> Venture capitalists are investing far less funds to develop new antibiotics than they are for oncology drugs, according to a new report that highlights the need for more financial incentives to fight off the growing threat of drug-resistant bacteria.
> The report, published Monday by the Biotechnology Innovation Organization, found that investors are increasingly shying away from antibiotic research due in part to large companies exiting the space. That’s left small companies, that typically rely on investment capital, struggling to carry out new clinical trials.
> Newer antibiotics are more important than ever as the Covid-19 pandemic has forced people into hospitals for longer periods of time, increasing the chances for the spread of antibiotic-resistant germs, the biotech trade group said.
> But in the past 10 years, venture capital funding for U.S. antibiotic development amounted to $1.6 billion, compared to $26.5 billion for oncology, according to Monday’s report. The group noted that there are currently 64 new antibacterial therapeutics in the clinical trial pipeline, 80% of which originated from small companies.
You're not going to have new antibiotics without biotech or pharmaceutical companies helping.
The government needs to provide incentive for antibiotic research, right now regulatory and reimbursement issues are making the therapeutic area very unattractive.
New antibiotics are high on the list of things that are needed, but they will only be used as treatment of last resort, this is where the traditional investment model fails. Development is too expensive to ever recover the outlays.
Right now science can't do anything about the high failure rates in Phase II and Phase III trials. The problem isn't to come up with a compound against your target of choice, it's that apart from clinical trials we don't have a way to predict if in real life it will perform better than placebo (Phase II) or adequately (Phase III).
Not sure why this was down voted because it's true. Only a few big pharma have R&D programs in the antibacterial space. As a reply above states, the current system penalizes new antibiotics by reserving them for only the most severe cases. With the cost of a new antibiotic approval in the hundreds of millions of dollars, companies put their R&D dollars into areas with better returns.
That being said, a few new legislative changes have happened and will happens (GAIN Act approved, DISARM Act being considered) that will change the economics of antibiotic research and have already prompted drug companies to get back into the field.
The problem is not finding new antibiotics, it is getting them to market. Given the way the current drug development system has been designed it is very hard to bring a new antibiotic to market and make a profit. Because of this most pharma companies have long ago shut down their antibiotics divisions.
We really need a new approach for funding the development of new antibiotics. My personal favourite is a straight cash reward with a sliding scale for novelty and utility. Just pay the pharma companies a billion dollars in cash for each new antibiotic they bring to market and we will be awash in new antibiotics.
Another big reason is the lack of financial incentives for companies. A lot of new antibiotics are for very small populations (you'll only use a new antibiotics for the rare cases of drug resistance).
As a result, drug companies are looking at spending $100M to make a new drug, when they'd be lucky to make their money back on it.
> R&D is one thing, but most drugs fail at the clinical trial stage. This money (hundreds of millions per drug) is just gone, unlike R&D which might result in new tech or at least a patent.
Are you saying the clinical trial stage is somehow not part of R&D spending? It sounds like quite obviously research to me, but I'm not familiar with how it's actually reported.
> But pharma portfolios operate on the lognormal success model of VCs. Without the blockbusters, you can’t fund “development” of the failures that could lead to another blockbuster.
That was the point of my whole Humira example though: high pharmaceutical prices did not fund its development.
This assertion that drugs have to be expensive or they can't be developed keeps getting repeated, but there's little evidence to support it and even less evidence that they need to be this expensive. This argument is further troubled by little details like drugs being 600% more expensive in the US than in other countries, indicative of more of a "how much money can we extract from vulnerable people" strategy than a "how much will it cost to develop the next great drug" strategy.
To put this into perhaps more familiar terms, AbbVie's behavior is far closer to Intellectual Ventures than to Y Combinator, and yet people here keep defending it.
> Discover a new drug for a anti-biotic resistant infection? Great, here is $500M as long as you agree to produce as much drug as needed for free or some nominal cost.
If you were going to develop the drug at your own cost with no subsidy for failure, why settle for 500M? Why not do it on your kwn merit and reap billions instead? And keep all the IP.
