State-run drug companies may be needed to mend ‘broken antibiotics market’

Nationalised or state-run “utility” drug companies may be the only answer to the lack of investment in new antibiotics, former banker and superbugs tsar Lord Jim O’Neill has suggested.

The drastic measure would be intended to ensure that the development and production of new antibiotics are not at the mercy of capitalist market forces.

It may seem at odds with Lord O’Neill’s background as a chief economist at global banking giants Goldman Sachs.

But speaking at a London press briefing on “fixing the broken antibiotics market”, he compared it to the way banks or parts of their businesses were taken over by the Government after the 2008 financial crash.

Lord O’Neill said: “Its what happened in finance in the end. If you’re not going to do it yourself, we’re going to turn certain parts of your business into being a utility.”

Other proposals including “prizes” for new drug developers, a “Netflix” model that would see health providers pay for the right to access new medicines, and pricing antibiotics in a way that properly reflects their value to society, had led to talk but no action, he said.

Another possibility was a “carrot and stick” approach that taxed drug companies opting out of antibiotics while rewarding others that stayed in the game.

Lord O’Neill revealed that he floated the idea of a publicly owned pharmaceutical company in his first month as the Government’s “superbugs tsar”.

Between 2014 and 2016, he was chairman of the Review on Antimicrobial Resistance, which produced several reports on the looming danger from over-use of antibiotics and drug resistant bacteria.

Lord O’Neill said: “I was told that was ridiculously naive because the pharmaceutical companies are the only ones that have the depth of manufacturing and distribution capability.

“It seems to me that’s not really getting us very far.”

Drug-resistant superbugs pose a serious global threat, especially since no new classes of antibiotic have been developed since the 1980s.

In 1980, a total of 25 large drug companies had active antibiotic discovery programmes. Since then their numbers have dwindled to only three, Pfizer, MSD (Merck Sharp & Dohme) and GSK (GlaxoSmithKline). Their antibiotic pipelines are said to be “very small”.

Other companies engaged in antibiotics development have either quit the business, been swallowed up by larger players, or were struggling, the briefing was told.

Currently there were 26 candidate antibiotics in the global pharma pipeline, but almost all were simply modifications of older drugs and few targeted the most dangerous microbes listed as “priority pathogens” by the World Health Organisation.

The problem facing drug companies is that antibiotics, which are sold on a per-pill basis, simply do not bring in big enough rewards.

New infection-fighting drugs are generally priced at between £1,500 and £3,800 per course of treatment – a fraction of the cost of long-term therapy for chronic non-bacterial diseases, such as cancer.

This cut little ice with Lord O’Neill, however, who was highly critical of the pharma companies.

“They see their job as rewarding shareholders – and  its kind of really worrying,” he said.

He accused the industry of talking “incredible nonsense” about their commitment to producing and distributing new antibiotics and vaccines.

Lord O’Neill added: “If pharmaceutical companies delivered just a 10th of the commitment that comes from their words, we might actually get somewhere.

“It leads me to think that some of the more radical ways of changing the risk-reward incentive and social circumstances of it now need to be explored more.”

He confessed to not having a clear idea about how nationalising antibiotics production would work.

One possibility would be for the Government to take over developers that were looking for a private buyer.

Another would be to acquire all the remaining anti-infection business from the larger companies.

This could prove cheaper than offering multibillion-pound rewards for producing new drugs that meet a defined need, said Lord O’Neill.

Alternatively, a tax-payer supported utility company would only focus on the costly business of drug manufacture and distribution.

Dr Sheuli Porkess, deputy chief scientific officer at the Association of the British Pharmaceutical Industry (ABPI), said: “The pharmaceutical industry is hardly standing still in the fight against AMR (anti-microbial resistance).

“We have been working closely with the Government for the last two years and companies are ready and waiting to start testing a new model which will support antibiotics R&D this year.

“We shouldn’t write off this plan before we’ve tried it.”