Device tax hysteria

There is something about taxes - also known as paying for a civilized society - that just drives a certain segment of the populace crazy. There is no better example than the medical device tax, enacted as a funding mechanism for Obamacare.

The tax is set at 2.3% of sales of medical devices - pacemakers, stethoscopes and the like. Is this unfair, or worse, counterproductive? Well, the device makers certainly think so. "Medical technology companies across the country are struggling to remain competitive..." says Steven Ubi, the president of the industry group Advamed (I used to be a member). According to Senator Dan Coats, one company can no longer afford to continue "...working on solutions to relieve a wheelchair-bound child’s discomfort" because of the tax. Oh my, Obama is going after crippled children now. The Wall Street Journal says the tax is "...bound to destroy startups and stunt medical-device innovation in the U.S. and thus the quality of health care world-wide." So it's not just crippled children, it's the whole world that will suffer.

Really? A 2.3% tax is going to bring a flourishing industry to its knees? Someone should tell investors. The iShares Medical Device Index (IHI) has posted 14% annualized returns in the three years since Obamacare was passed. Since the tax was implemented at the start of this year, returns are 16%.

It's not too hard to figure out why investors, as opposed to self-dealers and gasbags, are not worried. Gross profit margins (sales receipts minus production costs) are typically 60-70% in this industry. Hospitals, who are the primary customers, typically markup this sales price another 100% or more when billing patients and insurers. 2.3% is not the end of an industry. It's not a crippling death blow. It's just noise.

About 50 million Americans lack health insurance, 16% of the population. If Obamacare cuts this number in half, medical device manufacturers will see a market increase three times as large as the device tax. That's why their stocks keep going up - they are about to get tens of millions of new customers. You'd think the manufacturers would be, if not actually grateful, at least discreetly content. But no. They want the new customers, sure. But they don't want any part of paying to bring them into the system.

This is truly swinish behavior.

 

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What FMT can learn from PT

Fecal Microbiota Transplantation (FMT) may emerge as a serious alternative to antibiotic therapy. Phage therapy has not, despite many more decades of research and clinical experience. It's not as though the potential of phage therapy is a secret - there are any number of editorials and reviews that propose we give phage therapy "another look", as we combat increasing rates of antibiotic resistance. Yet there are only 4 phage therapy trials listed on ClinicalTrials.gov, and one of these appears to never have gotten started. By contrast, 18 are listed for FMT therapy, a number that is surely an undercount given how recently the FDA began insisting on formal trial protocols.

Phage therapy has been around for many decades, predating the antibiotic era, and continuing in use in Eastern Europe. Although only one placebo-controlled clinical trial has been reported, it gave encouraging results for treatment of otitis media due to Pseudomonas infection. But those results were published in 2009. The sponsor, BioControl (now AmpliPhi Biosciences) no longer features the otitis project on the company's website, although there is a respiratory Pseudomonas project in preclinical development.

I would suggest that phage therapy has an insuperable intellectual property problem. Phage aren't like other drugs. It's not just that they are alive (or biological, if you prefer), it's they are too easy to make and too hard to define.

Phage experiments are really easy to do. When physicists with no lab skills decided to "solve" biology in the mid 20th century, they turned to phage as model systems. Phage are everywhere in the biosphere, they multiply by many orders of magnitude in a few hours, and they are conveniently stored in the fridge when it's time to call it a day in the lab. Because they are so prolific and so easy to handle it's easy to select phage that have desirable properties, such as enhanced killing of pathogenic bacteria.

You can obtain patents on these phage, but it won't protect your company from completion. We never filed on our proprietary phage at MicroPhage, because it would just be too easy for someone else to independently select phage that were functionally equivalent yet compositionally different, and so did not infringe.

