AMR is a threat to the global economy, with impacts on international trade, heath care costs and productivity. If no action is taken, AMR could cost the world’s economy USD 100 trillion by 2050

Antimicrobials - and antibiotics in particular - are key infrastructure for health systems.

| There is no viable market for novel antibiotics. The return on investment for new ‘reserve’ antibiotics fails to cover the costs of their development, manufacturing and distribution.

As a result, major pharmaceutical companies have backed away from antibiotic development, and the enterprises, often small or micro biotech, remaining in the space struggle to sustain their operations.

| Push incentives - government or regulatory interventions which support R&D by directly lowering the costs of development - have contributed to mitigating some of the challenges associated with antibacterial development, but in isolation and at the current scale, are insufficient to meet R&D objectives and bring sufficient products to market.

Recognizing that push incentives on their own - at the current scale - are not sufficient to drive the development of new antibacterials beyond the R&D phase, concerted and ambitious actions are needed for the development and implementation of pull incentives or other innovative financing mechanisms.

In addition, mechanisms for equitable and appropriate access once products are developed are limited. Without a viable market, industry representatives have signaled investment in AMR R&D will continue to decrease

The Global AMR R&D Hub’s studies highlight a worsening access gap, whereby effective antibiotics are not available in the parts of the world at scale, where the need is most dominant and growing most rapidly. With need spread unevenly across many national markets, access is precarious in low- and middle-income countries (LMICs), but also in some high-income countries (HICs) | In addition, G7 countries continue to invest in relevant partnerships to accelerate the development and market entry of needed new antimicrobials (e.g., through CARB-X, GARDP, Innovative Medicines Initiative, InnovFin Infectious Diseases). | Investments in AMR R&D from public and philanthropic sources globally equate to USD ~1.6 – 1.8 billion per year. Since 2017, public and philanthropic investments in AMR R&D globally across all One Health sectors have reached USD 10.67 billion – an increase of over USD 1.67 billion since April 2022.

Private sector contributions to AMR R&D are claimed to be ~1.8 bn USD annually, but due to the lack of return on investment (ROI) for antibiotics R&D in particular, more profitable areas, such as oncology are favored. | There is therefore the need for cooperation and further engagement across countries, donor agencies and public-private partners to ensure equitable access to priority antibiotics and diagnostics for those with the greatest need.

Ensure pull mechanisms are designed to stimulate R&D and reward innovation, and provide appropriate global and equitable access, including for low- and middle-income countries that experience the highest burden of resistance. | | | | The State of Innovation in Antibacterial Therapeutics, 2022: https://www.bio.org/sites/default/files/2022-02/The-State-of-Innovation-in-Antibacterial-Therapeutics.pdf

<I WROTE THIS> Research from the Biotechnology Innovation Organisation shows that in 2022, the AMR clinical pipeline contained “54 direct-acting novel chemical or biochemical entities and 10 microbial entities” with only 10 of those having a novel target. The majority had targets for which marketed drugs already existed or looked to extend the activity of existing drugs (Thomas et al., 2022). <I WROTE THIS> | | The primary issue forcing big pharma out of the antibacterial sector and leaving small company innovators empty handed is that the traditional market dynamics do not exist for antimicrobials, and this has not been resolved through new policies

The investment issues and anemic pipeline presented in this report are a result of broken market dynamics that create a risk-benefit imbalance when it comes to developing and launching antibiotics. | There are three main factors that have scared off investors from antibacterial development.

First, large companies have been exiting from the space for some time, with very few listed as co-sponsors of small company pipeline candidates. Without a vested interest from large biopharmaceutical companies, licensing deals and M&A dry up, souring the incentive for early-stage investors such as venture capitalists.

Second, the majority of recent examples of “successful” biotechs (those that have raised venture capital, obtained funding through public offerings, obtained FDA support via QIDP, and achieved FDA marketing approval) have been commercial failures. Investors point to these recent stories of antibacterial company bankruptcies and acquisitions at fire sale valuations as evidence to avoid investment in this segment of medicine.75,76

The third factor is the lack of effective policy and regulatory solutions to address the unique characteristics of the antimicrobial marketplace. | 1) Early-stage investment (push mechanisms for research), 2) regulatory incentives, 3) late-stage investment (push mechanisms for development), 4) market-based mechanisms (pull incentives), and 5) reimbursement reform.

