
The antibiotic paradox: why companies can’t afford to create life-saving drugs - sohkamyung
https://www.nature.com/articles/d41586-020-02418-x
======
sithadmin
While the gist of the article is true - antibiotics development is an area
where 'the market' seems to discourage innovation - I always roll my eyes when
I see Achaogen name dropped in articles like this. Achaogen would have had a
much longer runway had the leadership not began demolishing it as soon as it
was clear that the FDA might grant approval for one or more indications. They
faced the usual struggles associated with bringing a new antibiotic to market,
but in the final stretch before final approval began to behave like a valley
startup: setting enormous piles of cash on fire to hire a massive workforce
before having anything resembling stable income, and widespread frivolous
expenditure on nonessential projects and perks across the company. The
leadership also seemed obsessed with emulating nearby Bay Area tech companies,
and it was never clear how or why this was supposed to help Achaogen succeed
as a pharma enterprise.

Source: was there for the explosion in growth, and the eventual implosion.

~~~
parhamn
Wait, what happens to the formulations after the company goes out of business?
Is all the effort really just lost?! Surely it’s just bought by another org?

~~~
sithadmin
In Achaogen's case, Cipla purchased global rights to Zemdri (plazomycin)
outside China and other IP for practically pennies on the dollar: $16M USD.
Everything else went to liquidators for the most part.

It remains to be seen if Cipla is actually going to do anything worthwhile
with Zemdri. I personally doubt that they are capable of it.

------
vikramkr
This is genuinely a pretty big problem in the field. The reward for making a
good antibiotic is getting a drug that nobody will use since they want to
preserve it for when a bacteria becomes resistant to everything else. We've
yet to see really great successes from other approaches like phage therapy,
but I do think that long term, the only commercially feasible way to fight
bacteria is to use some technology along those lines, where you can keep
adapting the therapy to deal with resistance so people will be encouraged to
use it and you will have revenues from the product. Still a lot of technical
problems to overcome there, but there are interesting approaches (such as
using the phage as a CRISPR vector) that go ahead and engineer the phages to
get around some of the roadblocks that have stopped them from being useful in
general. And we shouldn't underestimate non-antibiotic approaches as well -
some good progress in C. diff has been made with stool transplants. Lots of
ways to target bad bacteria, unfortunately the one that's worked the best so
far is the least commercially sustainable.

~~~
arethuza
Globally we spend trillions on weapons (specifically nuclear weapons) that
nobody wants to use so the problem doesn't seem completely insurmountable?

~~~
vikramkr
The problem is that in America, creating jobs is a significant focus in
government spending, including military spending. There's not a lot of jobs in
antibiotics the same way that there are lots of well paying jobs to bring to
your congressional district if you fund a plane to nowhere. Elsewhere in the
world maybe it's different and there's an opportunity there, but spending
decisions like those in the US are very jobs driven and antibiotics just don't
really fit into that

~~~
x86_64Ubuntu
How come military oriented job programs are the only ones that seem to pass
the Grim-Reaper of Free-Market zealotry?

~~~
momokoko
Because based upon WTO agreements and others, the US cannot force all
contractors and suppliers to hire only or mostly within the US.

The one exception is “national security”. So military spending is the most
efficient to create jobs in the US because you can prevent hiring in other
countries.

An example in the opposite direction is US subsidies for solar energy. These
subsidies do create some jobs installing them, but the majority of jobs end up
created overseas in other countries like China.

~~~
arethuza
Interesting, one of the areas that the UK government and the EU are apparently
arguing over is our apparently quite right wing government wants more freedom
to support UK companies through state aid than the 'socialist' EU would like.

If we were to be constrained by WTO rules (an organisation hardcore Leavers
seem very fond of) perhaps we can expect an increase in UK arms spending,
though this being the UK no doubt this won't mean any improvements for the
people at the sharp end of things.

~~~
pbhjpbhj
Government procurement is interesting, eh. We've recently spent something like
£1Billion on masks - hundreds of millions to companies which seem all to have
connections to Tory faithful ... and AFAICT none of which have provided
useable masks. (Aside from corruption why would they pay if the product isn't
useable??!).

I dare say defence procurement will be similar.

Here's to cutting all that contracting red-tape the EU had us wade through. /s

------
nabla9
Incentives in medical research are screwed. This article just scratches the
surface.

