The financial barrier to developing antibiotics? No big payday for drug companies


Watch Part I: We are running out of effective antibiotics fast

JUDY WOODRUFF: But first: our series on antibiotics and the dangerous so-called superbugs building resistance to them.

It's a joint project from our science correspondent, Miles O'Brien, and our economics correspondent, Paul Solman.

Last night, Miles looked at the clear and present dangers for patients.

Tonight, we start tackling the hunt for new drugs, and why the market for creating them has just about collapsed.

Here's Paul's report. It's part of our weekly series Making Sense.

PAUL SOLMAN: So, Russian emigre, 1989, came here speaking no English. How do you like capitalism?

DR. SLAVA EPSTEIN, Northeastern University: I embrace it.

PAUL SOLMAN: Slava Epstein has been embracing novelty his entire life. Told he'd never make it as an astrophysicist in the former Soviet Union, he swapped telescope for microscope and became a biologist instead. Then, unable to find an academic job upon emigrating to the U.S., he volunteered at university labs while doing odd jobs to survive.

DR. SLAVA EPSTEIN: Painting houses takes no English. Repairing roofs doesn't take very much English. Paving driveways with bricks can be a silent job.

PAUL SOLMAN: And nearly 30 years later, Epstein is still getting his hands dirty, looking for new antibiotics.

DR. SLAVA EPSTEIN: One gram of dirt like this contains roughly, give or take, 10 billion cells.

PAUL SOLMAN: And as he told my colleague Miles O'Brien:

DR. SLAVA EPSTEIN: One percent has been more or less explored. The remaining 9.9 billion cells per gram have not.

PAUL SOLMAN: Now, digging up dirt is actually a grand old tradition in antibiotics research.

NARRATOR: One hundred samples of soil to be scientifically searched for a lifesaving organism.

PAUL SOLMAN: A project made that much more urgent by the onset of World War II, and the wounded soldiers who filled England's hospitals.

MARIE-LOUISE KERR, Oxford Museum of the History of Science: Chambers of horror seemed the best way to describe those septic wards.

PAUL SOLMAN: Marie-Louise Kerr of the History of Science Museum in Oxford, where penicillin was developed into a drug.

But, by the end of World War II, penicillin is a key factor in the Allies winning the war, right?

MARIE-LOUISE KERR: Definitely. America was able to produce penicillin on a much larger scale. And, yes, by 1944 to' 45, there was enough penicillin to treat every soldier involved in D-Day and also civilians as well.

PAUL SOLMAN: But just two years after that, penicillin-resistant staph infections were already being reported, a pattern that's been repeated for every antibiotic since.

DR. SLAVA EPSTEIN: Resistance arises very quickly to antibiotics. Really, in clinical use, it takes just a few years.

PAUL SOLMAN: Now this wasn't much of a problem during the so-called golden age of antibiotic discovery and development, but that age has been over for decades.

KEVIN OUTTERSON, Boston University School of Law: The last time that we had a new class of gram-negative antibiotics, approved for human use, that drug was discovered the year that I was born, 1962. So we have had no new classes discovered in my entire lifetime.

PAUL SOLMAN: Boston University law Professor Kevin Outterson specializes in health law.

KEVIN OUTTERSON: So, these drugs worked well for our parents and grandparents' generation, but they won't work that way forever. Resistance will undermine them. We have to replace them.

PAUL SOLMAN: OK, clear enough: As today's antibiotics begin to lose their oomph, a clear and present danger lurks. But here's where prudent medicine runs into the hard truths of economics.

DR. JOHN REX, Former Senior Vice President, AstraZeneca Pharmaceuticals: Early on, if you bring in a new drug that goes one bacterium further, so to speak, you would say, I really need that, I need it today. I'm going to start using that today.

PAUL SOLMAN: Dr. John Rex is a former pharmaceutical industry executive.

DR. JOHN REX: But now you invent a new antibiotic that hits the very most resistant bacteria in the world, what we as a community want you to do with it is sit on it, OK, and save it for just that rainy day.

