Has big pharma finally stepped up?

Earlier this month, the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) launched a nearly $1 billion AMR (antimicrobial resistance) Action Fund to support the development of desperately needed new antibiotics. Many of the world's largest pharmaceutical companies, as well as the Wellcome Trust and the European Investment Bank, have signed on to the initiative, which was announced via a globally coordinated presentation broadcast simultaneously from Europe and the United States.

The IFPMA's members and representatives are voicing their concern about the deepening scarcity of effective antibiotics in the face of resistant and novel pathogens. In a Financial Times commentary to promote the new fund, Emma Walmsley, the CEO of GlaxoSmithKline, cites findings from the United Kingdom's 2014-16 Review on Antimicrobial Resistance, which I chaired. As we warned then, if the problem isn't addressed, the AMR death toll by 2050 could reach ten million per year, resulting in cumulative economic losses of $100 trillion.

Given the scale of the AMR crisis, the IFPMA's latest move is certainly welcome. But whether it represents a turning point remains to be seen. In the AMR Review, we pointed out that more funding is needed at all stages of the antimicrobial development pipeline. For example, at the earliest stage, there clearly needed to be stronger "push" incentives to stimulate research and innovation. But there also need to be "pull" incentives (rewards for outcomes), such as market-entry inducements or volume guarantees to bring new treatments from start to finish.

In the years immediately following the publication of the Review's final recommendations, considerable funding flowed into early-stage initiatives, most of it from governments and not-for-profit organizations. Total financial commitments were on track to reach the Review's recommended target of $2 billion over five years. The problem, as the experience of the past 18 months has shown, is that such funding addresses only the "push" side of the equation. Without the additional "pull" incentives, early-stage innovation does not necessarily translate into full-blown development and production.

Under these conditions, most of the smaller and emerging specialist biotech firms have struggled even to survive. A new AMR Fund could offer a lifeline to smaller firms working on critical research and development. From what I understand, one of the fund's primary objectives will be to support research into treatments for novel pathogens. Yet, as matters stand, the IFPMA's announcement has not been interpreted as a game changer, at least judging by the share prices of publicly traded firms engaged in this small area of research.

Moreover, the original Review estimated that around $20 billion would be needed over the next decade to finance a new generation of treatments for the World Health Organization's designated "priority pathogens." Such financing, we noted, could come from governments or from the industry itself, provided that the incentives are properly structured.

Participants in the new AMR Fund include some of the few pharmaceutical companies that are active in the full development-and-production pipeline, but also some that are not. Who will complete the work that these and other smaller firms start? The Fund, as it has been presented so far, does not appear to offer an answer to this question. Without significant new pull incentives from governments, the Fund will be dependent on new commitments to undertake the full process of developing new treatments from Big Pharma.

It remains to be seen how effective the initiative will be. A crucial test will be to observe how the major pharmaceutical companies behave when it becomes clear that the Fund is supporting a particularly attractive new treatment. For the system to work, new drugs need to be brought through all of the stages of preclinical and clinical trials, and then made available for people (and animals) all over the world.

One hopes that the Fund will inaugurate an accelerated process for solving a dangerous and chronic market failure. Policymakers will need to do their part to create a supportive environment for innovation, and the big pharmaceutical companies still need to clarify precisely what they will use the Fund for, in terms of their own contributions to the fight against AMR and other collective challenges.

It is still early days, and we do not yet know precisely how the Fund will be administered. At a minimum, the corporate contributions made so far undoubtedly represent a new commitment from an industry that I have long criticized for not stepping up. Big Pharma is demonstrating that it is prepared to take a more active role in bringing new antibiotics to market.

Another promising sign is the proposed US Pioneering Antimicrobial Subscriptions to End Upsurging Resistance (PASTEUR) Act, which would establish a framework for reimbursing (up to a certain point) the makers of new antibiotics. If the law passes, it would represent a significant development in itself, but it would also place additional pressure on other countries – in Europe and also in Asia – to follow suit.

On that note, a final encouraging sign is that Emer Cooke, the incoming executive director of the European Medical Association, has committed to make AMR a major priority. Other European policymakers should join her by launching initiatives to establish stronger pull incentives for companies within their remit.

When the Covid-19 pandemic first seized the world's attention, it wasn't clear to me whether it would help or hinder the fight against AMR. But now that many governments, businesses, and other organizations are embracing the spirit of never letting a crisis go to waste, one hopes that the IFPMA's new initiative will not be the last.

Jim O'Neill, a former chairman of Goldman Sachs Asset Management and a former UK Treasury Minister, is Chair of Chatham House.

Disclaimer: This article first appeared on foreignpolicy.com, and is published by special syndication arrangement.