In general, doing research towards direction that might lead to molecule that
can't be patented is not possible in commercial medical research. Research is
actively directed away from cheap treatments or drugs.

~~~
natechols
There is a lot of nonsense tossed around about who actually discovers the
majority of drugs and how the public sector can be more involved, but you've
identified one case where government and academia could make a huge
difference, e.g. by running clinical trials on off-patent drugs applied to new
conditions. Low risk, low cost, and very little incentive for big pharma, but
a big win for taxpayers if the trials identify cheap new cures.

~~~
HeadsUpHigh
Clinical trials are never low cost. Even small scale studies with a few
subjects can climb in eye-watering numbers.

~~~
Cpoll
Why? Not that I don't believe you, but I can't get a back-of-the-envelope
estimate to go that high (certainly from lack of knowledge on my part).

But I'm picturing the kind of study you see in posters on mass transit: "Are
you X, Y, and Z and suffering from W? You might be eligible for experimental
treatment. Call this number."

~~~
HeadsUpHigh
I remember a recent study on a new supplement that costed ~10k per subject for
a 6 month trial.

There's a lot of hidden cost wrt bureaucracy and other such issues.

------
hu3
There's a Steam review for the game Big Pharma that illustrates this paradox
to a lesser extent:

> Came within 5% of the top-most goal for a level, and failed for lack of
> time. Went back several saves and looked at everything. Was my choice of
> drug wrong? Were my production lines a square or two inefficient, preventing
> me from utilizing another delivery portal? Was I spending too much on
> Bolivian Tree Frog Saliva? Did I not get the researchers working on new
> machines fast enough?

> And then it hit me: my best-selling drug, for erectile dysfunction,
> beautifully crafted to avoid side effects and have an A cure rating... was
> devastating the market... for itself. I simply couldn't pull enough profit
> out of the economy if I cured people.

> Tried again. Made sure to give the sufferers a side-effect free drug which
> worked... some of the time... enough to get their hopes up... but not enough
> to stop buying next month's installment.

> 10/10 would abandon business ethics again.

[https://steamcommunity.com/id/patio11/recommended/344850/](https://steamcommunity.com/id/patio11/recommended/344850/)

~~~
renewiltord
That is a pretty well done game if it has emergent effects like that.

------
kyrra
WSJ did a good story on this back in January:

News version: [https://www.wsj.com/articles/antibiotic-makers-find-
rewards-...](https://www.wsj.com/articles/antibiotic-makers-find-rewards-for-
tackling-superbugs-are-scarce-11578259557)

Free podcast: [https://www.wsj.com/podcasts/the-journal/the-broken-
business...](https://www.wsj.com/podcasts/the-journal/the-broken-business-of-
antibiotics/38922695-fada-4ff5-9638-b459a3a68d1b)

~~~
casefields
WSJ mirror: [http://archive.md/YbmXl](http://archive.md/YbmXl)

------
DougWebb
I believe a workable solution for this would involve:

1\. Pharmas separate drug R&D from manufacturing and sales.

2\. R&D companies submit proposals to the FDA for new drugs they want to
develop. The FDA can also send out RFPs for drugs they'd like to prioritize.

3\. The FDA chooses drugs based on likely public benefit, rather than the
profitability-driven selection we have today.

4\. The FDA _funds the R&D_ for the drugs it chooses. This allows the R&D
company to operate with positive cash flow, separately from the eventual
(possible) future income from manufacturing and sales. This is also the
incentive for developing drugs that aren't patentable, or which will be
required only in small quantities.

5\. When a drug is approved for release, the FDA will license one or more
manufacturers to produce it, based on their quality, cost, and scale. This is
why the Pharmas break into separate companies. Some may focus only on R&D,
some may focus only on manufacturing. Some manufacturers can focus on large-
scale high volume production, while others can focus on small-scale
production. This prevents the excuse for charging huge prices for rarely-
needed drugs "because the equipment needed would otherwise be producing much
higher volume drugs at lower cost".

