commitments by private companies to public-private product development partnerships (PDP) such as the IMI and BARDA likely only make up a small portion of private investment. Data on venture capital investment also only provides a snap shot of private investments into R&D projects. Based on 2008–13 data from the BIO report, $181 million was raised annually through venture capital for global antibiotic R&D. It is unclear to which firms (large pharmaceutical firms vs. SMEs) this venture capital money is heading. Further obscuring the picture is the lack of transparency in investments made by big pharmaceutical firms and SMEs into their own R&D operations.

5.3.2. The global antibiotic pipeline

Based on information gathered from the Pew Charitable Trusts and the BEAM Alliance we know that there are at least 19 antibacterial products in clinical development Phase I, 27 products in Phase II and 6 products in Phase III (Figure 14).¹⁵,¹⁷ Using transitional success rates for antibiotic clinical development, this pipeline might translate into approximately six systemic antibiotics that have the potential to target gram-negative bacteria. This is promising. However, only one antibiotic in the entire pipeline uses a novel mechanism of action and it is specific to targeting Pseudomonas. Developing and marketing reiterations of existing classes of antibiotics will not overcome antibiotic resistance. Novel antibiotics are needed to provide more sustainable and effective methods of treating bacterial infections that are increasingly resistant to the current classes of antibiotics.

Figure 14

Partial picture of the current development pipeline of antibiotics and related products. Note: Compiled from data provided by the Pew Charitable Trusts and the BEAM Alliance.,

This pipeline analysis is not an accurate representation of the complete global antibiotic pipeline. We are missing US pipeline data on alternative therapies, European pipeline data from large pharmaceutical firms, and complete pipeline data from other countries such as Japan, South Korea, China and India. In addition, we have no information on the development pipeline of diagnostic tools.

Having a complete picture of the antibiotic pipeline allows us to determine how aligned the current pipeline is with global medical needs. Future investments can also be better targeted to support high-priority, high-value antibiotic R&D projects. Moreover, by having a better understanding of the antibiotics pipeline we can more realistically assess the predicted market outcomes from current R&D. For instance, the Infectious Disease Society of America has called for 10 new antibacterial drugs by 2020, yet we do not know how close or far we are to reaching this goal.⁸³

The WHO is currently establishing a Global Health R&D Observatory that has the potential to act as a global data hub on antibiotics and other medicines. This observatory could collate and monitor information from around the world on R&D resource flows, product pipelines and research outputs in order to inform priority setting for future R&D investments. The WHO is currently seeking consultation on how to fully implement the Global Health R&D Observatory.⁸⁴

5.4.1. Inter-initiative coordination

The antibiotic R&D initiative environment has become crowded.⁸⁵ At just the global level, the JPIAMR, TATFAR and EDCTP each actively strive to coordinate antibiotic R&D. The Global Action Plan on AMR and the G7’s GUARD Initiative are global strategies that plan to additionally coordinate global antibiotic R&D. Thus, there is undoubtedly some overlap in these international initiatives’ goals, strategies and activities.

There are also many valuable, smaller initiatives that are left out from these global coordinating networks. For instance, the JPIAMR does not leverage support from the UK’s ANTUK, Wellcome Trust and BSAC; Germany’s Leibniz Institute and Infect Control 2020; Sweden’s Vinnova and Formas; and the Netherland’s Centre for One Health. Of particular concern is the degree of coordination in clinical trials globally and across Europe. The EDCTP, BARDA and IMI are the largest antibiotic clinical trials programmes, but there are multiple other initiatives that support clinical trials at a smaller scale. This suggests that there is significant room to build synergies across the existing set of initiatives by further sharing and coordinating resources.

Therefore, there is a need for a single global governing body for antibiotic R&D. This entity would: set globally accepted priorities and targeting for antibiotic R&D; coordinate all existing and new initiatives and build synergies between all stakeholders; minimize global inefficiencies arising from overlapping antibiotic R&D work; and integrate antibiotic R&D efforts within the broader global AMR strategy. This global governing is not intended to stifle the diversity of approaches needed to stimulate antibiotic innovation, but rather provide a unified direction for these varying approaches. Additionally, a global governing body will be essential to any strategy that involves a large prize for successful development of a novel antibiotic and joint procurement of the antibiotic for multiple nations.

