- Overuse of antibiotics has led to new classes of “super bugs” that are resistant to current or traditional antibiotic treatments.
- Legislative and economic incentives are driving innovation and adoption of new technologies in the antibiotic resistance category across the investable healthcare spectrum.
- We anticipate increased new drug development and improvements in the identification and treatment of bugs and “super bugs.”
By Aaron Reames, Walter Colsman, Harlan Sonderling and William Hite
Antibiotic resistance is a growing problem in the U.S. and abroad. Overuse of this drug class to treat illness coupled with widespread use of antibiotics in animals has led to new classes of “super bugs” that are resistant to current or traditional antibiotic treatments. The Centers for Disease Control and Prevention (CDC) estimates that antibiotic resistance costs over $20 billion in excess healthcare spending and $35 billion in lost productivity. Further, drug resistance is resulting in increased mortality. In 2012, over 170,000 people worldwide died from drug resistant tuberculosis, which is only one of the 17 antibiotic resistant microorganisms classified as a major threat by the CDC. These 17 organisms directly cause 23,000 deaths each year in the U.S.
Strengthening legislation and economic incentives, including potential penalties for hospitals based on infection rates, are driving innovation and adoption of new technologies in the antibiotic resistance category across the investable healthcare spectrum.
Source: The Atlantic
Opportunities in drug development
Despite alarming statistics regarding antibiotic resistance, there hasn’t been much incentive for pharmaceutical companies to invest in newer antibiotic treatments (poor pricing, limited exclusivity). One study estimates it takes 10 years, and over $1 billion to develop a new antibiotic. Given these factors, antibiotic drug approvals have fallen drastically from the early 1980s, with only a handful of new approval since 2005. Changing governmental incentives including the DISARM Act (better economics and pricing) and the GAIN Act (speedy pathway for approval) are likely to lead to faster development timelines and longer exclusivity periods, which should lead to increased new drug development in the near- and mid-term.
DISARM and GAIN
Earlier this year the DISARM Act was introduced into legislation to improve the reimbursement environment for new antibiotics that treat significant disease threats. The GAIN Act from 2012 provided economic incentives (such as five years of additional data exclusivity for a total of 10 years) and a faster path to market (such as approval on Phase 2 data) for developers of antibiotics for hard to treat infections. The DISARM Act will further incentivize development by helping improve the reimbursement environment for new antibiotics that treat significant disease threats. Currently, hospitals using expensive drugs are penalized under the diagnosis-related group (DRG) reimbursement model. The bill provides the ability for companies to charge higher prices that are more in-line with the high unmet need and smaller target patient populations of these so called “super bugs.” Near-term launches from Cubist Pharmaceuticals (ceftolozane/tazobactam) and an expected submission from Forest Labs (ceftazidime/avibactam) will set the tone for the results of these new regulations.
In September, the CDC named urgent antibiotic-resistant infections. Three pathogens were classified as urgent threats in a U.S. Centers for Disease Control and Prevention report on antibiotic-resistant infections. CDC assigned a threat level of "urgent," "serious" or "concerning" to pathogens based on seven factors: health impact, economic impact, incidence, a 10-year projection of incidence, transmissibility, availability of effective antibiotics and barriers to prevention. Carbapenem-resistant Enterobacteriaceae (CRE), drug-resistant Neisseria gonorrhoeae, and Clostridium difficile were deemed by CDC to pose the most immediate risk to human health. Twelve more pathogens were classified as serious, and three as concerning.
Hospitals and Diagnostics
The Affordable Care Act specifies that the lowest-performing quartile of U.S. hospitals will be penalized on a variety of hospital acquired conditions (HAC). Underperformers will see a 1% Medicare reimbursement reduction beginning in fiscal-year 2015. According to Kaiser Health News, U.S. hospitals would forfeit about $280 million in Medicare funds annually from these penalties, or an average of $126,000 per hospital facing a penalty.
Currently, there are only eight quality metrics included in HAC penalties. While sepsis in the only infection currently penalized under HAC regulations, MRSA and C. difficile (both hospital acquired) infections remain on CMS’s priority list for inclusion. In FY2015, CMS will begin allowing hospitals to submit MRSA and C. difficile data electronically, paving the way for this initiative in the future. Hospitals are actively investing in rapid molecular testing systems from companies like the GeneXpert system from Cepheid to screen patients for these bugs to prevent potentially costly outbreaks.
Physicians have historically used a “prescribe first, verify later” approach, which has been leading to overutilization of antibiotics in general. An approach where patients are rapidly identified, segregated and treated appropriately has been the more recent trend, especially with difficult to treat infections like MRSA and C. difficle. Molecular diagnostic systems that provide rapid and accurate identification of pathogens are enabling this new treatment paradigm to occur.
On the periphery, medical device manufacturers and life science tools companies will also benefit from innovation in antibiotics. Life science tools manufacturers will continue to provide the instruments used for basic research surrounding microbes, and possibly new techniques used for the rapid identification of bugs and “super bugs.” Medical device manufacturers have focused their development on antimicrobial instrumentation used in surgeries with the aim of preventing the spread of pathogens during surgical procedures.