Traditionally push mechanisms Push > Investment and support for R&D

What we need to is pull mechanisms too Pull > First, new economic incentives that reward successful innovation at a level sufficient to attract further R&D may serve to pull participants back into the fray. Studies estimate that incentives in the range of $1-4 billion per successful launch of a new and innovative antibiotic are needed globally…

One solution is an incentive, such as a market entry reward or subscription model, which rewards the successful approval of a novel AMR medicine that meets critical unmet medical needs. This mechanism could provide an important incentive for private investment in these products by providing a return on investment for AMR programs that is competitive with other areas of potential R&D investment. This could also be achieved through a subscription model that would allow reimbursement to be partially de-coupled from volume of sales to reduce the incentive to inappropriately use novel antibiotic medicines. The bipartisan Pioneering Antimicrobial Subscriptions to End Upsurging Resistance (PASTEUR) Act, introduced in both chambers of Congress in 2020 (and reintroduced in 2021), is one policy proposal currently under consideration which would establish such an incentive. | Approved Antibacterial Drugs: Although there have been 164 FDA-approved direct-acting antibacterial new chemical entities (NCEs) since the early 1900s (Figure 1), only one new molecular target NCE has been approved over the last 35 years, illustrating a need to broaden the antibacterial discovery engine (Figure 2). There have been 11 indirect-acting NCEs approved, including seven drugs that work to extend the activity of existing drugs and four monoclonal antibodies specific for exotoxins.

The breadth and novelty of the antibacterial clinical-stage pipeline is insufficient to meet the ongoing threat of wide-spread infection from drug-resistant strains. The clinical pipeline contains 54 direct-acting novel chemical or biochemical entities and 10 microbial entities (Figure 3). However, of the non-microbial candidates, 61% have targets for which marketed drugs already exist. More than 38% of candidate programs are indicated for C. difficile and TB, leaving only 44 drugs for other pathogenic bacteria. Only 10 of these 44 candidates have a novel target. There have been 14 indirect-acting NCEs in the clinical pipeline, including nine that work to extend the activity of existing drugs and five monoclonal antibodies specific for exotoxins.

Over the past 10 years (2011-2020) 22 antibacterial companies started their R&D journey by raising their first major financing round, called a series A-1 round. However, these financing rounds only account for only 2% of the funding provided to start-up biopharmaceutical companies created over this period. This low percentage shows a stark contrast in the investment of antibacterial companies versus other diseases. The disparity can also be seen in the amount invested in all antibacterial companies vs. other diseases. As shown in Figure 9, antibacterial companies received 17-fold less money than oncology companies for the decade. <IMAGE OF TABLE> | | | | | 2021 ANTIBACTERIAL AGENTS IN CLINICAL AND PRECLINICAL DEVELOPMENT: https://iris.who.int/bitstream/handle/10665/354545/9789240047655-eng.pdf?sequence=1 | | | Traditional antibacterial agents under development are still insufficient to adequately address the enormous threat posed by AMR, and there is a major gap in development of products addressing pathogens that possess a broad spectrum of resistance to current antibacterial agents. | | Overall, the clinical pipeline and the recently approved antibacterial agents are insufficient to tackle the challenge of increasing emergence and spread of antimicrobial resistance.

Given the average progression rates and the development duration associated with traditional R&D models, the current pipeline will generate few new innovative antibiotics in the coming years (4) | | | | | Government response to the recommendations of the Health and Social Care Committee's inquiry on antimicrobial resistance 2017: https://assets.publishing.service.gov.uk/media/5c4889ede5274a6e4f614e2f/antimicrobial-resistance-government-response-to-hscc-inquiry.pdf | | It is increasingly critical we find a solution to the market failure in antimicrobials as pharmaceutical companies continue to pull out of the antibacterial and antiviral market, leaving a stark gap in the pipeline.

The Committee rightly points out that industry could do more to invest in new products. All sectors have a role to play in tackling AMR and industry needs to step up and play its part, not least because of the ‘insurance’ value that antimicrobials play in terms of pharmaceutical companies’ wider drug portfolios | | | | | | | | Mazzucato, M. (2023, April 13). Getting drug development right. Project Syndicate. https://www.project-syndicate.org/commentary/drug-development-health-innovation-public-funding-needs-more-conditions-by-mariana-mazzucato-2023-04 | | | | | | | | | | Mazzucato, M and Li, H. L. (2020). A market-shaping approach for the biopharmaceutical industry: governing innovation towards the public interest. UCL Institute for Innovation and Public Purpose, Working Paper Series (IIPP WP 2020-21) | | This role stems from prevailing economic theory, which does not consider the state a key driver of market creation (Arrow 1972; Mazzucato 2016). State intervention is thus justified only in areas characterised by market failures — such as coordination or information failures,(Stiglitz and Weiss 1981; Coase 1960) imperfect competition, under- provision of positive externalities, over-provision of negative externalities (Stern 2007) and under- provision of new knowledge arising from basic research — with actions restricted to levelling the playing field so that industry and competition can thrive; devising market mechanisms to internalise external benefits or costs; and funding basic public goods, such as science, infrastructure and education.

**^This view has significantly limited policymakers’ understanding and choice of tools for addressing problems with the biopharmaceutical innovation system (Mazzucato 2013; Mazzucato 2017).

(IF USED IN ARGUMENT, LINK TO MARKET FAILURE QUOTE FROM POLICY RESEARCH)** | | | | | | | | | | | | | | | | | | | | | | | | | | |