5.4.2. Intra-initiative coordination

Our analysis shows that a large number of initiatives are partnerships between two or more organizations, which benefit from sharing the risks and costs of antibiotic R&D. These partnerships vary substantially based on the number and type of organizations involved.

Public-private partnerships are the most common form and tend to be supported by significant funding. They can be single partnerships between a public agency and a pharmaceutical firm such as that of the BARDA/GSK joint portfolio programme. Alternatively, they may be multi-partnerships that bring together public agencies, academic institutions, NGOs and industry, such as the IMI. In our analysis, we have also observed private-private partnerships such as ANTUK and public-public partnerships such as the JPIAMR.

However, it is unclear which method of partnership is most effective for differing purposes. Single partnerships boast adaptability to changing scientific discoveries and market conditions. In contrast, large multi-organization partnerships can draw on a wide array of resources, but may be less flexible. Moreover, the various public and private organizations that could participate in such partnerships bring varying benefits and drawbacks. Therefore, we suggest that the role of antibiotic R&D partnerships be further explored in the near future.

5.5.1. Basic research

A majority of European initiatives identified in this report target basic research of antimicrobials. This finding is reiterated in Kelly et al.’s analysis of European public funding of antibacterial research, which found that 86% of national-level public funding in antibiotic therapeutics was for basic research (therapeutic sub-categories I – II).³¹,³² Basic research lends itself to being subdivided into multiple small projects that require lesser monetary commitments. In comparison, preclinical and clinical research tends to require far larger investments that cannot be easily parsed. Thus, from a political feasibility stand-point it is understandable why the majority of public funding goes towards basic research. While basic research is important in the development process, an overemphasis of funding towards early discovery stages might inhibit R&D progress of existing antibiotic candidates that could reach the market.

5.5.2. Preclinical and clinical trials

The majority of European public funding towards preclinical and clinical trials appears to come from the IMI. Despite having only nine active projects, the IMI has invested €312 million in EC public funding and €294 million in in-kind private sector contributions towards antibiotic clinical studies. The IMI has proven to be an excellent model for antibiotic development on multiple fronts.

First, the IMI’s PDPs actively engage with the pharmaceutical industry to combine resources and expertise, as well as share financial risk. The PPP model of the IMI also acts to align private and public priorities. Second, the IMI’s investment in European-wide clinical trial infrastructure allows researchers to access a far greater pool of potential study participants than if clinical trials were operating out of one country. This facilitates timely clinical studies of antibiotics, while striving to maintain safety and efficacy standards. Third, the IMI is now engaging with non-European partners such as BARDA’s BSA programme. This stands to further mutually improve the clinical capacity of participating initiatives.

BARDA’s GSK and AstraZeneca portfolio partnerships are further examples of successful PDPs for antibiotics. These clinical development portfolios allow the BSA and the pharmaceutical companies to quickly determine the viability of a particular project and either add or drop the project from the portfolio, thus minimizing risk and cost. By involving the BSA leadership team in the decision process, BARDA can still ensure that public health priorities are at the forefront of the portfolio development pipeline. This partnership model is also observed in the IMI’s ENABLE, a flexible portfolio of projects targeted at early discovery programmes run by SMEs and academic institutions to develop new agents that treat gram-negative bacteria. These more adaptable portfolio models may serve as good examples for future projects in antibiotic R&D.

It worth noting that there are at least 72 research projects with clinical trial aspects that operate at national levels in Europe.³¹ These projects likely have minimal coordination, which can be inefficient and risks duplicating work.

5.5.3. Market approval

The EMA and FDA have a number of useful regulatory mechanisms to expedite approval of high-priority antibiotics. Both regulatory agencies have the ability to accelerate the approval process as well as approve antibiotics through adaptive licensing pathways. These regulatory tools indirectly improve NPV of antibiotic projects and can result in timely patient access to new antibiotics. However, these mechanisms highlight that there is a necessary trade-off between flexibility and speed of approval and maintaining high levels of safety and efficacy of authorized antibiotics.