> Currently pharmaceutical companies spend only 15% of their revenue on new drug research. The remaining 85% is spent on activities such as marketing and profit taking.
[Citation needed]
I'd like to see a budget breakdown of what these companies spend on research, manufacturing, marketing, etc.
At a glance, from looking at CBO pages, it looks like average R&D spend is actually more like in the 18-20% range, and that this isn't unusual for industries, which makes sense since they have other costs beyond R&D.
> Private capital works hard on this to gain a return. They spend first, then are under pressure to make a return.
The key point here is "return" - in the private markets, it's just a numbers game. Most successful, important scientific research is not going to make a big return. Perhaps it'll lead to money for someone else down the line, but that's besides the point. Private markets are a bad fit for huge swathes of research where success != $$$. Which leaves a couple of areas, e.g. drug development...
> pharma companies still spend a TON of research. They live and breathe by getting to the next "big" drug to make them money and make up for all the failures.
While correct, it's important to remember that pharmaceutical company research spending is highly weighted towards drugs with a large number of patients or where demand is relatively insensitive to price. COVID vaccines are a perfect example because they fit both categories. This usually works out OK, but it isn't a good fit for a poorly-understood condition like long COVID where the size of the target market and the price sensitivity of the customers is very difficult to estimate. You also end up with other undesirable outcomes like the systematic underfunding of research into conditions that predominantly affect minoritized or less well-off communities. Pharmaceutical companies also rely on a huge body of publicly-funded basic research.
>The R&D funding came from the previous drug, not the current drug.
In practice, yes that is often the case, but it doesn't matter for the new drug development decision.
If a new drug is unprofitable, it doesnt matter if there are funds from a prior one. A company will invest it elsewhere instead of spending it on a revenue negative drug.
Similarly, If a new drug looks profitable but internal funds are scarce, the Company will secure funding or sell distribution rights to raise the funds.
The Key role that the US is currently playing to making drugs profitable to develop that otherwise would not be.
I have worked on several programs, and the question is always "what is the return on investment" and never "how much do we have in the bank".
>Except the cost of many drugs continues to go up, even as they're commercially available and R&D has been recouped
A successful drug doesn't have to recoup its own R&D costs, it also has to recoup the costs of all the drugs that failed to make it to approval. It's not any different than VC investing. Just because one company in a portfolio returned 10x ROI, doesn't mean you can be like "alright guys, you made back all your money, now turn yourself into a non-profit".
It'd be great to see more investment in antibiotics, and we need world governments to lead the charge. It'd be even better to see our current drug prohibition regime pivot from recreational drugs to antibiotics. Development of new, fantastic antibiotics is only a matter of time and money. We as a species have the capabilities, we just need to make the move.
Investment is a problem because ABX aren't profitable relative to other opportunities (in biotech / pharma, think cancer or Hep C). ABX cure, rather than treat, which means you have a single revenue event rather than recurring (chronic) revenues. Even in that space, Hep C was way more profitable. And if you're successful with ABX in a public health sense, the number of new cases generally goes down. Compare to a cancer drug, or a urinary incontinence drug, where that doesn't happen. There have been precious few new ABX developed in recent years. One is daptomycin ("Cubicin" in American marketing-speak). It was a few tens of thousands per course of treatment when it came out, pitched (and approved) as a narrow treatment for a very few indications, because that's how you have to sneak a new antibiotic through the system these days--you won't command high enough prices otherwise. It is, in fact, a broad-spectrum drug and I'm sure it's used off-label.
I think what we need to do to fix this is recognize it is a public health problem that the market is not forward-looking enough to fix, and use government power to fix it. We could do this by subsidizing the cost of pushing a new molecule through the FDA. Or we could, you know, fix the FDA and make their review processes more utilitarian and less costly...but that's bigger fish. There are limited government programs trying to do this at the moment.