PAUL SOLMAN: That's because the last thing we want to do, as a society, is use a new superdrug too soon, spurring the evolution of superdrug-resistant bugs that will eventually render the new drug worthless.

So then the increasing awareness of the overuse, potential overuse of an antibiotic because it will create resistance makes the economics worse?

DR. JOHN REX: It does. And also our awareness of how hard it is to find them, so once we have found this precious jewel, we need to protect it, because every use of an antibiotic, even a correct use, drives resistance.

KEVIN OUTTERSON: This is not a question of if this is a problem. It's when.

PAUL SOLMAN: John Rex and Kevin Outterson are both working on a new project called CARB-X, a public-private partnership to spur development of new antibiotics, because the market just can't do the job by itself.

After all, why would a drug company spend a fortune developing a new antibiotic, when no responsible doctor will prescribe it until there's no alternative?

KEVIN OUTTERSON: From the company perspective, it's a disaster, because their novel, cutting-edge, exciting product doesn't sell.

PAUL SOLMAN: And it's a product in which they have presumably invested a huge amount of capital.

KEVIN OUTTERSON: Hundreds of millions of dollars.

PAUL SOLMAN: Meanwhile, the patent that keeps any other company from making and selling a generic version runs out after only 14 years.

KEVIN OUTTERSON: Two of the most highly used antibiotics in the United States, last-ditch antibiotics, are Colistin and Vancomycin. And both of them have been off patent for decades.

At the time that they entered the market, we had better drugs. Now we need them, right? So this is a classic example of, if it's useful, it's saved for the future, which makes the commercial prospects very difficult.

PAUL SOLMAN: Another problem: For a relatively rare infection, a company might have to charge tens or even hundreds of thousands of dollars to get a return on its investment.

KEVIN OUTTERSON: You see that for cancer.


KEVIN OUTTERSON: It's impossible to do that for antibiotics.


KEVIN OUTTERSON: We lack the diagnostics that would tell the doctor immediately that this antibiotic is the one that would save this person's life.

PAUL SOLMAN: As if all that weren't enough of an economic disincentive for investing in new antibiotics, infectious disease specialist Lindsey Baden points out yet another one: length of treatment.

DR. LINDSEY BADEN, Brigham and Women's Hospital: Often, the treatments are short, a week or two, and intermittent. And that's very different than for hypertension, diabetes, hypercholesterol, where it's a treatment every day for the rest of your life.

PAUL SOLMAN: So does that mean that the market as currently constructed can't come up with new antibiotics; there just won't be the investment to making them?

KEVIN OUTTERSON: We won't get the sort of antibiotics we really need. What about the antibiotic that saves the life and returns you to full health of somebody who's 20 or 30 or 40? That antibiotic is worth, truthfully, millions of dollars.

In any other field, there would be venture capitalists running around funding these pre-clinical ideas. For antibiotics, because there's no big payday at the end, the business model is broken, there's very little private capital.

PAUL SOLMAN: So how does society change the economics to solve a problem that could be as important to the future of humanity as any?

DR. SLAVA EPSTEIN: Well, I happen to be an optimist.

PAUL SOLMAN: That's where Slava Epstein comes in.

DR. SLAVA EPSTEIN: An incurable optimist.

PAUL SOLMAN: Yes, still dancing to his own beat. And while it still takes two to tango, Epstein's eternal optimism is all his own.

DR. SLAVA EPSTEIN: The probability of overwhelming success is over 100 percent.

PAUL SOLMAN: Well, 100 percent seemed a tad high to both me and Miles O'Brien.

Is Slava Epstein a piece of work or not? And I use that phrase in the best possible sense.

MILES O'BRIEN: Absolutely. And he wouldn't be offended.

But his optimism, I wonder about. Now, you're the expert on the invisible hand, though I have a certain amount of expertise on this myself. But let's put that aside.

Everybody I have spoken to along the way about this says this just cries out for some government intervention.

PAUL SOLMAN: Yes, and that's where we're going with the next story. How does government get involved when the market can't seem to solve a problem, as is the case here?

For the PBS NewsHour I'm economics correspondent Paul Solman.

MILES O'BRIEN: And I'm science correspondent Miles O'Brien.

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