The Atlanta Journal-Constitution
Antibiotic crisis looms as drugmakers go bankrupt
Congress’ gridlock has thwarted legislative efforts to address issue.
At a time when germs are growing more resistant to common antibiotics, many companies that are developing new versions of the drugs are hemorrhaging money and going out of business, gravely undermining efforts to contain the spread of deadly, drug-resistant bacteria.
Antibiotic startups like Achaogen and Aradigm have gone belly up in recent months, pharmaceutical behemoths like Novartis and Allergan have abandoned the sector and many of the remaining American antibiotic companies are teetering toward insolvency. One of the biggest developers of antibiotics, Melinta Therapeutics, recently warned regulators it was running out of cash.
Experts say the grim financial outlook for the few companies still committed to antibiotic research is driving away investors and threatening to strangle the development
of new lifesaving drugs at a time when they are urgently needed.
“This is a crisis that should alarm everyone,” said Dr. Helen Boucher, an infectious disease specialist at Tufts Medical Center and a member of the Presidential Advisory Council on Combating Antibiotic-Resistant Bacteria.
The problem is straightforward: The companies that have invested billions to develop the drugs have not found a way to make money selling them. Most antibiotics are prescribed for just days or weeks — unlike medicines for chronic conditions like diabetes or rheumatoid arthritis that have been blockbusters — and many hospitals have been unwilling to pay high prices for the new therapies. Political gridlock in Congress has thwarted legislative efforts to address the problem.
The experience of the bio- tech company Achaogen is a case in point. It spent 15 years and $1 billion to win Food and Drug Administration approval for Zemdri, a drug for hard-to-treat urinary tract infections. In July, the World Health Organization added Zemdri to its list of essential new medicines.
By then, however, there was no one left at Achaogen to celebrate.
The industry faces another challenge: After years of being bombarded with warnings against profligate use of anti- biotics, doctors have become reluctant to prescribe the newest medications, limiting the ability of companies to recoup the investment spent to discover the compounds and win regulatory approval. And in their drive to save money, many hospital pharmacies will dispense cheaper gener- ics even when a newer drug is far superior.
“You’d never tell a cancer patient, ‘Why don’t you try a 1950s drug first, and if doesn’t work, we’ll move on to one from the 1980s,’” said Kevin Outterson, the execu- tive director of CARB-X, a government-funded nonprofit that provides grants to companies working on antimicrobial resistance. “We do this with antibiotics, and it’s really having an adverse effect on patients and the market- place.”
Many of the new drugs are not cheap, at least when compared with older generics that can cost a few dollars a pill. A typical course of Xerava, a newly approved antibiotic that targets multidrug-resistant infections, can cost as much as $2,000.
“Unlike expensivenew cancer drugs that extend survival by three to six months, antibiotics like ours truly save a patient’s life,” said Larry Edwards, chief executive of the company that makes Xerva, Tetraphase Pharmaceuticals. “It’s frustrating.”
Coming up with new compounds is no easy feat. Only two new classes of antibiotics have been introduced in the last 20 years — most new drugs are variations on existing ones — and the diminishing financial returns have driven most companies from the market. In the 1980s, there were 18 major pharmaceu- tical companies developing new antibiotics; today there are three.
“The science is hard, really hard,” said Dr. David Shlaes, a former vice president at Wyeth Pharmaceuticals and a board member of the Global Anti- biotic Research and Develop- ment Partnership, a nonprofit advocacy organization. “And reducing the number of peo- ple who work on it by abandoning antibiotic R&D is not going to get us anywhere.”
A new antibiotic can cost $2.6 billion to develop, he said, and the failures along the way are the biggest part of that cost.
Some of the sector’s big- gest players have coalesced around a raft of interventions and incentives that would treat antibiotics as a global good. They include extending the exclusivity for new antibiotics to give companies more time to earn back their investments and creating a program to buy and store critical antibiotics much as the federal government stockpiles emergency medication for possible pandemics or bioterror threats like anthrax and smallpox.
The DISARM Act, a bill introduced in Congress earlier this year, would direct Medicare to reimburse hospitals for new and critically important antibiotics. The bill has bipartisan support but has yet to advance.
One of its sponsors, Sen. Bob Casey, D-Pa., said some of the reluctance to push it forward stemmed from the political sensitivity over soaring prescription drug prices.
“There is some institutional resistance to any legislation that provides financial incentives to drug companies,” he said.
Washington has not entirely been sitting on its hands. Dur ing the past decade, the Biomedical Advanced Research and Development Authority, or BARDA, a federal effort to counter chemi- cal, nuclear and other public health threats, has invested $1 billion in companies developing promising antimicrobial drugs and diagnostics that can help address antibiotic resistance.
Achaogen and its 300 employees had held out hope for government intervention, especially given that the company had received $124 mil- lion from BARDA to develop Zemdri.
As recently as two years ago, the company had a market capitalization of more than $1 billion, and Zemdri was so promising that it became the first antibiotic the FDA desig- nated as a breakthrough ther- apy, expediting the approval process.
Dr. Ryan Cirz, one of Achaogen’s founders and the vice president of research, recalled the days when venture capitalists took a shine to the company and investors snapped up its stock.
“It wasn’t hype,” Cirz, a microbiologist, said. “This was about saving lives.”
In June, investors at the bankruptcy sale bought out the company’s lab equipment and the rights to Zemdri for a pittance: $16 million. (The buyer, generics drugmaker Cipla USA, has continued to manufacture the drug.) Many of Achaogen’s scientists have since found research jobs in more lucrative fields like oncology.