This arm of the FDA would be funded partly by the public, and partly by
licensing fees. The math for insurance costs and premiums would change because
retails prices for most drugs would drop. That would make insurance cheaper,
and some of those savings would probably need to go towards a tax for the
FDA's R&D funding. But longer term, the licensing fees might be adequate on
their own since the FDA would operate as a non-profit.

~~~
sithadmin
Point 1 effectively happens today, with larger and successful pharma firms
basically waiting on startups to do the heavy lifting/absorb risk of product
development, then swooping in at a late phase to acquire the startup.

Point 2 is outside the FDA's mandate. Other HHS agencies like the CDC and
BARDA are a better fit and more or less already do this.

Point 3: again, outside the FDA mandate, and the FDA doesn't 'choose' anything
in this sense. It evaluates safety and efficacy. Public health benefit is a
secondary factor, and one that doesn't necessarily get heavy weight (e.g.
Achaogen getting plazomicin 'Fast Tracked' by the FDA didn't seem to do much
in Achaogen's favor in the end, with the drug only getting approved for a
less-profitable indication).

Point 4: Again, agencies other than the FDA already do this and are a better
fit.

Point 5: This is practically already how the industry works, though the FDA
isn't the one calling shots.

~~~
DougWebb
If it wasn't obvious, I'm talking about changing the FDA's mandate to
nationalize drug R&D, while contracting the work out to private entites. I
would actually require those entities to operate as non-profits too, in order
to receive FDA contracts.

If other agencies are a better fit for various parts of this plan, I'd do some
reorganizing to bring them into a single organization. Maybe that's called
FDA, maybe not. It would definitely be doing the FDA's current role in drug
approval.

~~~
sithadmin
Putting the same agency in charge development and regulatory QA is a horrible
idea. Way too many perverse incentives there.

~~~
DougWebb
Such as?

Corrupt behavior of government employees is already illegal, so if your
concern is that they'd approve R&D funding for a drug and development company
they have a financial stake in, that wouldn't be allowed and would be dealt
with, unless they can prove that the drug really should be developed and the
company getting the contract and funding really is the best choice.

Same goes for the manufacturing side, once the drug is approved.

And for the approval process, what perverse incentives would be created that
don't already exist, and are already being dealt with? Today, anyone at the
FDA who approves a drug that they've got some way to benefit from is already
breaking the law.

~~~
sithadmin
>what perverse incentives would be created that don't already exist

If the FDA is both in the business of facilitating R&D, and regulatory QA for
the products resulting from said R&D, you're creating an internal feedback
loop that results in a couple predictable courses of action for the
organization to appear successful:

1\. The R&D program 'picks winners' and puts low-hanging fruit in the product
pipeline that's highly certain to pass QA. FDA looks good due to high % of
approvals for products it pushes to develop, but doesn't really reward
innovation or high-risk + high-payoff projects. While this yields benefits, it
doesn't address the issue of trying to get 'moonshot' type projects that
result in significant leaps ahead funded.

2.) The R&D program (predictably) suffers from the same sort of high failure
rate and safety issues that plague pharma in general; it's not a fault of the
FDA per se, but because our collective knowledge regarding mechanisms of
action is still rather basic. FDA proceeds to be attacked by Congress, the
public, the media, etc. for 'wasting taxpayer dollars' on a low-yield program.
FDA officials are thus incentivized to let their standards of quality and
efficacy slide in order to protect the agency's image on the R&D side of the
house.

~~~
DougWebb
The organization will "appear successful" if it brings useful drugs to market
at a reasonable cost to patients. There would obviously need to be unbiased
criteria for deciding what's useful and what isn't, and the decisions around
both selecting criteria and applying them should be made by medical
professionals, not bureaucrats or MBAs.

Your second argument could be applied to _every_ government program, which
_are_ attacked all the time, with the intent to get rid of them and eventually
have no government programs at all. That's a separate problem that needs to be
solved.

------
kokey
I've heard the economics of developing new antibiotics making it difficult
being mentioned a number of times but this is the first time I've seen an
article explaining the economic difficulties so clearly. I do like the sound
of some of the proposals, like rewarding new products so they don't have to be
at the mercy of a slow introduction to the market.