This is why no pharma company or other deep-pocketed entity has ever put serious money into phage therapy. Imagine that you developed a phage cocktail that suppressed wound infection. There's little to stop a second (or third, or fourth etc) group from doing the same thing, as the concept of phage therapy of wounds is in the public domain. It would be essentially impossible to show that one formulation was superior to another in clinical trials. That would leave your company to compete on cost, driving everyone's margins down to nothing. Generics compete on cost, but the makers of generics don't have to spend hundreds of millions of dollars to perform clinical trials before they see a cent of revenue. No one is going to put up the money for high-risk clinical trials whose best outcome is a product with a small addressable market and low margins.

This is a failure of our profit-driven system (to be clear, I have enthusiastically participated in and profited from this system). There is no doubt that patients would benefit from phage therapy. It is becoming increasingly clear that patients are benefitting from FMT. A key question for the future of FMT is whether it can avoid the same IP trap as phage therapy. I don't think so. Like phage cocktails, I expect that FMT cocktails can be diverse in composition, yet functionally equivalent. There are dozens, if not hundreds of bacterial species to choose from in making a defined FMT cocktail, and an unlimited number of strains within species. It is telling that of the 18 FMT trials listed on ClinicalTrials.gov, not one is sponsored by a commercial entity.

Thus there is a serious chance that FMT will end up like PT - a marginal or experimental therapy practiced by a few experts. The only way forward that I see is for a not-for-profit (perhaps crowd sourced?) entity to pick up the costs of developing a manufacturable formulation and putting it through clinical trials. The standard model of venture or pharma financing is just not going to work.

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Antibiotics are too cheap

It's a common trope to bemoan the lack of resources that pharma companies put into antibiotic development. But why should they, when so much more money can be made in other fields? The newest example can be found in the excitement over Xofigo, which increases median survival in metastatic prostate cancer from 11 to 15 months. A positive step, but calling it a "big deal", as the Cleveland Clinic's Robert Dreicer did, speaks more to how awful most cancer treatments are.

The cost? $69,000, fully reimburseable by insurance. And the side effects? 47% serious adverse events vs 60% for the standard treatments. This may be the best thing out there, but it is still a terrible drug by any objective standard.

Compare this to the performance of anti-MRSA drugs. Without antibiotics (or inappropriate ones) the 30-day mortality for bacteremia is > 80%; with appropriate antibiotic treatment it is about 25%. Serious adverse event rates are typically a few percent. Drug costs are some $120 for vancomycin, and 10 times that for daptomycin, which is considered to be scandalously expensive.

It would be nice if pharma companies were willing to spend hundreds of millions of dollars to develop a drug that they can sell one time for a hundred dollars; but we don't live in that world. The fault is ours: we fear cancer and are willing to spend almost anything to hang on, sick and miserable, for a few additional months. We don't fear bacterial infections nearly enough, it seems.

Antibiotics are too cheap. As Laurie Piddock put it: "The price of antibiotics needs to relate to their value to society and should not relate to the price of previous products." Until we begin to value a life lost to infection as highly as a life lost to cancer we can expect to see little investment in new ant-infectives.

 

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Rapid diagnostics - ID is not enough

In a previous post I discussed some of the hurdles - mainly economic - to developing rapid diagnostics for bacterial infectious disease. Despite these problems, several new technologies have been developed and are finding their way, however slowly, into clinical microbiology labs.

The problem with all of them is that they are great at identifying bacteria, but are limited in their abilities to determine resistance and susceptibility. In a low-resistance environment, this is not a significant limitation. Historically, doctors would consult a reference that matches clinical presentation and bacterial species with preferred antibiotics, and prescribe accordingly. They might also consult their hospitals' antibiogram, a tally of observed antibiotic susceptibilities at their hospital.

But what do you do when the antibiogram looks like the one below (which is very typical)?

 

Your rapid test may have identified the infecting bug as Acinetobacter, but then what? None of the antibiotics on the list are highly likely to be effective for any particular strain, but there is a pretty good chance that one or two might be. You just don't know without a susceptibility report on the bug that has been isolated from the patient - and that still takes 2-3 days. The rapid ID test has told you what the patient is infected with, but not what treatments are likely to work.

