Can a federal agency engage in long-term strategic partnerships with business? Yes.

ASPR’s Biomedical Advanced Research and Development Authority (BARDA), for instance, is pioneering an innovative approach to collaboration that uses Other Transaction Authority (OTA for short) to create flexible business partnerships between government and industry. Partnerships formed under OTA allow both parties to invest in the development of a portfolio of products for biodefense and to combat the growing public health threat of antibiotic resistance. This approach allows the partners to operate strategically and to proceed even in cases where antibacterial drug candidates fall out during the development process.

The ability of government to enter into such relationships with industry comes at a critical time in the practice of medicine. With the incidence of antibiotic resistance rising, once treatable infections are becoming untreatable and threatening routine medical procedures which depend on available and effective antibiotics.

The CDC estimated that in the U.S alone, antibiotic resistant bacteria are responsible for two million infections and 23,000 deaths annually with an estimated annual economic burden of $35 billion on the healthcare system.

At the same time, the pace of new antibiotic drug development has slowed. Many pharmaceutical companies have been withdrawing from antibacterial R&D due to the significant scientific and commercial market challenges leading to a lower return on investment than in many other therapeutic areas.

With the recent focus on antimicrobial resistance, we’re seeing increased interest from industry in partnering with the government to develop new medical countermeasures – vaccines, drugs, diagnostics and other medical products for emergencies. HHS’ Other Transaction Authority allows for the creation of a strategic alliance between government and industry in which the cost and risk are shared between the two.

For companies large enough to have drug portfolios, this kind of alliance with BARDA could offer:

1. Flexible portfolio-based funding: The successful development of new antibacterials is a significant business risk; some estimates are that 16 promising antibiotic drug candidates enter clinical development for every drug product that gets approved. With agreements under OTA, the partners share the cost of developing a portfolio of products and jointly decide to move candidates into and out of the portfolio based on product performance, technical risk, and programmatic need. This approach increases the probability of bringing urgently needed new antibacterials to market.

In contrast, asset-specific funding – for example a traditional government contract to develop a single drug – lacks the flexibility needed to reposition funds when a drug candidate fails or when public health priorities change.

Both of BARDA’s OTA partners, GlaxoSmithKline and AstraZeneca, have portfolios of potential candidates under development that meet the dual needs of biodefense and antimicrobial resistance. The portfolio approach is a fundamental difference between an agreement and a traditional government contract – and an advantage.

2. Consortia: Agreements under OTA allow the company and the government to enter into consortia with multiple industry partners. Through consortia, the companies can identify antibacterial candidates in development by other companies that could be brought in to the portfolio through in-licensing, co-development or alliances with other companies. The probability is high that antibacterial candidates would enter the portfolio this way.
   
   
3. Time & cost savings:
   Agreements under OTA also allow the government and its industry partner to decide jointly to replace an underperforming candidate in the portfolio with a promising new candidate. This flexibility results in a significant time, effort and cost savings to both partners.

In contrast, a traditional federal contract often requires significant costs and time to modify or close-out if the government terminates a contract (for example, due to product failure) and then award a new contract to develop a new promising drug candidate.

4. Cost Sharing: The industry cost to bring a single medical product to the market can exceed hundreds of millions dollars. With agreements under OTA, BARDA can provide steady, non-dilutive funding over multiple years. For example in this week’s agreement with AstraZeneca, BARDA could provide up to $170 million over five years and the company agrees to cover the remaining costs to develop the drugs in the portfolio.

When licensed, the new antibiotics will become available on the commercial market which means not only a return on investment for the company but also a lower long-term cost for taxpayers since less or none of the product would need to be stockpiled by the government.

5. True collaboration: With agreements under OTA, both partners are represented on joint scientific or technical oversight committees. BARDA brings insight about the nation’s biodefense and public health needs and ensures that there is a sound public health rationale for portfolio decisions. The joint oversight committee meets regularly to monitor the progress of each product in the portfolio. The committee endorses potential new projects, agrees on how funding should be allocated, and evaluates overall performance.

There’s quite a bit of support behind this approach. The 2015 President’s National Action Plan for Combating Antibiotic-Resistant Bacteria called for forming public-private partnerships with pharmaceutical and biotechnology companies to advance the development of antibiotics through a portfolio approach. This plan specifically called on BARDA to create at least one additional portfolio partnership with a pharmaceutical or biotechnology company by March 2016.

Although we’ve met the 2015 President’s National Action Plan for Combating Antibiotic-Resistant Bacteria  goal of forming public-private partnerships with industry with the new AstraZeneca agreement, we’re always looking for solid partners.

Other federal plans call for innovative approaches for partnering with industry, too, including the strategic plan from the Public Health Emergency Medical Countermeasure Enterprise (a coordinating body with members from BARDA, NIH, DoD, VA, FDA, and CDC), the National Health Security Strategy and the BARDA Strategic Plan.

That’s because partnerships – whether they’re under OTA or other cost-sharing agreements – reduce the risk and burden for everyone in developing the broad spectrum antimicrobials urgently needed to counter antibiotic resistance.

Forming public-private partnerships under OTA is a unique way to ensure that the public has, and will continue to have, treatment options for biodefense and to combat the growing threat of multi-drug resistant bacterial infections.