America’s Secret Crisis Is a Profit Gold Mine

Today, I want to tell you about a class of drugs we’ve been overprescribed — but also underprescribed.

These drugs changed the course of the 20th century — they even affected the outcome of that century’s bloodiest war.

The United States undertook the equivalent of a pharmaceutical Manhattan Project in order to learn how to make enough of the first of this new type of drug in order to protect Allied soldiers in WWII.

The solution was eventually found. It was identified as a mold growing on a cantaloupe in Peoria, Illinois.

Though discovered over a decade earlier by Scottish scientist Alexander Fleming, this particular mold lent itself to the mass production of this drug.

If not for the mass production of this drug, thousands of American soldiers would never have made it home to their families at the end of the war. Battle wound infection and tropical disease would have taken their lives.

That drug was penicillin, and the drug class is antibiotics.

Penicillin was just the first, but it would be far from the last.

Its discovery sent researchers scurrying in search of other antibiotics, digging through soil samples, trash heaps and even the occasional overripe cantaloupe. Penicillin was originally found to inhibit bacterial growth in a petri dish.

The hunt was on for organisms that secreted substances that killed bacteria.

But as Fleming noted in his Nobel lecture, “It is not difficult to make microbes resistant to penicillin in the laboratory by exposing them to concentrations not sufficient to kill them, and the same thing has occasionally happened in the body.”

Antibiotics should be used sparingly and only when they are clearly needed in order to reduce or prevent the creation of resistant bacteria… but they get handed out like candy to Halloween trick-or-treaters.

We’ve overprescribed, which exacerbates a growing problem: antibiotic resistance.

Even worse, we use vast amounts of antibiotics in the agricultural industry. It gets put in feed, water, everything.

This is a really bad idea!

For many years, we have overcome this problem because we’ve discovered enough new antibiotics to stay one step ahead of evolving bacterial resistance.

But we’re still overprescribing old antibiotics like they’re party favors.

Plus, we’ve had a dearth of new antibiotics for many years. It’s become harder to innovate in this field.

A hopeful trick — slightly modifying the chemical structure of an existing antibiotic — has yielded diminishing returns.

Thus, the rate of discovery, development and commercialization of new antibiotics has fallen off a cliff.

Pharmaceutical companies have determined that the returns aren’t worth the costs and the risk of failure. Thus, we’ve been underprescribed potential new drugs that could heal us.

Countless new drugs haven’t seen the light of day — even drugs that show promise in a test tube, or maybe even in a few human test subjects.

Some of these drugs could have eventually helped many sick people.

But pharma is a business. It’s not the pure pursuit of science. A new drug has to hold the potential to generate a profit for its discoverer and developer.

And a pharma company must take into account the regulatory framework under which it operates.

This lack of innovation means the bad old days from before penicillin are coming back.

In those times, people could die from something as simple as an infected scratch — and many did. Surgery was also far more dangerous in the absence of a way to block the growth of an errant microbe that found itself on the operating table — despite every antiseptic effort.

But people in power have noticed the problem. Congress has introduced FDA reforms to ease the development and improve the returns for pharmaceutical companies that develop new drugs that save lives by killing the microbes.

President’s Trump’s push to open the drug market further bodes well for the future of drug development.

He wants to lower the cost of new drugs, while making it easier to bring new drugs to market.

He’s a strong proponent of improving drug regulation, and his new FDA chief is widely expected to be a reformer.

And we need new drugs desperately. On the current trend, we’re on track to have more people dying from “superbugs” than cancer by 2050.

The need is there. And the means to make it easier is on the horizon. Companies that can innovate a new wonder-drug to combat the growing antibiotic resistance crisis will win big. And biotech investors will reap the rewards.

To a bright future,

Ray Blanco
for The Daily Reckoning

The Daily Reckoning