Do Drug Companies Need Financial Incentives For Antibiotic Development?

One of the commonly stated problems that limits the development of new antibiotics is that the economic incentives are all wrong. A company has to spend a lot of money developing a drug that we then have an incentive not to use. Obviously, if you’re in the business of selling drugs, not selling drugs isn’t exactly a viable business model (in fact, I’ve made that argument myself). In response, a prize system has been proposed, in which companies that develop a successful antibiotic are given a ‘prize’–that is, they are paid a big sum of money and then encouraged or ordered to not provide it except when necessary.

But I’m starting to have doubts about this argument. Mind you, I think it’s effective for small or mid-size drug companies, though I’ll provide an important caveat in a moment. But for large companies (e.g., Pfizer, Merck) that generate ten of billions of dollars of sales, and many billions of dollars in net profits (payouts to shareholders), it’s not clear this would work. Sure, they would always take the money, but the public relations value, even if they had to write off a billion dollar loss, is worth it. The ads write themselves: cut to a man with a square jaw, a fierce gaze, staring defiantly off into the horizon, with the slogan “Pharma X: the last line of defense against bacterial infection.” Finding a drug that’s effective against CRE and refusing to make money off of it would rank up there with Mercedes-Benz’s “we never enforce the patents” campaign.

While small and mid-size companies don’t make the money the bigs do, they still have the option to sell the drug to larger companies or be bought out by them–which can still be quite profitable.

So I don’t think this is a problem of incentives. Instead, I think the greatest challenge is medicinal chemistry. By way of prelude, in days of yore, before the FDA approved virtually everything it was sent, people used to grouse about how ‘the FDA wouldn’t approve aspirin.’ While that might have been true, the reality is that if you gave a medicinal chemist a list of twenty compounds slated for further development that included aspirin, aspirin would probably be at the bottom of the list. Aspirin, arguably one of the most commercial successful drugs, is an awful molecule. No medicinal chemist in her right mind would choose aspirin (I’m not going to go into details; either you’re a chemist/know enough chemistry to understand this, or I would have to provide a very, very long explanation that I would probably screw up).

I remember a policy-oriented meeting I attended that had the chiefs of drug development from the large drug companies. A very famous medicinal chemist was giving an overview of the principles used to choose ‘good’ molecules. At the end of his talk, one of the VPs asked a one word question, “Aspirin?” Said famous medicinal chemist had to acknowledge that these ‘principles’ would have ruled out aspirin based on every single criterion.

The problem is that, in terms of chemical diversity, we’re looking for our keys under the streetlight. The molecules from which drug development begins (sometimes referred to as ‘scaffolds’) are pretty limited. They often have the advantage that they’re easy to alter, so it’s possible to generate thousands of related compounds cheaply and quickly that can then be screened for antibiotic activity (or any other drug activity, such as killing cancerous cells).

We need new sources of compounds. One source has been given the unfortunate moniker of ‘natural products’ (which sounds like something in an environmentally-friendly shampoo), which are molecules found in naturally occurring organisms, from marine organisms such as sponges to soil bacteria. There have been strides in discovering new ways to find these molecules, but they haven’t really been incorporated the major drug companies. Also, these molecules are often less than ideal (‘bad’), so there will have to be more research into how to modify these compounds (which might explain some of the reluctance to pursue these compounds).

On the policy front, anything that can close this gap would be very useful. We also need to support the basic research that will make working with and altering these non-traditional compounds easier.

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3 Responses to Do Drug Companies Need Financial Incentives For Antibiotic Development?

  1. PolicyNerd says:

    Completely agree. Which is why the GAIN Act was not a game changer at all. It did nothing to entice investing in antibiotics. Companies that had existing antibiotics investments benefitted and even the extent of that benefit is questionable. The biggest beneficiary was a certain mid-sized company specializing in Antibiotics which was subsequently taken over by Merck.

  2. renxkyoko says:

    My parents are both pharmacists, and my older sister works with Merck ( R &D ) , and I hope to work for related companies….

  3. NickF says:

    I’m curious about what you mean when you say aspirin is an “awful molecule”; I’m not a chemist, but I do have a physics and mathematics background, so I might be able to understand some of the details. Perhaps you could provide some links to writing that does go into the details of the criteria used for distinguishing ‘good’ from ‘bad’ molecules, so far as drug development companies are concerned?


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