This limitation is true whether the rapid-test technology is PCR, PNA-FISH, or the new favorite of many, mass spectrometry. It's true that PCR tests can detect the presence of some resistance genes. But the prevalence of these genes (e.g., mecA in S. aureus, vanA in E. faecium) is so high that doctors usually assume resistance and treat accordingly regardless of the test result. A negative result for a resistance gene does not necessarily mean that the strain is susceptible, as there can be new variants and new pathways for resistance that gene tests may not detect. Accordingly, no gene tests have been cleared by the FDA for determination of antibiotic susceptibility. The distinction between negative and susceptible is not always obvious to doctors, and the FDA has required the Cepheid MRSA PCR test to carry a label to that effect.

The basic problem is that antibiotic susceptibility and resistance are complex phenotypes that can't be reduced to a problem of detecting a few molecules or gene sequences. Resistance can occur through thickening or modification of the cell wall, chemical modification or mutation of ribosomes, or production of degradative enzymes and efflux pumps. Each of these mechanisms can have many variants and pathways, and new ones are always evolving. Even if (actually, when) it becomes possible to get an entire genome sequenced within a few hours, it will not be possible to read out a susceptible phenotype with high confidence. There are just too many possible genetic variants that would have to be validated first.

So for now and the indefinite future, ID-only rapid tests will continue to have limited clinical impact, and susceptibility testing will have to proceed by traditional methods: expose a bacterial strain to the antibiotics of interest, and observe the response. This process typically takes 2-3 days at present. Some methods to reduce this time are being developed, and I will write about them in a later post.

 

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Rapid Diagnostics

In previous posts I wrote about the three principal barriers to new antibiotic development: economics, biology and regulatory approval.

I'll add another. A really great diagnostic would be of immense help in executing clinical trials. Enrollment in trials is often a problem. Patients may be initially treated with an antibiotic other than the test or control antibiotic. The infecting bug may not be the one indicated for the new antibiotic. Or it may be equally susceptible to both the control and test antibiotic. All of these issues increase the cost and decrease the power of a clinical study.

A rapid diagnostic that identified the infecting bacteria and determined antibiotic resistance and susceptibility would go a long way to resolving these issues. Right now, standard methods require 2-3 days to return results, too late to be of use in trial enrollment.

What would a great bacterial infectious disease diagnostic device look like? As always, the ideal device would be perfectly accurate, give instant results with no specimen workup, and cost nothing. That's the fantasy anyway.

Having tried, succeeded (in getting regulatory clearance) and failed (in the marketplace) in developing such a device, I have a few thoughts about the challenges involved.

First, as always in our system, is economics. No one is going to develop a diagnostic device solely for the purpose of enabling clinical studies. There has to be a viable market for the device in routine clinical use. This requirement turns out to be a surprisingly severe constraint.

There are lots of visits to doctors offices and ERs for infectious disease complaints. But the vast majority of these are for non-lethal indications: urinary tract infections, wounds, sinusitis, otitis, bronchitis. At MicroPhage we looked long and hard at the case for developing a urinary tract infection (UTI) test. There are many millions of prescriptions written for these every year, and the rate of resistance of the principal pathogen (E. coli) to frontline antibiotics is high, 10-30%.

Sounds like a great business opportunity, right? Big market, high rates of resistance, lots of ineffective scrips being written. But what is the consequence of getting the antibiotic wrong? The patient will experience a couple additional days of discomfort, then call her doctor and get a different prescription. That's it.

How much would she (or her insurer) be willing to pay for a test to avoid this inconvenience? How long would she be willing to wait in the doctors office while a tech ran the test? After all, antibiotics are cheap and her time is valuable. The principal harm done is to further weaken the effectiveness of frontline antibiotics such as ciprofloxacin. That is a cost that is diffused throughout society, and no one is willing to pay to prevent it.

