skip to Main Content
  • This page as PDF

US Government Continues Investing in Solutions to Combat AMR

Summary

As the COVID-19 pandemic draws to a close in the US, another public health concern is once again coming to the fore: antimicrobial resistance (AMR).

In the US, at least 2.8 million antibiotic-resistant infections each year cause more than 35,000 deaths.1 While public health agencies and healthcare systems employ various strategies to combat AMR, including antibiotic stewardship and infection control measures, the threat of drug-resistant microorganisms continues to grow. As a result, AMR is estimated to cost the US over $2 billion in additional medical costs per year as a result of extended hospital stays and increased treatment costs.2

Two recent federal announcements underscore continued investment by the US government in combatting superbugs: a recent Biomedical Advanced Research and Development Authority (BARDA) Broad Agency Announcement (BAA) and the FY 2022 Inpatient Prospective Payment System (IPPS) proposed rule from the Centers for Medicare and Medicaid Services (CMS). Additional legislative proposals, including the  Developing an Innovative Strategy for Antimicrobial Resistant Microorganisms (DISARM) Act and the Pioneering Antimicrobial Subscriptions to End Up-surging Resistance (PASTEUR) Act, would reform the reimbursement landscape that antimicrobial product sponsors face in the future. Current trends may also signal a shift toward greater emphasis on value messaging.

HHS Seeks an Antibacterial Accelerator Partner

On May 12, the Department of Health & Human Services (HHS) released a BAA seeking proposals to continue its antibiotic accelerator program for the next 10 years. The accelerator will continue the progress made by the Combating Antibiotic-Resistant Bacteria Biopharmaceutical Accelerator (CARB-X) program, a public–private partnership between HHS’s BARDA and Boston University. Since CARB-X was established in 2016, it has raised over $480 million and sponsored early discovery, pre-clinical, and phase I trials across 85 portfolio assets. CARB-X’s executive director Kevin Outterson has indicated that the highly successful accelerator will apply for HHS’s next phase of funding for the program.

The next iteration of the BARDA program will, like the first, require the recipient of US government funding to seek additional investment by private investors. The BAA indicates that the US government will provide up to $175 million in direct funding; the accelerator will have to at least match that amount. Currently, pharmaceutical partners are also expected to contribute 10–20% of funding, depending on the stage of development, as a condition of receiving CARB-X grants.

The announcement comes as BARDA is continuing to only accept meeting requests for COVID-19 products. However, product sponsors who are not in the COVID-19 pipeline can still meet with CARB-X. BARDA’s key engagement forum, TechWatch, is likely to reopen for all meeting requests by the fall.

More Infectious Disease Products to Obtain NTAP Status in FY 2022

Under Medicare’s bundled payment system for inpatient treatments, the CMS may provide additional payment to certain qualifying technologies under the New Technology Add-on Payment (NTAP) designation. On April 27, the CMS released the FY 2022 IPPS proposed rule, where the agency recommended 3 infectious disease products for NTAP designation. If granted, the NTAP designation will allow for additional reimbursement beginning on October 1, 2021.

Generally, the NTAP payment pathway allows inpatient providers to collect additional reimbursement up to 65% of the cost of the drug. The criteria for NTAP designation are newness, inadequate payment under existing Medicare Severity Diagnosis Related Groups (MS-DRGs), and substantial clinical improvement. However, the criteria are more favorable under the recently finalized alternative pathway that is only available to infectious disease products. Products designated as Qualified Infectious Disease Products (QIDPs) or approved under the Food & Drug Administration’s (FDA’s) Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) benefit in 2 ways: (1) they must only demonstrate that they meet the cost criterion; and (2) NTAP reimbursement for QDIP/LPAD products is up to 75% of the technology’s cost, as opposed to 65% for other NTAP pathways.

Additionally, the CMS proposed to provide LPAD and QIDP products conditional NTAP approval if they obtain FDA approval before the last quarter of the fiscal year. For drugs with conditional NTAP approval, the CMS proposed allowing NTAP to begin the quarter after FDA approval is obtained.