------
thinkingkong
Its interesting that one of the drugs mentioned isnt viable as a business
model because it must be given intravenously. Its almost like the value stream
/ value chain in medicine expects the drugs to do the work as a replacement
for people. If the cost of an in-person visit was free, it would still cost
more but might it be viable?

~~~
sithadmin
It's not just that there's friction associated with injection-only
antibiotics. It's also that most cutting edge antibiotics that must be
delivered via injection or infusion tend to be finicky about dose titration
(requiring regular blood tests and hence effectively have secondary product
dependencies to support use of the antibiotic), and have an unfortunate
tendency to cause a number of relatively severe side effects that need to be
monitored for over an extended duration.

------
acarl005
I do agree that incentives are a problem. However, I also see this as a sign
that small-molecule antibiotics may not be the most efficient approach for
antibiotics in the future. Designing small-molecule pharmacological agents in
general is extremely inefficient in terms of time and money, and lacks robust
design methods. I was shocked at how much "throwing everything against the
wall to see what sticks" (high-throughput screening) was being depended upon
to optimize drug leads. Sure, machine learning can help this process a bit,
but it's building upon a shaky foundation.

We should be investing in bacteriophage research and other methods more robust
to evolving resistance. This will ultimately be more beneficial for the public
good. Of course, incentives probably still need to change in order for this
research to gain momentum.

~~~
comicjk
Designing small-molecules is "extremely inefficient" compared to what? We
might as well say fishing is inefficient because of all the time spent not
reeling in a fish. We should definitely research all plausible alternatives,
but nothing in medicine is as convenient as a small-molecule drug that works.
So people are going to try to find them.

------
renewiltord
The FDA should be able to certify drugs as safe, effective, etc. They
shouldn't be able to ban drugs for not being that. Helmets in America don't
have to be CPSC certified and that's fine. You can choose to buy an
uncertified helmet if you want.

Certification is good. But uncertified drugs have their place.

~~~
sithadmin
What you are suggesting is completely mad.

The average US citizen cannot be expected to have a nuanced enough
understanding of pharmacology to make informed decisions about the safety and
efficacy of drugs. Even trained and licensed physicians often have
difficulties making such decisions in non-mundane situations, and rely heavily
upon their pharmacy colleagues (either by way of consulting practice-specific
literature, or actually consulting with a qualified pharmacist) to assist with
making determinations about what would be safe and effective to administer.

~~~
renewiltord
They don't have to. They can stick to the pharmacists and all that. If you
want me to take a test to demonstrate that I am of sound mind and should be
released of my restrictions, that's fine. If you want me to post money so you
can afford to bury my body, that's also fine.

But release me from the bonds that bind "the average US citizen".

~~~
sithadmin
>They can stick to the pharmacists and all that.

Again, your position is absurd. Individual pharmacists of the type that serve
the average person most often (retail pharmacists) are not equipped or trained
to be the gatekeepers deciding which products are safe and effective. Putting
that sort of risk and power into the hands of pharmacists will necessarily
result in a need for cooperation on de facto standards that will only result
in strengthening cartels like the American Pharmacists Association, which are
already anti-consumer enough as it is.

>release me from the bonds that bind "the average US citizen".

Well...that definitely vibes with the incoherent disestablishmentarianist
approach you seem to be promoting, I guess.

~~~
renewiltord
> > me: _The FDA should be able to certify drugs as safe, effective, etc._

> you: _Individual pharmacists of the type that serve the average person most
> often (retail pharmacists) are not equipped or trained to be the gatekeepers
> deciding which products are safe and effective._

I find your response stupefying since it seems to be responding to things I'm
not saying...

> > _Well...that definitely vibes with the incoherent disestablishmentarianist
> approach you seem to be promoting, I guess._

Hahaha, beautiful.

~~~
sithadmin
I'm directly responding to your (insane) line of argumentation: You're arguing
that medications that have not passed regulatory requirements for safety or
efficacy should be sold to consumers, and that they can simply rely on retail
pharmacists or the like as a stand in for the FDA's approval process.

~~~
renewiltord
Interesting. Perhaps my English isn't that good. Please re-write "The FDA
should be able to certify drugs as safe, effective, etc." in the way you
understand it.

In this universe, you can just get an FDA-certified thing. No stand-in
required.

> _You 're arguing that medications that have not passed regulatory
> requirements for safety or efficacy should be sold to consumers, and that
> they can simply rely on retail pharmacists or the like as a stand in for the
> FDA's approval process._

No. No gatekeepers. The standard is you buy FDA drugs from pharmacists. If you
don't want to, you don't, you buy it from who will sell it and you're on your
own. It's the escape hatch. Just like you can buy non-Snell-certified helmets.

