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UK testing Netflix-style payments to boost antibiotics development

  • Health authorities in the United Kingdom are testing out a new payment model they hope will better incentivize drug companies to develop new antibiotics.
  • The subscription-style model would offer participating drugmakers an upfront payment in exchange for access to their antibiotics. This differs from the current system, which bases payments on the volume of antibiotics sold to the U.K.’s National Health Services.
  • NHS said the subscription model makes it “more attractive” for industry to invest in antibiotics at a time when antimicrobial resistance, or AMR, poses significant health and economic risks. A World Health Organization report released in April found drug-resistant diseases result in upwards of 700,000 deaths each year, and concluded AMR may cause economic damage similar to the 2008-2009 global financial crisis.

Officials are slowly warming to new drug purchasing systems like the Netflix-style subscription model. Earlier this year, Louisiana and Washington state selected Gilead and AbbVie, respectively, for two programs in which the states get an unlimited license to the company’s hepatitis C treatments in exchange for an upfront payment. 

NHS is now trying a similar model in antibiotics, an area of drug development that government agencies still struggle to incentivize.

The Food and Drug Administration, for example, has implemented regulatory and marketing perks to fuel further research, but those haven’t overcome inherent commercial barriers. Notably, antibiotics are often sold at low cost and newly developed ones are used sparingly — market characteristics ill-suited for a volume-based system. 

To that point, Merck & Co. CEO Ken Frazier last month said the reimbursement model for antibiotics shouldn’t be based on volume. Merck remains one of the largest drugmakers in the space, and has argued in the past that greater commercial benefits would help to boost new antibiotics development.

For its program, NHS is asking companies to identify products that would work for the initial phase of its test. Though the agency said the model should provide some reassurance to antibiotics manufacturers, it also called for buy-in from other health authorities. As such, NHS plans to share the results of its experiment “so that other healthcare systems can test similar models.”

“We will take the lead but this is a global problem and we cannot succeed alone,” Matt Hancock, health and social care secretary, said in a July 9 statement.

In its report, WHO described an “alarming level” of AMR across the globe, driven by factors such as overuse of antibiotics in people and animals and inadequate sanitation processes at schools, hospitals and farms. NHS’ Hancock noted that it’s been roughly 30 years since the discovery of a new major class of antibiotics.

The field has also been dinged by cuts in research and regulatory rejections.

Swiss pharma giant Novartis last summer said it was pulling back on antibiotics R&D. More recently, Nabriva Therapeutics disclosed that manufacturing deficiencies had resulted in a Complete Response Letter from the FDA for its complicated urinary tract infections drug, Contepo (fosfomycin).