The federal government could provide higher reimbursement for new antibiotics as a way to incentivize companies to develop new therapies, the President’s Council of Advisors on Science and Technology (PCAST) recommends in its report on combatting antibiotic resistance.

PCAST offers several other suggestions for boosting commercial development, including that the government subsidize R&D programs for antibiotics; provide companies with a financial reward, such as a one-time lump payment, for bringing a new antibiotic to market; provide a tradable voucher that extends the patent life of another drug; and impose an antibiotic usage fee – a surcharge on the cost of each antibiotic, which would go into a fund for antibiotic incentives.

PCAST notes that these approaches would require new legislation to create new authorities, new appropriations, or both.

The PCAST report also includes recommendations to accelerate clinical trials, facilitate FDA approvals and improve stewardship programs to maintain the effectiveness of existing antibiotics. PCAST co-chair Eric Lander, president of the Broad Institute of Harvard and MIT, had given a preview of the report at a meeting in July ([A#14140711004]).

Lander and PCAST co-chair John Holdren, director of the White House Office of Science and Technology Policy, announced the release of the report at a Sept. 18 conference call, along with Centers for Disease Control and Prevention Director Thomas Friedan.

At the same time, they announced an executive order from President Obama directing federal departments and agencies to take action to battle the rise of antibiotic resistant bacteria. The order calls for the establishment of a new interagency task force led by HHS, which is to implement a five-year national strategy to prevent and contain outbreaks of antibiotic-resistant infections; maintain the efficacy of current and new antibiotics; and develop next-generation diagnostics, antibiotics and vaccines. The task force is to submit the plan to the president on Feb. 15, 2015.

The executive order also establishes a new presidential advisory council of non-government experts.

The administration also announced that a $20 million prize, co-sponsored by the National Institutes of Health and the Biomedical Advanced Research and Development Authority (BARDA), for the development of rapid, point-of-care diagnostic tests to identify highly resistant bacterial infections.

Emphasizing the urgency of the situation, Friedan stated that antibiotic drug resistance causes at least 23,000 deaths and two million illnesses in the United States each year.

Congress Could Allow Higher CMS Reimbursement

With regard to commercial incentives, the report says one option is to ensure that a new antibiotic drug obtains a high price in the market. It says the Centers for Medicare and Medicaid Services can reimburse premium antibiotics administered by a doctor at a rate of up to the average sales price plus 6% and that Congress could increase the allowable premium.

“A challenge with this approach is that it is unclear that feasible increases in premiums would be adequate to drive private insurance,” the report states. “In addition, increased reimbursement exacerbates the incentive to overuse novel antibiotics that ought to be conserved.”

Currently, hospital treatment is reimbursed according to the diagnostic-related group code established at admission. Cubist Pharmaceuticals Inc. Senior VP of Scientific Affairs Barry Eisenstein said in an interview following the release of the PCAST report that carving the cost of an antibiotic out of the DRG would help assure that the value of the antibiotic is recognized.

He said this idea is not currently being discussed in Congress and he hopes it will be taken up at the House Energy & Commerce Committee’s Sept. 19 hearing on ways to combat antibiotic resistance and foster new drug development. Cubist received approval for its second-generation oxazolidinone Sivextro (tedizolid) earlier this year and has a pending NDA for ceftolozane/tazobactam ([A#06140701032]).

Eisenstein said another key aspect of the report is its focus on antibiotic stewardship to assure that the right drug is used in the right patient at the right time.

Helen Boucher, a board member of the Infectious Diseases Society of America and associate professor of medicine at Tufts Medical Center, also pointed to the report’s emphasis on stewardship as being critically important. She noted that IDSA has long advocated that hospitals and long-term care facilities have a stewardship program as a condition for participation in CMS.

FDA Urged To Pursue Special Medical Use Pathway For Antibiotics

Boucher also praised the report’s recommendation that FDA and NIH to propose a plan to establish a national infrastructure to support clinical trials of new antibiotics. She said FDA has shown a desire to expedite approval and the PCAST report will help push forward the idea of getting approval of a narrow indication in a limited population.

PCAST notes that in its 2012 report on propelling innovation in drug discovery it recommended the development of a new “special medical use” pathway when a candidate drug has been shown to be safe and effective in a limited, defined group of patients. It reiterates its support for this approach and says FDA could implement aspects of the pathway before obtaining the endorsement of Congress.

Specifically, it says FDA could include strong labeling, limit prescriptions to certain trained providers, and require dispensing by certified institutions and administration in specific health care settings.

“We urge FDA to do so,” the report states. It also says FDA should coordinate closely with the European Medicines Agency, which appears to be proceeding in a similar direction.

FDA Commissioner Margaret Hamburg said in a Sept. 18 FDA Voice Blog post that FDA is “delighted to stand with the White House in the development and response to the President’s Executive Order” and the national strategy to combat antibiotic-resistant bacteria.

“To address the need for effective antibiotics, FDA is working hard to ensure development of new strategies,” she stated.

Hamburg noted FDA’s involvement with outside groups to advance the science of clinical trials, including a July workshop the agency held with NIH to discuss innovative regulatory and clinical trial approaches to bringing new products to market ([A#00140804012]).

GAIN Act Has Limitations

In discussing drug development funding mechanisms, the report suggests that the federal government could subsidize, in part or in whole, R&D programs for antibiotics that address urgent public health needs. It says that BARDA is well suited to this given its support of development of countermeasures against threats and its existing antibiotic development partnership program.

PCAST says that in return for providing investment and assistance, “the federal government should expect transparency of pricing and profits by companies, as well as measures to ensure affordability and accessibility of antibiotics to all patients who require them.” In addition, it says incentives should be limited to the development of antibiotics likely to be able to address important current or future public needs.

The report notes that Congress sought to increase economic incentives for antibiotic development with the passage of the 2012 Generating Antibiotics Incentives Now (GAIN) Act, which provides five years of additional market exclusivity for antibiotics that target qualified pathogens.

But PCAST says the economic impact of this provision is rather limited because the additional five-year period of exclusivity runs concurrently with the drug’s patent protection and the average extension is only two to three years.

How To Spur Antibiotic Development? Higher Reimbursement, Govt. Funding Proposed By PCAST

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