------
pow_pp_-1_v
There was a PBS Newshour piece about this:
[https://www.pbs.org/newshour/show/as-a-virus-ravages-the-
wor...](https://www.pbs.org/newshour/show/as-a-virus-ravages-the-world-
antibiotic-makers-are-in-disarray)

------
mmazing
I don't understand why we don't (as a society) fund more scientific research,
in general.

It seems like taxes could fund non-profits to be able to do this sort of
research, and then pay for the vetting process and manufacturing.

It would probably save TONS of money, too.

~~~
dcolkitt
I agree with more funding of scientific research, but why not use X-prizes
instead of direct grants to non-profits?

When we have a clear objective in mind (i.e. develop a new antibiotic with no
pre-existing resistance in the wild), X-prizes tend to produce much better
ROIs. For-profit organizations tend to be much more efficient at hitting
concrete targets. An X-prize also doesn't require the government to directly
pick winners and losers, or evaluate intermediate progress. That sidesteps a
lot of the risk of political corruption that inevitably creeps in with big
government budgets.

~~~
mmazing
I think that makes total sense in terms of coming up with a solution to a
specific objective.

However, since antibiotic resistance, and treatment of diseases in general
(COVID, for example) is a moving target - it would be nice to have machinery
in place for solving these problems as they come.

Regarding political funding, that's a whole different problem in itself.

------
newacct583
I don't know that the details about the drug market are particularly important
here. This is just another tragedy of the commons effect. Drug resistant
infections are a "problem" (a very severe one to those suffering), but they're
an _economically_ insignificant problem. So no one is willing to pay enough
for new/unresisted drugs to make it worth their development.

There are plenty of straightforward ways to get these drugs to patients. They
just aren't ever acceptable to the people regulating research funding and the
drug market.

------
dmch-1
When I read the title I thought the point was that companies can't afford to
create life-saving drugs, as it is in their interest people to stay ill and
keep buying less effective drugs.

------
devit
Why do trials cost so much?

It would seem like testing on 100-1000 people spending $10-100k per person
would work, which gives $1-100m, but apparently they cost billions for some
reason.

~~~
oxygenjoe
Doctors, Nurses, clinical trail coordinators, paying a lab to process
specimens, the list goes on. I work in a medical lab that charges a low flat
rate for literally holding onto the specimens for a couple hours, and a high
flat rate for any amount of processing, i.e. centrifuging specimens, pipetting
into little labelled vials, adding certain preservatives, etc. This processing
isn't really automation friendly and regulations require a CAP accredited lab
to do the processing so it can't really be outsourced to a lower bidder.

I get the impression these companies aren't too concerned with the actual
costs involved.

------
not2b
Markets don't always work. They often work well, but when they don't, states
will have to step in and fund things.

------
zeckalpha
Classic market failure problem.

------
Cirpop
It’s going to be hard to find a drug, and it is going to be hard to develop
it, and you weren’t going to get paid for it. So why would you do that?

------
EGreg
Start to make patentleft to start competing alongside, and allowing this to be
developed.

Just like in open source software, all other science departments run on a gift
economy just fine, everyone contributing small parts to a snowball. Newton
stood on the shoulders of giants, he says. He didn’t have a swat team shut him
down for it.

The engine of Capitalism is about taking risks and investing capital into a
project, to recoup it if it turns into products people want to buy with viable
unit economics. That works well, but also has major downsides. Countries like
USA which do it wind up paying 10x more for the same drugs as others, and you
can see other problems in the OP post about not even developing the drugs. May
as well try another system (alongside) like patentleft.

Open source and science is a gift economy where everyone contributes what they
can afford, and a growing snowball of ideas. It is built on COLLABORATION
rather than competition, and requires NONE of the intrusive government
interventions to grant monopolies on ideas and “doctrine of equivalents”.
Libertarians and progressives alike should welcome it.

Private property is just a man made system, just like any other. We can look
around and see what systems work better. Which is far more popular today:

Wikipedia vs Britannica

WebKit / Blink vs IE

Linux / BSD vs SunOS

The Web vs AOL

Linux/Android vs Nokia

Apache / NGinX vs IIS

Programming languages are almost all open source

Wordpress vs Blogger.com

I could go on... but you get the idea. The tortoise beats the hare eventually.

