What Do the Paycheck Protection Program and Antibiotic Resistance Tell Us About Drug Development?

May 13, 2020 9:51 am

To keep millions of Americans attached to the workforce during COVID-19 closures, federal lawmakers created the Paycheck Protection Program, which supplies loans to small businesses to keep their workers employed—even while operations are shut down. The program is so popular, Congress had to replenish funds for it within weeks of the first loan application approval.


The lesson? Government policies matter. Congress wields significant power, particularly in an economic downturn. What it does, and what it does not do, will have far-reaching consequences. Indeed, that is the message a recent Government Accountability Office (GAO) report sent to lawmakers. The report explores incentives the U.S. Department of Health and Human Services (HHS) could provide to manufacturers to spur the development of antibiotics.


That cause is increasingly important. The GAO report notes, “Experts warn that the current pipeline of antibiotics in development is insufficient to meet the threat of” antibiotic resistance. And that threat is dire: according the U.S. Centers for Disease Control and Prevention, at least 2.8 million people in the United States are infected with antibiotic-resistant bacteria or fungi annually, and more than 35,000 people die as a result.


Forbes contributor Nicole Fisher noted these numbers are the equivalent of commercial plane crash each week. Fisher also found that, due to lost wages, hospital stays, and premature death, the United States lost about $35 billion in 2008 due to antibiotic-resistant infections. Fisher argued there are few new antibiotics in development because “the private sector is financially disincentivized to create new antibiotics.”


She is not the only one who has reached that conclusion.


In Newsweek, Helen Boucher, a physician at Tufts Medical Center in Boston and director of its infectious disease fellowship and heart transplant programs, discussed drug resistance to antibiotics. She said “doctors have no drugs to give their patients for what once were treatable infections but are now life-threatening” because “sales wouldn’t bring in enough to justify the cost.” She explained that existing antibiotics manufacturers “at or near bankruptcy, and small biotech companies are struggling.”


That is right. According to a STAT News article by Dr. Manos Perros, “Achaogen, a company that overcame the innumerable technical and scientific challenges that face developers of antimicrobial drugs and created a new FDA-approved, commercialized antibiotic, filed for bankruptcy.” Perros also explained, “Other biotechnology companies with recently FDA-approved antibiotics are terminating their research and development efforts in an attempt to survive an unsustainable commercial market.”


The GAO reached the same conclusion. Its report explains, “Several challenges impede the development of new treatments for resistant infections, notably inadequate return on investment for drug companies largely due to low prices and a limited patient population for whom these treatments would be appropriate.”


The GAO offers several suggestions that could help spur antibiotic development, and those ideas are worth exploring, but, broadly, this report should be an important reminder to executive and legislative branch policymakers to exercise caution as they consider drug pricing legislation. Plain and simple: price controls on new treatments will leave American biopharmaceutical companies with less room to innovate.