Why Nobody Can Justify Building the Medicine We’ll Need Most
In April 2019, a small California biotech called Achaogen filed for bankruptcy. Ten months earlier, the company had done something genuinely rare: it won FDA approval for a new antibiotic, plazomicin, aimed at drug-resistant infections that had almost no other treatment options. The drug worked. The science was sound. The approval was real. And within a year, the company that built it was gone, its assets auctioned off for a fraction of what it cost to develop. By the end of its first full year on the market, the drug had brought in $800,000 in sales. Its intellectual property later sold for $16 million, against hundreds of millions spent getting it there.
Achaogen was not an outlier. Since 2009, five of the fifteen antibiotics approved by the FDA have seen their commercial value fall to essentially zero. Within a single year, 2019, three antibiotic-focused companies with real, approved products, Achaogen, Aradigm, and Melinta Therapeutics, went bankrupt. Melinta had four antibiotics on the market and was still growing sales when it collapsed. Every one of these companies did the hard part. They discovered a molecule, survived years of clinical trials, and cleared the FDA, one of the most demanding regulators in the world. Then they went out of business anyway.
The usual explanation for the shrinking antibiotic pipeline is that bacteria evolve, old drugs stop working, and scientists need to invent new ones faster. That’s true, but it treats the shortage as a supply problem, as if the missing ingredient were cleverer chemistry. It isn’t. Achaogen didn’t fail in the lab. It failed after approval, in the market. The bottleneck moved downstream years ago, and understanding why requires looking at something stranger than resistant bacteria: what happens when a drug is designed, on purpose, not to be used.
Why success works backward here
A new antibiotic aimed at dangerous, resistant bacteria isn’t supposed to be widely prescribed. Hospital stewardship committees and infectious disease doctors deliberately hold it in reserve, using it only when older drugs fail, so that bacteria don’t get the chance to evolve resistance to the new one too. That’s correct medical practice. It’s also, from a business standpoint, close to a death sentence, because the people whose job it is to protect the drug’s effectiveness are also, without meaning to, restricting the volume that would make the drug profitable. A pharmacy committee doing its job correctly and a company losing money are the same event, seen from two different desks.
This is the actual engine of everything else in this story. Every other successful pharmaceutical product hopes demand grows. A cancer drug, a blood pressure medication, a GLP-1 for weight loss: the business plan behind each one assumes more patients, longer use, repeat prescriptions, ideally for years. A good antibiotic runs the opposite calculation. Doctors want to prescribe it as rarely as possible, for as short a time as possible, and then never need it again for that patient. The better the drug is at doing its job, the smaller its future looks. No other category of medicine is built to want less of itself.
Why the usual playbook doesn’t work here
Every standard tool the pharmaceutical industry uses to make a drug profitable runs into trouble here. Patents don’t help much, because a ten-day course prescribed sparingly generates little revenue no matter how many years of exclusivity remain on the label. Premium pricing doesn’t help either, since a short course rarely supports the price tag that a chronic-disease drug commands over a decade of refills. And once the patent does expire, generics take over almost immediately and flatten what little margin was left.
The comparison that makes this concrete: a statin or a GLP-1 patient might fill the same prescription every month for twenty years, generating twenty years of revenue off a single diagnosis. An antibiotic patient takes the drug for ten days and, if it works, never needs that specific drug again. Two products, similar development cost, wildly different lifetime value per patient. Getting an antibiotic through clinical trials and FDA approval typically takes ten to fifteen years and costs in the range of $600 to $700 million, according to estimates from CARB-X executive director Kevin Outterson and physician-researcher John Rex. That’s the same order of cost as a blockbuster chronic-disease drug, attached to a fraction of the revenue.
It’s not surprising, then, that big pharmaceutical companies left. Since the 1990s, roughly eighteen major drugmakers have exited antibacterial research. AstraZeneca sold its antibiotics unit to Pfizer in 2016. Sanofi, Allergan, and Novartis all shut down their programs within the next two years, Novartis citing a decision to “prioritize resources in other areas” as it laid off 140 researchers. By 2020, only a handful of large companies still had active antibiotic programs, and industry estimates put the share of new antibacterial candidates coming from small biotechs at around 80 percent. That matters because small biotechs are the companies least able to absorb a single expensive failure. The industry didn’t just lose interest in antibiotics. It handed the field to the players with the thinnest margin for error, then watched several of them go bankrupt anyway.
Why this matters beyond antibiotics themselves
It’s easy to file this under public health and move on, but antibiotics aren’t really a category of medicine people take. They’re closer to infrastructure that makes the rest of medicine possible. Organ transplants depend on suppressing the immune system, which leaves patients exposed to infection unless antibiotics are there to cover them. Chemotherapy does the same. So does a hip replacement, a C-section, or a routine appendectomy gone slightly wrong. None of these procedures strictly require a new antibiotic to work. All of them become more dangerous without a reliable backstop of drugs that still work against resistant bacteria. Economists call this kind of value option value: what a resource is worth by existing and being ready, independent of how often it’s actually used.
Step back and the shape of the problem is bigger than antibiotics. Markets are very good at rewarding goods whose value rises with use: subscriptions, chronic prescriptions, software, anything a customer returns to again and again. Antibiotics belong to a much narrower class of goods, ones whose value comes from remaining effective until the rare moment they’re actually needed. That class needs different economic rules, because the ordinary rule, sell more to earn more, works directly against the goal.
What a fix would actually have to do
Any real solution has to answer that specific problem: how do you pay a company for keeping a drug in reserve, when the entire point of the drug is that it barely gets used. The United Kingdom’s NHS has been testing one answer since 2022, when it signed the first “subscription” contracts with Shionogi and Pfizer for two new antibiotics, paying a fixed annual fee tied to the drug’s assessed value to the health system rather than paying per prescription. In effect, the government pays for the drug to exist and be ready, not for how many boxes move. The pilot was judged successful enough that the NHS made the model permanent in 2024 and opened a broader tender worth close to £1.9 billion over sixteen years. In the United States, the equivalent proposal, the PASTEUR Act, would let the federal government sign similar contracts. It has been introduced in Congress four times since 2020, most recently in February 2026 with bipartisan sponsorship, and has not yet passed. Both efforts are aimed at the same target: breaking the link between prescriptions and revenue, because as long as that link exists, doing the medically correct thing and staying in business will keep pulling in opposite directions.
Back to the paradox
None of this is a story about markets malfunctioning. Pharmaceutical companies behaved exactly as rational actors should when the incentives pointed them elsewhere. Achaogen didn’t go bankrupt because anyone made a mistake. It went bankrupt because it built something the system was, by design, supposed to use as little as possible. The drug worked, stewardship did its job, and the company still lost.
The same shape shows up anywhere a society needs something to exist far more than it needs it to be used: vaccine stockpiles ahead of a pandemic that hasn’t happened yet, flood defenses built for a storm that might not arrive this decade, backup power for a grid that mostly stays up. Antibiotics are just the clearest version of it, because the mechanism is so direct and the evidence, bankruptcy filings with a drug’s name on them, is so hard to argue with. Until paying for availability becomes as normal as paying for volume, the medicine most likely to save us in the next crisis will keep being the one nobody can currently justify building.