Figure 1. CMS Pathways for NTAP Designation
Figure 1. CMS Pathways for NTAP Designation

These latest NTAP designations demonstrate the CMS’s continued commitment to fostering a more attractive marketplace for new antimicrobials. Pharmaceutical companies must take an active role in accessing the incentives, however, by applying for NTAP designation. The NTAP application process requires submission of the application in October (i.e., a full calendar year before the October 1 start of the fiscal year for which an applicant would be applying). Given the cost analyses and clinical information required as part of this application, manufacturers should begin working on their NTAP application in the months leading up this application deadline.

Future Antimicrobial Reimbursement Reform

Two pieces of AMR legislation introduced in the last Congress would, if enacted, change how new antimicrobial products are reimbursed: the DISARM Act and the PASTEUR Act. These proposals have the potential to be reintroduced later this year or included in larger legislative packages, given significant stakeholder interest in AMR (language from the DISARM Act was included in a version of the CARES Act but was ultimately removed before the bill was passed). Trends in both the public and private market may also impact how companies develop value messaging and engage with key customers.

DISARM Act

The DISARM Act removes the current incentive for hospitals to choose lower-cost antibiotics under the bundled payment system. DISARM would increase payment for certain novel AMR products by carving out payment from existing MS-DRGs and reimbursing based on the average sales price. The act also requires hospitals receiving increased payments to establish stewardship programs and report data to the Center for Disease Control. If enacted, DISARM would offer manufacturers a stronger market incentive than the NTAP alternative pathway.

PASTEUR Act

Sometimes referred to as the “Netflix model,” the PASTEUR Act would allow HHS to enter innovative, subscription-style contracts for critical-need antimicrobial drugs. The PASTEUR Act would be the first attempt at a delinkage model with a federal payer; that is, revenue is allocated based on a reasonable return and delinked from volume of product dispensed. Delinkage models are attractive for antimicrobials, as they account for low volumes and help to discourage inappropriate use. Like DISARM, PASTEUR includes provisions for antimicrobial stewardship.

In the past, these bills had been referred to the House Committees on Ways and Means and Energy and Commerce and to the Senate Health, Education, Labor, and Pensions Committee. While policy of this nature is unlikely to progress as standalone legislation, support from industry and other stakeholder partners could lead to their consideration within a larger healthcare package in the future.

Considerations for Stakeholders

As the landscape for AMR solutions continues to evolve, companies considering bringing products to market in this space should consider several issues:

  • US government funding: Companies developing solutions to AMR should consider the benefits and drawbacks of securing additional government funding for their products, both in the development phase and in the commercialization phase of the product lifecycle.
  • Value story: Companies who are launching new antimicrobial products in the future will need robust data to tell a holistic value story and product value proposition. These value messages could include cost avoidance using real world spending, enablement of other medical procedures, and the societal value of avoiding disease outbreaks.
  • Policy and public payer landscape: Stakeholders should also be aware of proposed legislation or regulation, as well as current contracting trends, that may put more emphasis on value story creation and payer/provider engagement in both public and private payer markets.

About Avalere

Avalere is a market leader in delivering results for clients on policy, market access, and reimbursement. Since 2013, Avalere has successfully supported 14 applications to achieve NTAP approval in the past 8 years, including drug, device, and alternative pathways such as QIDP. To learn more about our expertise and end-to-end services, connect with us.

Notes

  1. CDC. 2020. “Antibiotic/Antimicrobial Resistance (AR/AMR).”
  2. Chris Dall. 2018. “Price to pay: Antibiotic-resistant infections cost $2 billion a year.”

Avalere Health is an Inovalon company, a leading provider of cloud-based platforms empowering data-driven healthcare. We believe in the power of data, informing actionable insights, delivering meaningful impact, and driving stronger patient outcomes and business economics.

From beginning to end, our team synergy
produces measurable results. Let's work together.
Back To Top