2Pharmaceutical market failure
25.As noted above, one of the most serious issue in the fight against AMR is the fact that no new class of antibiotics has been introduced for over thirty years.31 According to Professor Dame Sally Davies, this is in part because the ‘easy wins’ have been made; but there is also now a fundamental failure of the market for new antibiotics.
[Source - ReACT]
26.New medicines have a patent of 20 years during which the market dictates the price paid for them–it is during this period that new medicines make a high profit and pay back the investment that has been made in their development. After their patent expires they can be produced by any manufacturer and are sold far more cheaply as ‘generic’ medicines.
27.However, given the growing threat of AMR, and the need to conserve and use current and future antibiotics very carefully to preserve their effectiveness for as long as possible, pharmaceutical companies are aware that any new antibiotic they bring to market will only be prescribed very sparingly rather than as a first line treatment during its patent life, thereby reducing its profitability. Other factors cited as contributing to a lack of commercial appeal for antibiotic development include the unpredictable nature of emerging resistance, and shorter courses of use, compared with for example, a medication to treat high blood pressure.32 Addressing this market failure was a key strand of Lord O’Neill’s recommendations.
28.During the past 5 years, we heard that there has been increased investment in the early scientific research needed to discover new antimicrobials.33 Between 2015–16 and 2017–18, DHSC funding for research on AMR has risen from £11.6 million to £30.6 million. However the number of pharmaceutical companies involved in the further development and clinical trials to then take new antimicrobials to market has decreased. The latest company to exit this market, in June of this year, was Novartis, bringing the total number of companies involved in antimicrobial drug development to six.34
29.The Access to Medicines Foundation’s 2018 Benchmark report sets out current levels of industry involvement in AMR development, and identifies eight companies involved in research of this type–GSK, Johnson and Johnson, Merck, Novartis, Pfizer, Roche, Sanofi and Shionogi. Since the publication of the report however, two of these eight companies, Sanofi and Novartis, have left the market.
30.Lord O’Neill told us he was very concerned about this market failure. He argued that the market
… does not function, and it is getting worse. Somebody I respect said to me about a month ago that, if they were a betting person, they would think that there might be no major pharmaceutical company left seriously attempting to produce antibiotics within two years. Since our review finished, more have left than have got involved.35
31.Professor Dame Sally Davies argued that industry needed to step up and act in a socially responsible way, pointing out that tackling AMR is also in their interests:
Although many of these companies are colleagues, and many of their members are doing their best to work with us, I am disappointed by the number of them who have said quietly over a drink, “Well, Sally, we know you’re going to solve this. The Government will have to pay, so we’re waiting until you pay”. There are two issues. First, where is social responsibility? They should be putting in their money too. The second is short-sightedness. To go back to the point about losing modern medicine, what is the point of developing the world’s greatest cancer portfolio if there are not antibiotics to rescue the patients? Yet they expect that we in the Government and the public sector will fund this, or that it will happen by someone else being corporately responsible.36
32.In the view of the ABPI, however, sufficient investment is already being made by industry:
[Dr Paul Williams MP] We heard from the previous panel that industry seems to be waiting for the Government to stump up the cash. Is there collective investment from industry as well?
[Dr Sheuli Porkess, ABPI] Yes. The investment from industry has been made, in that we already have five candidate products that have been put forward to the Department of Health and Social Care for consideration for the pilot. Industry has already invested in developing those, and we now need to work together on how we get the pilot early next year.37
33.The market for antimicrobial drugs is a global one, and we were told that the UK accounts for only 3% of this market.38 Therefore this is not a problem that the UK should have, or indeed will be able, to solve unilaterally. However, as we heard from the ABPI, if the UK leads by example in this area by intervening to stimulate or regulate the market here, other countries may follow its example.39
34.We heard evidence of a number of different possible options to tackle this problem:
- “Play or pay”—Lord O’Neill’s report suggested the introduction of an “antibiotic investment charge” to be paid by pharmaceutical companies, but with exemptions for those which are participating in antibiotic development.40
- Changes to patent law, including the possibility of extensions, or of a transferable patent voucher, currently under consideration in the US.41
- Upfront payments to drug companies who develop new antimicrobial drugs—like advance purchase orders—so that a certain level of profitability is guaranteed within the patent life, even if the product is held back as treatment of last resort and not extensively used.
35.The Government has been working with the ABPI on developing a pilot scheme of this last option. We heard that this will require Government funding now to take it to the next stage. When questioned about progress developing the market for antibiotics, the Minister did not seem as concerned by lack of progress in this area as previous witnesses.42
Conclusions
36.The market failure for antimicrobial drugs must be resolved, or modern medicine will be lost. As well having a profoundly damaging effect on the health and lifespan of people in all parts of the world, and the world’s economy, this will have a clear financial impact on the pharmaceutical industry, if, for example, chemotherapy stops because there are no antibiotics to support it. The government needs to re-engage with the seriousness and urgency of this problem.
37.We expect to see tangible and rapid progress in this area within six months. Efforts to pilot the Government and industry’s current preferred option of an upfront payment scheme should not be delayed. Both government and industry should invest in this scheme. We recommend that other options to address market failure, including changes to patent law for antimicrobials and Lord O’Neill’s ‘play or pay’ proposals, should also be considered by Government.
31 ‘Why is it so difficult to discover new antibiotics?’ BBC Online News, 27 October 2017.
32 Antimicrobial Resistance, House of Commons Library Research Paper, November 2017
40 Tackling Drug Resistant Infections Globally - final report and recommendations, Lord Jim O’Neill, May 2016, p167
Published: 22 October 2018