Through TATFAR, the EMA and FDA are working diligently to improve cross-agency collaboration and harmonization of licensing requirements for antibiotics. However, under present regulatory frameworks ensuring that an antibiotic meets both the EMA’s and FDA’s licensing standards can be time consuming and costly for the developer. Given that both the EMA and FDA have similar goals in terms of antibiotic approval, it may be worth exploring the idea of joint EMA/FDA approval of certain novel antibiotics. Regardless, the present EMA/FDA partnership sets a strong and favourable precedent for future collaboration and harmonization efforts with other national drug regulatory bodies such as the China Food and Drug Administration and Japan’s Pharmaceuticals and Medical Devices Agency.

5.5.4. Commercialization

Presently, there are few antibiotic initiatives that target the commercialization aspect of the antibiotic value chain. These include the three end prizes for diagnostic tools and the market exclusivity extensions offered by drug regulatory agencies to qualified antibiotics. Thus, the additional incentives proposed and discussed above (section 5.2.2) tend to fill this gap in the value chain. The IMI’s DRIVE-AB programme is also exploring incentive solutions that effect commercialization.

5.7.1. Stewardship and patient access

According to a 2014 study by Van Boeckel et al., global consumption of antibiotics by humans increased by 36% between 2000 and 2010.⁸⁶ Brazil, Russia, India, China and South Africa were responsible for 76% of this increase in consumption despite comprising 40% of the world’s population. Overconsumption of antibiotics continues to be a major driver of antibiotic resistance and is a problem faced by both high-income countries and LMICs.⁸⁶ Antibiotic stewardship can be facilitated through disease prevention efforts, infection control, surveillance and appropriate prescribing. High-income countries have multiple antibiotic stewardship programmes in place such as systems for monitoring resistance, patient awareness programmes, treatment guidelines for physicians, legislation on antibiotic advertising and restrictions on over-the-counter dispensation. However, in LMICs, antibiotic use is primarily driven by a lack of basic public health measures for controlling infectious disease such as sanitation, clean water and adequate nutrition.⁸⁷

LMICs and even development agencies often do not recognize AMR as a top health priority, despite LMICs suffering the majority of the global health burden from AMR.⁸⁸ These countries struggle to attain equitable and affordable access to antibiotics in the first place and thus the overconsumption of antibiotics and subsequent spread of AMR can often be considered secondary problems. It is estimated that 5.7 million people die annually from treatable infectious diseases, most of which are vulnerable to the existing arsenal of antimicrobials.⁸⁸,⁸⁹ More than a million young children die of untreated pneumonia and sepsis annually, almost all of which are in LMICs.⁹⁰ In a recent 2016 article in The Lancet, Laxminarayan et al. estimate that global provision of antibiotics could mitigate the deaths of 445,000 children under the age of five each year due to community-acquired pneumonia.⁸⁷ Thus, antibiotic stewardship cannot be a blunt policy tool that broadly restricts all access to antibiotics in the name of conservation. Ideally, equitable access to antibiotics worldwide will grow alongside restricting inappropriate distribution of antibiotics through regulation and stewardship.⁸⁸

Antibiotic stewardship and patient access are traditionally addressed through public health programmes independent of R&D initiatives. In Europe, these programmes are run by the EC (i.e. DG SANTE) as well as agencies such as the EFSA and ECDC. Thus, few R&D initiatives have explicit stewardship and access policies. This makes more sense given that most initiatives use push mechanisms that are not tied to any post-approval conditions regarding marketing practices or distribution of the antibiotics. However, it is critical that R&D initiatives are interlinked with and reinforce the other aspects of combating AMR. If R&D initiatives debase other AMR programmes then we cannot have an effective global strategy for tackling this complex and evolving threat. In order to address this issue, the DRIVE-AB programme has been tasked with designing and presenting a sustainable new business model for antibiotics that factors in these broader public health priorities. Their final recommendations are expected in 2017.

