The Need, the Roadblocks, and the Search for Proper Incentives for Renewed Antibiotic Research

By Joshua Blume

Antimicrobial resistance is on the rise, and a new antibiotic has not been invented since Eli Lilly & Co. invented daptomycin in 1984. A recent WHO report indicates that resistance to antibiotics currently reduces worldwide GDP by around 1.5 percent, but drug companies are not able to recover enough of that lost productivity to pay the $2.558 billion in development costs for inventing a new drug.

As it stands, not only is the antibiotic market saturated with dozens of products, but the return on investment for antibiotic medicines—which is used in only short-term doses—is projected by most companies to be less valuable than medicines for chronic illnesses, such as heart disease or diabetes. Another problem is that while many underdeveloped nations have a greater need for new antibiotic treatments, they are some of the greatest contributors to antibiotic resistance and have almost exclusive access to compulsory licenses—as provided by the WTO TRIPS Agreement and the paragraph 6 framework to Article 31.

As the WTO explains, a compulsory occurs “when a government allows” another country to produce a patented product “without the consent of the patent owner.” It was originally included in the 1995 TRIPS Agreement, but was expanded to allow wider access. While there are some restrictions they mostly have to do with notice and attempts to negotiate a voluntary license, it is not restricted to national health emergencies, as many believe. Even if it were, the WTO has clearly stated that “[e]ach member has the right to determine what constitutes a national emergency.” It is available to all nations except the several dozen who have opted out or limited their use to extreme necessity. These vast differences in consumption, regulation, law, and access for less-developed countries creates an uphill battle for companies to recoup their research and development costs.

The problem is worsened by the growing antibiotic resistance disparity between developed and less-developed countries. Antibiotic consumption is decreasing in many developed countries, while growing exponentially in much of the developing world. This growing disparity will also increase the incentive for less-developed countries to announce compulsory licenses. Canada’s production of TriAvir for Rwanda to combat the HIV/AIDS crisis is one prominent example of such compulsory licensing. Antibiotic-resistant tuberculosis is on the rise and poses exactly this type of threat. Current WHO numbers show that 480,000 people globally develop multi-drug resistant TB each year. This is not to say that the developed world is not affected—gonorrhea acts as one of three drug-resistant “urgent threats” in the United States according to the CDC, with only 0.3 percent of cases exhibiting resistance in 2011, multiplying by more than 8 times that percentage in just three years—but many developed countries have opted out of compulsory licensing.

That said, considering the differences in regulation and law in many underdeveloped countries, compulsory licenses should not be the main concern for corporations. Instead, the worry is that countries will simply refuse to grant patents to newly invented pharmaceuticals within their borders, so that their citizens can receive treatment at a greatly reduced cost, such as happened with the $84,000 Hepatitis C drug cure Sovaldi in 2014. Sovaldi—the generic name is Sofosbuvir—was heralded as a miracle cure for Hepatitis C, a liver disease spread by blood. Studies have shown that an estimated six million people in Egypt have this deadly disease, and for years it was incurable. The problem was that due to the high costs of developing the drug, Gilead, the patent holder, needed to find a way to get returns on a drug that is disproportionately needed in less-developed nations. Gilead ended up negotiating a 99 percent reduction in price so that they could sell their product in Egypt. One article even recommended that patients leave the United States and seek treatment in Egypt for a few months, where it was available for only $900. If patents are not respected where the medicine is being used, the downside risk for originating companies is even more immense than for compulsory licensing.

Thus, the question remains, what ways are available to encourage sustainable antibiotic production? The WHO has recommended international prize funds using 0.01 percent of worldwide GDP. Others have agreed to the principle of prize funds to create “delinkage” from the typical sales revenue, but there is disagreement on how to implement it, how much to contribute, and who to put in charge. While delinkage could prove extremely successful as an incentive—after all 80 different companies are asking for it—it does not change the fact that approximately 80 percent of all antibiotics in the United States are used for farming, nor does it structure proper incentives for the developing world to prevent antibiotic pollution. In the meantime, however, we should not let the perfect become the enemy of the good, especially on a ticking clock where pharmaceutical research often takes years and billions of dollars of expense. Such a prize fund may be the best solution to prevent 300 million premature deaths before 2050.


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