A lot of the reason we see new, ABX-resistant strains in SE Asia is unrestrained use of our better drugs, which are cheap in generic form (ciprofloxacin, for example). We should be regulating ABX use with the fervor we now reserve for so many low-harm recreational substances. Perhaps we could just pivot that whole industry rather than taking them apart...
You didn't make it, but you hear far too often that drugs for management of chronic conditions are more profitable than cures for acute conditions, and that's what determines what goes into the development pipeline.
The truth is more complex than that. The reason that you don't see investment in antibiotics is that the low-hanging fruit is picked and you cannot use the new compounds unless as a treatment of last resort, and sales would be far too low to be profitable. They will be needed, though, in the medium term. The financing model in pharma is broken and there is no change on the horizon in that department.
I don't know if there is plenty of money to be made on the development of antibiotics, but I do know that the heads of all the big pharmaceutical companies don't think there is.
More regulation preventing the use of antibiotics won't encourage pharmaceutical companies to invest in this area, only making developing antibiotics more profitable will. This can be done in three way:
1. Encourage use of the new antibiotics so they sell more.
2. Increase the price.
3. Pay the companies directly for developing a new antibiotic (X-Prize-like approach).
My personal opinion is that option 3 is the best way, but right now there is no mechanism for doing this on anything other than a toy-scale. What won't encourage pharmaceutical companies to invest in the development of new antibiotics is to restrict their sales and increase their costs via regulation.
>There is a very lengthy process of getting drugs through the FDA which makes investment's return-on-investment difficult to justify without raising already available drug prices.
The lengthy process is there for a reason, it's not some hamper on profits just to hamper profits. Do we believe that the FDA is full of short sellers? Poor Pfizer, they won't get more money than they've spent! The logic here is sinister. ROI on drugs shouldn't be every dollar spent gets you a dollar ten and a drug, it should be you have a drug. The basic research that informs R&D spending has a ROI of zero by business metrics.
It is sad to think that the trajectory of medical advancement is dictated not by what we can achieve as scientists, but what is profitable for businessmen. When Jonas Salk was asked who owns the patent to the polio vaccine he developed, he replied, "Well, the people, I would say. There is no patent. Could you patent the sun?" In 1988 there were an estimated 350,000 cases of poliomyelitis worldwide, in 2018 there were 29 (1). The global initiative to eradicate the disease would not have been possible had the vaccination been for-profit.
> If you look R&D spending by pharma companies, the research part costs about 1/3rd. The development part is 2/3rds of the cost.
You left off the marketing expense:
"In 2012, the pharmaceutical industry spent more than $27 billion on drug promotion— more than $24 billion on marketing to physicians and over $3 billion on advertising to consumers (mainly through television commercials)."
> Take a look at the Nature article that traced who discovered new drugs over the past decade or so. Over 2/3 were NOT invented by gov't or non-profit funding.
But that doesn't mean government can't invent or fund drug discovery.
It's getting more attention, but its been faltering for a long time.
https://news.bloomberglaw.com/health-law-and-business/antibi...
> Venture capitalists are investing far less funds to develop new antibiotics than they are for oncology drugs, according to a new report that highlights the need for more financial incentives to fight off the growing threat of drug-resistant bacteria.
> The report, published Monday by the Biotechnology Innovation Organization, found that investors are increasingly shying away from antibiotic research due in part to large companies exiting the space. That’s left small companies, that typically rely on investment capital, struggling to carry out new clinical trials.
> Newer antibiotics are more important than ever as the Covid-19 pandemic has forced people into hospitals for longer periods of time, increasing the chances for the spread of antibiotic-resistant germs, the biotech trade group said.
> But in the past 10 years, venture capital funding for U.S. antibiotic development amounted to $1.6 billion, compared to $26.5 billion for oncology, according to Monday’s report. The group noted that there are currently 64 new antibacterial therapeutics in the clinical trial pipeline, 80% of which originated from small companies.
The report mentioned is The State of Innovation in Antibacterial Therapeutics - https://www.bio.org/sites/default/files/2022-04/BIO-Antibact...
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