On 29 February 2016, the WHO held a consultation on the establishment of a global development and stewardship framework to fight AMR. The proposed framework, endorsed by the Global Action Plan on AMR, would “support the development, control, distribution, and appropriate use of new antimicrobial medicines, diagnostic tools, vaccines and other interventions, while preserving existing antimicrobial medicines, and promoting affordable access to existing and new antimicrobial medicines and diagnostic tools, taking into account the needs of all countries.”⁹¹ The framework builds on the “policy tripod for addressing antibiotic resistance”, which recognizes that resistance needs to be tackled collectively through access, conservation and innovation.⁹²,⁹³

5.7.2. Delinkage

It is increasingly recognized that the current patent-based pharmaceutical business model does not sufficiently work for antibiotics. Antibiotic developers are rewarded through market exclusivity, which reinforces the over-marketing and over-consumption of antibiotics that contribute to high levels of resistance.²⁴ In addition, developers are incentivized to distribute antibiotics based on ability to pay instead of need.²⁴ Therefore, LMICs often have reduced access to high-value antibiotics.

As a result, delinkage has been proposed by academics, industry representatives and policy makers as the basis for a new business model for antibiotics.²⁴,⁹⁴ Delinkage occurs when a drug developer’s revenues are separated from the volume of antibiotic sold. In theory, this would be accomplished through a value-based payment to the developer in return for control over the marketing and distribution of the new antibiotic. These payments may be in the form of payer licenses, a full patent buyout, or as AMCs.³⁰

Delinkage is a global solution to a global problem, however its practical implementation seems to be its largest barrier to fruition. Delinkage forms that allow firms to retain their intellectual property appear to be more favourably reviewed by industry.³⁰ Promisingly, a recent declaration was signed by 85 companies and nine industry associations representing global pharmaceutical, diagnostics and biotechnology development in 18 countries, calling on national governments to work with them in developing a new and sustainable antibiotic market.⁹⁵ The envisioned antibiotics market would have improved access to all those in need and a reduced incentive to promote antibiotic consumption.

5.7.3. Medical needs

Ensuring that global medical priorities are aligned with those of the developer is critical to producing marketable antibiotics that target high-priority medical needs. The US pipeline analysis (Appendix 1) suggests that there is in fact significant alignment between developer goals and public health needs; gram-negative bacteria and the ESKAPE pathogens are targeted. Moreover, many of the pipeline antibiotics are for the Big Five indications, which are most commonly affected by resistant bacteria.

However, there are multiple antibiotics in the pipeline that target lower priority diseases such as gram-positive acute skin infections. Also, there are very few antibiotics in the development pipeline that offer entirely new mechanisms of action that are not marred by cross-resistance. Low-priority antibiotics in the pipeline suggest that current initiatives do not set out clear objectives in antibiotic R&D.⁴ This is one of the problems with push mechanisms; it is challenging to control the direction of private R&D to attain public health priorities. Milestone prizes tied to ongoing target product profiles is one possible method of ensuring push funding is allocated to antibiotic candidates pursuing high-priority medical needs. Larger end prizes linked to target specifications would be an alternative. In a newly published The Lancet Infectious Diseases article, Rex and Outterson suggest that a newly marketed antibiotic could receive a base payment end prize plus bonus payments for achieving certain clinical goals.⁹⁶ These goals could include having a first-in-class mechanism of action, a clinical spectrum of activity that includes one or more urgent pathogens, have been approved in oral dosage form, or delivered agreed paediatric commitment studies.

Another aspect of this issue pertains to LMICs, which have unique health priorities for infectious disease.² Thus, actively seeking involvement from LMICs will be an important step in aligning antibiotic innovation with their medical needs. The EDCTP is a convincing model for accomplishing this as it focuses antibiotic R&D towards LMIC health priorities and actively includes LMIC institutions in the antibiotic R&D process.

The WHO Prequalification of Medicines Programme (PQP) could further support LMIC-focused R&D initiatives like the EDCTP. The PQP is a UN programme managed by the WHO and works in close collaboration with national regulatory agencies and partner organizations to authorize a list of prequalified medicinal products for HIV/AIDS, malaria, TB and reproductive health.⁹⁷ The PQP medicine list is used by UN agencies like UNAIDS and UNICEF to guide bulk procurement decisions and ensure that the medicines are used appropriately. The PQP could help steer antibiotic R&D targeting poverty-related infectious diseases, form the basis for a large end prize attached to public procurement (i.e. delinkage) and reinforce the stewardship and access goals of distribution.