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Time for a change in how new antibiotics are reimbursed: Development of an insurance framework for funding new antibiotics based on a policy of risk mitigation

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  • Towse, Adrian
  • Hoyle, Christopher K.
  • Goodall, Jonathan
  • Hirsch, Mark
  • Mestre-Ferrandiz, Jorge
  • Rex, John H.

Abstract

Healthcare systems depend on the availability of new antibiotics. However, there is a lack of treatments for infections caused by multidrug resistant (MDR) pathogens and a weak development pipeline of new therapies. One core challenge to the development of new antibiotics targeting MDR pathogens is that expected revenues are insufficient to drive long-term investment. In the USA and Europe, financial incentives have focussed on supporting R&D, reducing regulatory burden, and extending market exclusivity. Using resistance data to estimate global revenues, we demonstrate that the combined effects of these incentives are unlikely to rekindle investment in antibiotics. We analyse two supplemental approaches: a commercial incentive (a premium price model) and a new business model (an insurance model). A premium price model is familiar and readily implemented but the required price and local budget impact is highly uncertain and sensitive to cross-sectional and longitudinal variation in prevalence of antibiotic resistance. An insurance model delivering risk mitigation for payers, providers and manufacturers would provide an incentive to drive investment in the development of new antibiotics while also facilitating antibiotic conservation. We suggest significant efforts should be made to test the insurance model as one route to stimulate investment in novel antibiotics.

Suggested Citation

  • Towse, Adrian & Hoyle, Christopher K. & Goodall, Jonathan & Hirsch, Mark & Mestre-Ferrandiz, Jorge & Rex, John H., 2017. "Time for a change in how new antibiotics are reimbursed: Development of an insurance framework for funding new antibiotics based on a policy of risk mitigation," Health Policy, Elsevier, vol. 121(10), pages 1025-1030.
    • Handle: RePEc:eee:hepoli:v:121:y:2017:i:10:p:1025-1030
    DOI: 10.1016/j.healthpol.2017.07.011
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    References listed on IDEAS

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    1. Adrian Towse;Jimena Ferraro;Jorge Mestre-Ferrandiz, 2017. "Incentives for New Drugs to Tackle Anti-Microbial Resistance," Briefing 001842, Office of Health Economics.
    2. Hannah Kettler;Adrian Towse, 2002. "Public Private Partnerships for Research and Development: Medicines and Vaccines for Diseases of Poverty," Monograph 000479, Office of Health Economics.
    3. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    4. Jorge Mestre-Ferrandiz;Jon Sussex;Adrian Towse, 2012. "The R&D Cost of a New Medicine," Monograph 000135, Office of Health Economics.
    5. Priya Sharma;Adrian Towse, 2011. "New Drugs to Tackle Antimicrobial Resistance: Analysis of EU Policy Options," Monograph 000184, Office of Health Economics.
    6. Adrian Towse & Priya Sharma, 2011. "Incentives for R&D for New Antimicrobial Drugs," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(2), pages 331-350.
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    Cited by:

    1. Josie Coburn & Frederique Bone & Andy C. Stirling & Michael M. Hopkins & Jorge Mestre-Ferrandiz & Stathis Arapostathis & Martin J. Llewelyn, 2021. "Appraising research policy instrument mixes: a multicriteria mapping study in six European countries of diagnostic innovation to manage antimicrobial resistance," SPRU Working Paper Series 2021-03, SPRU - Science Policy Research Unit, University of Sussex Business School.
    2. Coburn, Josie & Bone, Frederique & Hopkins, Michael M. & Stirling, Andy & Mestre-Ferrandiz, Jorge & Arapostathis, Stathis & Llewelyn, Martin J., 2021. "Appraising research policy instrument mixes: a multicriteria mapping study in six European countries of diagnostic innovation to manage antimicrobial resistance," Research Policy, Elsevier, vol. 50(4).
    3. Hennessy, David A., 2018. "Managing Derived Demand For Antibiotics In Animal Agriculture," 2018 Annual Meeting, August 5-7, Washington, D.C. 274359, Agricultural and Applied Economics Association.
    4. Barlow, Euan & Morton, Alec & Megiddo, Itamar & Colson, Abigail, 2022. "Optimal subscription models to pay for antibiotics," Social Science & Medicine, Elsevier, vol. 298(C).
    5. Irene Anna Lambraki & Melanie Cousins & Tiscar Graells & Anaïs Léger & Patrik Henriksson & Stephan Harbarth & Max Troell & Didier Wernli & Peter Søgaard Jørgensen & Andrew P Desbois & Carolee A Carson, 2022. "Factors influencing antimicrobial resistance in the European food system and potential leverage points for intervention: A participatory, One Health study," PLOS ONE, Public Library of Science, vol. 17(2), pages 1-19, February.
    6. Itamar Megiddo & Dusan Drabik & Tim Bedford & Alec Morton & Justus Wesseler & Ramanan Laxminarayan, 2019. "Investing in antibiotics to alleviate future catastrophic outcomes: What is the value of having an effective antibiotic to mitigate pandemic influenza?," Health Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 556-571, April.
    7. Nadine Bongaerts & Zainab Edoo & Ayan A. Abukar & Xiaohu Song & Sebastián Sosa-Carrillo & Sarah Haggenmueller & Juline Savigny & Sophie Gontier & Ariel B. Lindner & Edwin H. Wintermute, 2022. "Low-cost anti-mycobacterial drug discovery using engineered E. coli," Nature Communications, Nature, vol. 13(1), pages 1-11, December.
    8. Hajkowicz, Stefan & Naughtin, Claire & Sanderson, Conrad & Schleiger, Emma & Karimi, Sarvnaz & Bratanova, Alexandra & Bednarz, Tomasz, 2022. "Artificial intelligence for science – adoption trends and future development pathways," MPRA Paper 115464, University Library of Munich, Germany.

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