Following the news on April 15, 2019 that Achaogen has filed for Chapter 11 bankruptcy,

Paul Jeng, Senior Pharma Analyst at GlobalData, a leading data and analytics company, offers his view on how incentives for antibiotics development can be reformed:

“Achaogen’s bankruptcy comes less than one year after the company won approval for Zemdri for treatment of complicated urinary tract infections (cUTIs), and amidst ongoing partnerships with CARB-X, BARDA, and the Bill and Melinda Gates foundation. Despite an urgent clinical need for novel antibiotic agents, market demands and sales volume have been unable to produce a sufficient return on investment for companies in the antibiotics space, such as Archaogen.

“KOLs interviewed by GlobalData believe that the need for new products to combat the crisis of drug-resistant infections can be directly related to the overuse of antibiotics. Balancing antimicrobial stewardship with simultaneous measures to bolster the antibiotics market is the central challenge of the modern antibiotics industry, and will require continued dialogue with public and private stakeholders until consensus policies are established.

“Funding sources like CARB-X are designed to provide a ‘push’ impetus for antibiotics research and development. However, it is equally important to complement early-stage subsidies with ‘pull’ incentives to ensure that companies remain sustainable once their products are approved. Former FDA Chief Scott Gottlieb has proposed licensing antibiotics to hospitals instead of reimbursing for individual prescriptions, which would establish a more predictable revenue stream and market for that therapeutic class.

“To continue stimulating product development in the era of drug-resistant bacteria, measures must be taken to delink antibiotics revenue from sales volume through new market incentives or procurement models.”