WSMoreOrLess: Antibiotics and the problem of the broken market

Episode Summary

Executive Summary: The episode explains why antibiotics are a broken market: resistance makes new drugs socially valuable but commercially unattractive. Focusing on carbapenem-resistant CRE, it shows how few cases need new drugs, why that destroys sales potential, and why governments may need to “delink” profit from volume by paying large lump sums to incentivize innovation.

Main Topics: Antibiotics as a broken market (Priority: 5/5): Antibiotics don’t behave like normal drugs because stewardship requires low usage, limiting sales even for valuable new medicines. Antibiotic resistance and CRE (Priority: 5/5): The program highlights CRE, especially carbapenem-resistant Klebsiella, as a severe example of resistance threatening critically ill patients. Why big pharma avoids antibiotics (Priority: 5/5): Short patents, low expected sales, and high R&D risk make antibiotics a poor commercial bet compared with other drugs. Scientific difficulty of developing new antibiotics (Priority: 4/5): Most candidate compounds fail, and gram-negative bacteria are especially hard to target because of their complex cell walls. Delinkage as a proposed solution (Priority: 5/5): Kevin Outterson argues governments should buy promising antibiotics outright, paying for value rather than number of doses sold. Policy response and funding estimates (Priority: 4/5): A UK review aligns with delinkage and proposes major international funding to revive antibiotic innovation, to be discussed at the G7/G20.

Key Arguments: Antibiotics are a public-health necessity but a commercial failure because they should be used sparingly to preserve effectiveness. CRE illustrates the crisis: resistance can rise rapidly, making once-reliable drugs ineffective. Because the number of patients needing last-resort antibiotics is tiny, companies cannot recoup research and development costs through sales. Patents do not solve the problem because the early years of an antibiotic’s life should involve minimal use, not aggressive marketing. Drug discovery is intrinsically risky: thousands of compounds are screened, but fewer than 4% progress to the stage of a potentially useful drug. Government-backed delinkage could create a viable incentive by paying large sums upfront or via purchase agreements, separating revenue from antibiotic volume. A broad public investment framework is needed because only large pharmaceutical firms can afford late-stage trials and regulatory testing.

Data Points: Global antibiotics market: $40 billion - Described as a huge market that nevertheless lacks commercial incentives for innovation. Carbapenem-resistant Klebsiella in UK: Under 1% - Current resistance level in the UK was said to be still low but potentially capable of rapid change. Italy Klebsiella susceptibility (2009): 99% susceptible - In 2009, almost all blood-poisoning Klebsiella infections in Italy could be treated with carbapenems. Italy resistant cases after one year: 15% - Within a year, carbapenem non-working cases rose sharply as resistance spread. Italy resistant cases after next couple of years: 30% - Resistance continued to increase, doubling again over the next few years. Sweden CRE cases (2007-2014): Under 100 - Used to illustrate how small the market is for a new last-resort CRE drug. Sweden cases needing last-resort treatment: All but one could be treated; effectively zero market - Kevin Outterson argued that if a new drug is reserved for when nothing else works, demand is negligible. US cases needing a new antibiotic: Fewer than 100 - Estimated demand in the US for a brand-new CRE-targeting antibiotic. Patent period: Around 14 years - Short exclusivity period makes it hard to earn enough before stewardship limits use. Compound attrition rate: Fewer than 4% - Ursula Thorotsbacher said fewer than 4% of starting molecules become viable candidates. Cost to buy new antibiotics internationally over 10 years: $16 billion to $37 billion - Estimate from the UK government review for paying companies for new antibiotics. Innovation fund: $2 billion - Additional funding proposed alongside purchase incentives to stimulate antibiotic R&D. Suggested purchase size for a “miracle drug”: $1 billion or more - Kevin Outterson’s proposed scale for delinkage-based rewards.

Pivotal Quotes: "if you don't get them on the appropriate antibiotic quickly, more patients actually will die of the infections." — Professor Alan Johnson: Explaining why rapid access to effective antibiotics matters in severe infections like sepsis and meningitis. "that's when the business model falls apart." — Kevin Outterson: Referring to the economics of developing drugs for a tiny CRE market. "we need a lot of research and a lot of companies working in this field." — Ursula Thorotsbacher: Arguing that multiple players are needed because antibiotic discovery is so uncertain and technically difficult.

Implications: Without new funding models, antibiotic innovation will remain weak while resistance rises. Governments may need to pay for value, not volume, to keep lifesaving drugs available for the future.