The story is much the same with wounds and most other infectious disease indications. There just really aren't that many indications where rapid identification and susceptibility results are critical to the patient's well-being. Hospital-acquired/ventilator-associated pneumonia is one. But that market is tiny and getting samples is hard.

Bacteremia is another critical indication. There are about 5 million positive blood cultures in the US per year (several per patient on average). About 100,000 patients will die. There is good evidence that getting the right antibiotics to the patient reduces length of stay and mortality for S. aureus bacteremia. But only about a million of those positive blood cultures are Gram-positive cocci in clusters, and are thus potential S. aureus bacteremias.

Venture capitalists simply don't get excited (greedy would be the less kind term) about market sizes less than a billion dollars. Even if you could charge $100 for your MRSA/MSSA test, and owned the entire market, you would fall well short of arousing the interest of serious money for developing a new technology.

And rest assured, few microbiology labs will spend anything like $100 per test. PCR MRSA tests, like Cepheid GeneXpert and BD GeneOhm, cost $25-75 on top of a capital outlay of $25-150K. They have been adopted by only a few percent of hospital micro labs. The MicroPhage MRSA/MSSA test was $50 and was adopted by about a dozen labs in the year that it was on the market. The attitude at Northwestern University Hospital, one of our clinical trial sites, was typical: "It's a nice test. I would buy it if it was $5."

That's unfortunate. Several very nice studies (Brown, Goff, Schweizer) show that getting the right antibiotics to S. aureus bacteremia patients in a timely fashion decreases mortality and length of stay in both the ICU and the hospital. Cutting just 1 or 2 days stay in the ICU pays for an awful lot of testing, even at $50 or $100 a pop.

So why are hospitals so unwilling to spend this money? After all, most bacteremias are hospital acquired, and so those extra costs (and deaths) are supposed to be the hospitals' responsibility. Even under the most conservative assumptions, rapid testing should be a great investment for hospitals.

The problem is that the costs are all borne by the micro lab, whose budget pays for the test and the staff to run it. The savings accrue to the hospital as a whole - no one gets to take credit for them, and thus no one is incentivized to champion rapid testing. Furthermore, the hospital has a strong incentive to game the system. If they attribute the extra care to causes other than the infection acquired in the hospital, then they can get fully reimbursed by insurers. Gaming ICD codes is much easier than implementing a new testing and reporting scheme. Everybody wins - if we define "everybody" as the hospital and micro lab. The patients and insurers not so much.

The bottom line here is that the market for rapid ID/AST is not great - markets are small and hospitals are reluctant customers at best. So long as antibiotics and antibiotic stewardship are not highly valorized there is little incentive to invest in the new technology needed to facilitate antibiotic clinical trial execution. There are also significant technical barriers, particularly with respect to prospects for a rapid AST, and I will discuss these in a future post.

 

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Glen Smith, 1929-2013

My father passed away at home on Friday July 5. He died at peace, without pain and surrounded by family. He always had a horror of institutionalization, and I am grateful that I was able to help him have a good death. I am especially grateful to Sangre de Cristo Hospice, who managed his pain and supported my mother with compassion and competence.

Both birth and death are over-medicalized in our country. You have to be assertive if you want these events to be a part of life, rather than become a source of medical procedures to be performed. My Dad's prostate cancer had been in remission for 16 years. When the source of his back pain was identified as bone metastases, he tried to make it clear to his oncologist that he did not want aggressive therapy, but only to die without suffering and without making his family suffer.

The oncologist talked him into a course of Lupron therapy (a testosterone antagonist), even though his testosterone levels were negligible. Lupron has fairly mild side effects compared to cytotoxic therapy. One of these is bone loss. So in addition to Lupron therapy, another procedure is added (phosphonate therapy), to minimize bone weakness. Phosphonates act as T-cell activators and often cause flu-like symptoms. My dad then spent 3 of his last 40 days in bed with fever, aches and nausea in order to mitigate the side effects of a therapy that had no chance of improving his life. Because that is the procedure. And performing procedures is what doctors do.

