Proposed ‘Pay Or Play’ Deal To Encourage Antibiotic R&D In Pharmaceutical Industry

A review conducted by the UK government recommends that pharmaceutical and biotech companies should be financially rewarded for investing in new antibiotics R&D. To reprimand those companies that decide not to participate in the effort, the review says those companies should be required to pay a penalty surcharge.

These recommendations were made by Jim O’Neil, former Goldman Sachs chief economist, who was contracted by the UK government to find ways to incentivize new antibiotic drug development. The report suggests that antimicrobial resistance – a growing problem resulting from the overuse of antibiotics – could surpass cancer as a leading cause of death by 2050.

According to O’Neil, everyone – including doctors, patients and governments – have a role to play in preventing antibiotics from being overused. As patients continue to demand antibiotics for inappropriate uses, such as treating a viral infection, and doctors continue to over-prescribe the drugs, the risk of patients dying from once-treatable infections continues to grow.

More than any other stakeholder, O’Neil places the most burden on the pharmaceuticals companies who he believes should receive a financial penalty if they do not invest in getting new antibiotics to market. The review proposes that life science companies that fail to put enough investment in antibiotic R&D, would be required to pay 0.25 percent of their annual sales as a penalty surcharge. This money would then be distributed to companies that are developing new treatments.

Companies that do successfully bring new antibiotic drugs to market, would benefit from a $1 billion to a $1.5 billion reward from the surcharge pool. O’Neil hopes this type of ‘pay or play’ would be enough encouragement to get more companies working on alternative antibiotics.

“If we don’t do something, we’re heading towards a world where there will be no antibiotics available to treat people who need them,” said O’Neil. As antibiotics are used relatively infrequently and can’t be priced too high, there is currently little incentive for pharmaceutical companies to develop new classes.

“We are now at a critical point in dealing with an unfolding health catastrophe,” said CEO of Redx Pharma, Neil Murray. “The review marks an important step forward, and we see significant potential for the Innovation Fund and new commercialization models.” Redx Pharma is current working on new treatments for MRSA infections.