~~~
jcranmer
> Which is far more popular today:

But consider all the other cases where open source software hasn't "won":

Photoshop v GIMP

Maya v Blender

Windows v Linux

MS Office v LibreOffice

IDA Pro v Ghidra

There doesn't seem to be a clear trend to me of open source software winning
out over closed-source software, or vice versa.

~~~
EGreg
It seems all your examples are on consumer desktop computers. I would even say
that iOS and mobile phones promote closed source software and are closed
themselves, tightly controlled. And there are many arguments about this, too.

Again, I am not saying there aren’t pockets where closed source will hold out
for a long time. I am saying why not have an open alternative also? Patentleft
movement in pharma

------
wooby
"Antibiotics present an enduring economic puzzle. These drugs changed the
world. Yet despite their unique power, the free market doesn’t value them."

No. The free market -- people -- values these drugs. If there wasn't demand,
this article wouldn't have been written. The problem is that drugs are too
expensive to bring to market for their developers to profit, and that the
single greatest cost is often FDA approval.

The article implies that the solution is to funnel more BARDA grants to
companies in order to make drug development profitable. This amounts to using
taxpayer money to help private companies pay government fees, with lots of
bureaucratic overhead (employees, forms, computer systems, buildings) at each
end of the transaction. This is dramatically suboptimal.

Instead of this, the FDA process should be cheaper, or the FDA itself should
be privatized, and operate as an entity like Consumer Reports or any other
review organization. Government need only be involved with prosecuting fake
producers. The consumer requires only access to information, and assurances
that a substance they bought is the same they have researched.

Paying government expenses with taxes is an unsustainable Ponzi scheme, and
takes us further away from a real solution.

~~~
digdugdirk
The FDA approval process ensures both that drugs perform an intended function,
and that drugs don't harm people. Part of the expense of this process is
making sure that both of these aspects are performed to sufficient standards.

It sounds like your suggestion would lower the bar for both these aspects, and
only catch issues after the fact - something which could have fatal
consequences.

I'm curious how you would see this playing out in a positive light,
particularly given the money involved and the incentives to game the system.

~~~
wooby
Pharmaceutical companies have every incentive to make their drugs safe,
because if their drugs hurt people, the drugs will not sell.

Many drugs have passed FDA approval but later killed people. If the FDA were a
private company, it might have gone out of business. But as a government
monopoly, it's very hard to stop paying for. Between pharma companies, the
government, and individual patients, the FDA has the least stake in the health
of a particular patient.

UL is an example of a non-government organization that offers product safety
certification. You see the UL seal on most consumer electric appliances.
Imagine an FDA seal.

Drugs are not magical or special. They are a product like any other, and it is
the consumer's right to choose a doctor, and for that doctor to choose proper
medication. We regularly choose the best mechanics, plumbers, and other
specialists we can find, and their reputation is partly a function of the type
and quality of the parts and tools they use.

~~~
sithadmin
If you want to see where this kind of free-wheeling approach to cGMP
certification and product quality gets you - just take a look at the
developing world, where big-name generics manufacturers knowingly dump subpar-
quality (or even outright dangerous or ineffective) drugs on the market with
impunity. This leads to all sorts of unsavory outcomes, and puts healthcare
providers in the position of resorting to incredibly unscientific approaches
to dosage management (it's not uncommon for physicians in such cases to
recommend dosages many times in excess of what's recommended due to extremely
poor active ingredient potency, based mainly on strictly qualitative feedback
from patients). It effectively reduces the pharmaceutical market to a guessing
game. The quality issues seen in the developing world are also directly linked
to antibiotics usage practices that directly contribute to development of
resistant strains of bacteria.

~~~
wooby
It is my understanding that malnutrition, clean water, and access to
education/information are foremost among the problems of the developing world,
and it's not at all clear to me that regulating medication in those countries
would improve anyone's situation measurably.

For my part, here in the "developed" world, I have a family member with a rare
autoimmune condition, and access to comparatively few medications. Those that
are available are very expensive and not covered by any insurance. There is
little competition between their manufacturers.

Because it costs at least 1.4B to bring a drug to market, and because of the
rarity of her illness, it's unlikely any company will pursue new research.
Thanks to the FDA's inordinately expensive approval process, no company is
incentivized to bring a drug to market with an upside of <= 1.4B, regardless
of how many people it could help.

