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Using innovative business models to enhance antibiotic development

Author: Joe Larsen, Acting Deputy Director, Division of CBRN Countermeasures, Biomedical Advanced Research and Development Authority (BARDA), Office of Assistant Secretary for Preparedness and Response (ASPR) and Tyler Merkeley, M.S. MBA, Broad Spectrum Antimicrobials (BSA) Program, Division of CBRN Countermeasures, Biomedical Advanced Research and Development Authority, Office of Assistant Secretary for Preparedness and Response
Published Date: 7/9/2014 10:08:00 AM
Category: Medical Countermeasures; Public Health Preparedness;

At BARDA, we want to revitalize the antibiotic pipeline. To do it, we’re pursuing an innovative business model and providing incentives for pharmaceutical and biotechnology companies to invest in antibiotic development.

BARDA has successfully established public-private partnerships with industry partners for the development of novel antibiotics and anticipates a long term commitment to this market.

BARDA has seen the companies we partner with raise additional funding in private markets, become more attractive assets for acquisition by larger pharmaceutical companies, enter into co-development agreements, and/or move forward with Initial Public Offerings (IPO). This additional funding can provide critical capital to support expensive Phase III clinical studies. While there are factors that impact each business decision our partners have made, it is clear that those that have partnered with BARDA have continued to accomplish important technical and business milestones. Securing technical guidance and financial resources through a BARDA partnership reduces the risk of drug development, freeing up additional resources to help companies grow and diversify.

We strive to be a collaborator and, as a result of our direct involvement, to mitigate regulatory uncertainty in developing antibiotics and other drugs, vaccines, and diagnostics.

In May 2013, BARDA entered into a unique strategic alliance with GlaxoSmithKline to launch a Portfolio Partnership. This Portfolio Partnership is a five-year, $200 million agreement formed under the Other Transactional Authority (OTA) granted to HHS by the Pandemic and All Hazards Preparedness Act of 2006. Partnerships formed using OTA aren’t traditional government contracts and allow for more flexible partnering arrangements.

In this case, instead of focusing the partnership on a single antibiotic candidate, this partnership supports an entire portfolio of candidate antibiotic therapies. The benefit of basing the partnership on a portfolio of candidates is that the partnership doesn’t end if a particular product fails in clinical trials. BARDA’s agreement with GSK possesses three central tenets: 1) flexibility in technical scope, 2) cost sharing, and 3) joint strategic oversight. This type of flexible, long-term partnership sends a strong signal of commitment to industry.

Currently under the Broad Spectrum Antimicrobial programs, our partners receive reimbursement for drug development activities in real time. This approach contrasts with that of models such as advanced market commitments, where reimbursement is provided only after the purchase of product, and milestone or prize payments, where awards are provided upon advancing a candidate antibiotic to predefined endpoints.

The near real-time direct reimbursement for drug development activities is a preferred structure for products in advanced development prior to approval. The “non-dilutive” funding provided by BARDA to support development activities does not need to be repaid and does not dilute shareholder’s equity. Further, the funding can favorably impact the net present value calculation of our partners when considering whether to undertake antibiotic development projects by reducing their upfront costs.

The rapid growth of the Broad Spectrum Antimicrobial program – from one partnership in August 2010 to six partnerships today, with three progressing in Phase III clinical development – speaks to the success of BARDA’s model.

This post is the fourth part in our series Combatting Antibiotic Resistance. Next week, our blog post wll be on the ways individuals, organizations and industry can do their part to responds to the threat of antibiotic resistance. To stay up to date as new blog posts are published, subscribe to the ASPR Blog on RSS, follow @PHEgov on Twitter or Like us on Facebook


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