Last checked at 
(Repeats May 27 story with no changes)
By Bill Berkrot
NEW YORK, May 27 (Reuters) - Drugmakers are renewing effortsto develop medicines to fight emerging antibiotic-resistantbacteria, but creating new classes of drugs on the scale neededis unlikely to happen without new financial incentives to makethe effort worth the investment, companies and industry expertssaid.
American military researchers on Thursday announced thefirst U.S. case of a patient with an infection found to beresistant to the antibiotic colistin, the drug often held inreserve for when all else fails.
That put a spotlight on the urgent need for new medicinesthat can combat what health officials have called "nightmarebacteria."
Drugmakers on Friday acknowledged that in the absence of anew way of compensating them, it simply does not make economicsense to pour serious resources into work on new antibiotics.
"The return on investment based on the current commercialmodel is not really commensurate with the amount of effort youhave to put into it," said David Payne, who heads GlaxoSmithKline PLC's antibiotics drug group.
Other pharmaceutical companies expressed a similarsentiment.
In January, some 80 drugmakers and diagnostics companies,including Pfizer Inc, Merck & Co, Johnson &Johnson and Glaxo, signed a declaration calling forcooperation among governments and companies to create incentivesto revitalize research and development of new antibiotics.
It proposed a new business model in which profit would notbe linked to higher sales. For example, governments and healthorganizations could offer lump-sum rewards for development of asuccessful new antibiotic. A British government panel suggestedthis month that drug companies be offered up to $1.5 billion forsuccessful development of a new antibiotic.
In the United States alone, antibiotic-resistant bacteriacauses 2 million serious infections and 23,000 deaths annually,according to U.S. health officials.
Unrestrained overuse of current antibiotics by doctors andhospitals, often when they are not needed, and widespreadantibiotic use in food livestock have contributed to theevolution of antibiotic-resistant bacteria.
But in recent years, major drugmakers have poured most oftheir research dollars into highly profitable medicines to fightcancer, rare diseases and hepatitis C. These drugs not onlycommand high prices, they also are typically used far longerthan antibiotics.
And the companies, which have come under intense criticismin recent months for continually raising prices on populardrugs, say it costs about as much to develop a new antibiotic asit does to bring to market new cancer drugs that can commandmore than $100,000 a year per patient.
"Drug companies can't make an economic case for investing insuperbug drugs," said Erik Gordon, a professor at the Universityof Michigan's Ross School of Business.
Gordon said governments and foundations need to get moreinvolved in research and funding to spearhead efforts to combatthe problem.
To critics who argue that U.S. companies have enormous cashreserves that could be used to address a public health crisis,drugmakers say they have a fiduciary duty to shareholders tomaximize profits.
ON THE R&D FRONT LINES
One reason companies are calling for alternativecompensation is that aggressive sales and use of new antibioticscould help create ever more dangerous bacteria that developresistance to the new medicines.
Glaxo and Merck are among the large pharmaceutical companiesdeveloping new antibiotics they hope can beat back resistantbugs, while Pfizer is working on vaccines aimed at reducing theneed for their use.
Industry experts said small, lesser-known companies withpromising approaches to tackling resistant superbugs included:Entasis Therapeutics, an AstraZeneca PLC spinoff, TetraphasePharmaceuticals Inc ; and Achaogen Inc.
"We believe plazomicin, our lead drug in late-stagedevelopment, has the potential to play an important role intreating this dreaded superbug," Achaogen Chief ExecutiveKenneth Hillan said.
Allan Coukell, an antibiotics expert at the Pew CharitableTrusts nonprofit research and policy organization, said what isneeded is a wave of new drugs based on new chemistry or thatwork in new ways.
"Most of what's being developed are variations on drugs thatwe've had for decades," Coukell said.
Pew has outlined what its calls a scientific roadmap tocreate a body of work around new drug discovery that companiesand academic researchers could draw upon to help jumpstart theprocess of finding new antibiotics.
Glaxo said its experimental antibiotic gepotidacin, inmidstage testing, belongs to an entirely new class ofantibacterials.
"Based on that, we're predicting it would work againstinfections that could be caused by bacteria that are resistantto available antibiotics," Payne said.
Other companies with late-stage studies underway forantibiotics include: Cempra Inc, whose drug wasrecently validated in a Japanese trial; Medicines Co ;and Paratek Pharmaceuticals Inc. J&J is also puttingmoney into battling antibiotic resistance.
"If there is a bright side, it is that the worldpolicymakers and health leaders have focused on this issue likenever before," Coukell said. "But we've got a long way to go." (Reporting by Bill Berkrot, Caroline Humer and Ransdell Piersonin New York and Natalie Grover and Amrutha Penumundi inBangaluru; Editing by Eric Effron and Will Dunham)