Nor did the oncologist consider the impact of asking a sick 84 year old man with severe back pain and COPD to come in to his office once a week or so. He seemed genuinely surprised to learn that this constituted any sort of hardship. It was only with reluctance that he agreed that hospice care was the best choice for my father.

I was not asking his permission, as I have spent too much time around doctors to be overly impressed by them. However for many patients, especially of my parents generation, acquiescence with no questions asked is the norm. This may be the most convenient arrangement for doctors, but it is essentially BS, and the sooner it changes the better off we all will be.

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WGS in the micro lab

Nucleic acid technologies are making steady inroads into the clinical microbiology lab as they get faster, better and cheaper. The logical endpoint of this development is the use of microbial genome sequencing as a diagnostic method. Given the pace of improvement in sequencing technology, the feasibility of routine sequencing of clinical isolates is inevitable. The question is whether this technology will add any value.

Writing in the Journal of Antimicrobial Chemotherapy, Torok and Peacock say the answer is yes: "...we believe that rapid whole bacterial genome sequencing has the potential to transform diagnostic clinical and public health microbiology in the not too distant future."

I am more skeptical and think the value of whole genome sequencing will be limited:

ID/Speciation: Genome sequencing is overkill. All the DNA information needed to speciate an isolate is contained in its ribosomal RNA genes. PCR and oligonucleotide hybridization methods return gold standard speciation results now. Additional sequence information will just be noise.

Epidemiology: Probably the best use of WGS information, as the additional sequence data allow the spread and evolution of strains to be tracked. This has already happened in the case of the KPC outbreak at NIH, and will become more common.

Resistance and susceptibility testing: A seductive but terrible idea. The response of bacteria to antibiotics is a complex phenotype, involving many genes. Reliably predicting this response would require a thorough understanding of the actions of all these genes. Even more difficult, it would require us to be able to predict the effect of various mutations in these genes on their activity. For example, a point mutation that changes the amino acid sequence of a metallo beta lactamase could make it more active, less active, or have no effect at all. There are billions of possible mutations in hundreds of genes that would have to be accounted for in order to reliably predict antibiotic response. This is not going to happen soon, or probably ever. More to the point, what actionable information would WGS provide that phenotypic susceptibility testing does not?

Don't get me wrong, I love this technology. I wish it had been around when I was in grad school - synthesizing oligos manually and then sequencing them by the Maxam-Gilbert method was some of the most tedious lab work I've ever done. But the application of WGS to clinical microbiology is likely to be much more hype than substance. Even the epidemiological applications could potentially be done just as well by much more old-fashioned methods such as phage typing (if anyone still knew how to do this). Just because it's new doesn't mean it's better.

 

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Why there aren't more antibiotics, part 3

Lack of financial incentives, and problematic biology are two big reasons for the lack of new antibiotics. The third is the difficulty of gaining regulatory approval.

To be marketed in the US, drugs must be cleared by the FDA, which requires proof that they are safe and effective. The highest-quality evidence of safety and efficacy comes from randomized and blinded placebo-controlled clinical trials: patients are randomly assigned to be treated with the new agent or a placebo. Neither the patient nor the caregivers know who is given a placebo and who is given the drug - this insures that all aspects of treatment and evaluation are unbiased. Trials of new antibiotics are never done this way, for reasons I'll explain below.

Doing clinical trials has an inherent ethical danger - they are essentially experiments on human beings. The Nuremburg code was developed after World War II in response to the horrors of human experimentation carried out by the Nazis. One of the principles of the code is that there must be informed consent. Another, one that is particularly relevant to the conduct of antibiotic trials, is that the participants must have some expectation of therapeutic benefit commensurate with risk. Both of these principles were violated by the notorious Tuskeegee syphilis experiment. Effective treatment was withheld from the subjects without their knowledge, so that the natural course of the disease could be better understood.

