The Problem. Rising rates of antimicrobial resistance (AMR) among bacteria is a growing public health concern because there are limited treatment options for patients with infections caused by these serious pathogens. Multi-drug resistant bacteria, aka superbugs, are among the most concerning because they harbor enzymes and other mechanisms of drug resistance rendering current antibiotics ineffective, thus making them difficult, if not impossible, to cure. Given the tremendous unmet need for safe antibiotics that are effective against drug-resistant Gram-negative bacterial infections (GNIs), commercial opportunity awaits antibiotic developers willing to tackle AMR in the GNI market.
The Precedent. In February 2015, the infectious disease (ID) community celebrated an unexpected win: the FDA’s approval of Allergan’s (formerly Actavis’) Avycaz (ceftazidime/avibactam), a much-needed antibiotic that’s effective against superbugs, namely those resistant to the most potent antibiotics currently marketed. Avycaz is a fixed-dose combination antibiotic comprised of ceftazidime–a third generation antipseudomonal cephalosporin with a well-established efficacy and safety profile–and avibactam–a novel, first-in-class broad-spectrum β-lactamase inhibitor that protects ceftazidime against mechanisms of drug resistance harbored by many superbugs (i.e., enzymatic degradation by Class A, C and some D, β-lactamases). FDA's approval of Avycaz for the treatment of complicated urinary tract infections (cUTIs), including pyelonephritis, and complicated intra-abdominal infections (cIAIs) was unexpected because it was largely based on Phase II clinical data, much of which was discussed at an FDA advisory committee meeting in December 2014. Avycaz was (and still remains) differentiated among existing current treatment options for serious GNIs through its coverage of Enterobacteriaceae, particularly those that produce Klebsiella pneumoniae carbapenemase (KPC), which degrades potent later-line carbapenem antibiotics. Through its spectrum of activity, Avycaz was poised to partially fill an urgent unmet need in the GNI market–for the treatment of serious GNIs for which patients have no other alternatives–and it was because of this characteristic that the U.S. market accepted the value-based pricing strategy that Avycaz’ marketer implemented.
Indeed, after Avycaz launched in April of 2015, Allergan made waves in the U.S. GNI market with their bold and unprecedented premium pricing strategy for Avycaz, commanding a wholesale acquisition cost (WAC)–which is the price the manufacturer will set for a wholesaler to purchase the drug – of $855 per treated day. To put this into context, Merck & Co.’s Zerbaxa (ceftolozane/tazobactam) entered the U.S. market in 2014 and was priced at $249 (WAC) per treated day, in line with expectations for a novel, branded antibiotic. Analysts and investors watched as Avycaz gained market share and our internal suggests that hospitals are stocking Avycaz, despite lack of formulary inclusion, even with its high price point. Now with a precedent for streamlined development, expedited pathway to regulatory approval, and successfully executed value-based pricing, a few multimillion-dollar questions remain:
- What development and pricing strategies will other developers of novel, life-saving antibiotics implement in the near future in order to capitalize on the commercial potential of the MDR GNI market?
- How will value of novel antibiotics with activity against MDR bacteria be assessed once competitors enter the market (and how will the market respond to such competition)?
- Will these new market dynamics be sufficient to continue driving momentum in the GNI pipeline?
The Prospect. There are a number of novel antibiotics in the GNI pipeline that have demonstrated activity (i.e., through in vitro studies) against drug-resistant bacteria (e.g., Achaogen’s plazomicin, Shionogi’s Cefiderocol, Tetraphase’s eravacycline, The Medicines Company’s Carbavance, Merck & Co.’s imipenem/cilastatin/relebactam) that are being evaluated in pathogen-specific clinical trials (with the exception of eravacycline). These companies are employing different development strategies for their agents, indicative of the FDA’s flexibility in how the agency will evaluate product safety and efficacy, as well as the intent by companies to differentiate their product from competitors. What still remains to be seen is how these developers will price their product in light of this evolving landscape. Nonetheless, their pricing strategy will likely hinge upon their benefit and perceived value (as demonstrated by supporting clinical data) in the context of a market with ever-increasing competition.