When no treatment exists, or if it is relatively ineffective, clinical trial design is fairly straightforward. One group of patients is given the current ineffective therapy, and the other is given the new therapy. Demonstrating the superiority of the new treatment in these circumstances is quite feasible.

Antibiotics have historically been very effective, curing the large majority of patients who have bacterial infections. Thus withholding antibiotic therapy from one group of patients (as in the Tuskeegee experiments) is simply out of the question. The control group in an antibiotic clinical trial typically receives an antibiotic that is expected to be effective against the infection. In this type of trial, the most that the new treatment can hope to show is that it is not inferior to the control treatment. This is not the sort of conclusion that gets your new drug breathless write-ups about being a breakthrough - the kind of publicity that new anti-cancer therapies that extend survival by a few weeks or months often get. This publicity matters because it affects our willingness to pay premium prices, and thus create financial incentives.

Noninferiority is a complex statistical concept with a somewhat arbitrary definition, and it often relies on historical comparisons to trials that may have been performed decades earlier. And again, what you'd really like from a newly approved drug is a demonstration that it's better than the current standard of care. Otherwise, why bother to switch?

This aspiration, among others, has led the FDA to ask for demonstrations of superiority as a condition for clearance, even when demonstrating superiority was not really feasible. Replidyne's application to clear faropenem for bronchitis, pneumonia and wound infections was deemed not sufficient for approval, despite data from 11 clinical trials that enrolled 5000 patients. These trials were designed to show non-inferiority; by the time they were done the FDA decided it wanted superiority. Replidyne did not survive this raising of the bar and eventually folded, taking many millions of investors dollars with it.

Given the difficulty of finding new antibiotics, the relatively low return on investment, and the considerable regulatory risk, it is no surprise that many pharma companies have terminated their antibiotic development programs.

The Infectious Disease Society of America is particularly troubled by regulatory roadblocks, and particularly determined to to provide alternative pathways to clear drug candidates. The IDSA is pushing for Limited Population Antibacterial Drug (LPAD) labeling, which would require less extensive clinical validation, and be restricted to seriously ill patients with few therapeutic options. In addition, IDSA has published a white paper proposing improved and feasible clinical trial designs.

Both of these approaches would benefit greatly from the availability of rapid diagnostics that could determine antibiotic resistance and susceptibility in a few hours. These companion diagnostics would identify patients who are at risk of treatment failure for first-line antibiotics, and thus are most likely to see a benefit from new drug entities. More about that in future posts.

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Hype Watch July 1

The Facts: A nanoscale cantilever device can detect differential responses of bound bacteria to antibiotics through changes in oscillation frequency.

The Hype: "Thanks to this method, it is quick and easy to determine if a bacteria has been effectively treated by an antibiotic.... Easily used in clinics..." Science Daily

The Reality: Development of rapid diagnostics for ID/AST (identification/antibiotic susceptibility testing) is not being held back by a lack of awesome biosensor technologies. Those are as common as warts on a witch. It's the pre-analytic steps that are the problem. The indications for which rapid ID/AST are really needed either have vanishingly low levels of bacteria (bloodstream infections) or samples in which pathogens are mixed with commensals (pneumonia).

The nano-cantilever offers no obvious innovation in bacterial ID. Although it detected a signal from just a few hundred bacteria, the sample applied held 10e5 cells, presumably at a high concentration, 10e7/ml or more. Since most positive bacteremia samples have less than 1 bacterial cell per mL, there is a 7 log gap in current vs needed sensitivity.

The verdict: if the pre-analytic problem can be solved and a method of rapid ID can be coupled to it, then nano-cantilevers could potentially give AST results in minutes, rather than hours or days. That's a pretty big "if".

 

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