IDEAS home Printed from https://ideas.repec.org/a/eee/socmed/v298y2022ics0277953622001241.html
   My bibliography  Save this article

Optimal subscription models to pay for antibiotics

Author

Listed:
  • Barlow, Euan
  • Morton, Alec
  • Megiddo, Itamar
  • Colson, Abigail

Abstract

Novel subscription payment schemes are one of the approaches being explored to tackle the threat of antimicrobial resistance. Under these schemes, some or all of the payment is made via a fixed “subscription” payment, which provides a funder unlimited access to the treatment for a specific duration, rather than relying purely on a price per pill. Subscription-based schemes guarantee pharmaceutical firms income that incentivises investment in developing new antibiotics, and can promote responsible stewardship. From the pharmaceutical perspective, revenue is disassociated from sales, removing benefits from push marketing strategies. We investigate this from the funder perspective, and consider that the funder plays a key role in promoting responsible antibiotic stewardship by choosing the price per pill for providers such that this encourages appropriate antibiotic use. This choice determines the payment structure, and we investigate the impact of this choice through the lens of social welfare. We present a mathematical model of subscription payment schemes, explicitly featuring fixed and volume-based payment components for a given treatment price. Total welfare returned at a societal level is then estimated (incorporating financial costs and monetised benefits). We consider a practical application of the model to development of novel antibiotic treatment for Gonorrhoea, and examine the optimal treatment price under different parameterisations. Specifically, we analyse two contrasting scenarios - one where a new antibiotic's prioritised role is reducing transmission, and one where a more pressing requirement is conserving the antibiotic as an effective last defence. Critically, this analysis demonstrates that effective roll-out of a subscription payment scheme for a new antibiotic requires a comprehensive assessment of the benefits gained from treatment. We discuss the insights this work presents on the nature of these payment schemes, and how these insights can enable decision-makers to take the first steps in determining effective structuring of subscription payment schemes.

Suggested Citation

  • Barlow, Euan & Morton, Alec & Megiddo, Itamar & Colson, Abigail, 2022. "Optimal subscription models to pay for antibiotics," Social Science & Medicine, Elsevier, vol. 298(C).
    • Handle: RePEc:eee:socmed:v:298:y:2022:i:c:s0277953622001241
    DOI: 10.1016/j.socscimed.2022.114818
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0277953622001241
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.socscimed.2022.114818?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Pedro Pita Barros, 2011. "The simple economics of risk‐sharing agreements between the NHS and the pharmaceutical industry," Health Economics, John Wiley & Sons, Ltd., vol. 20(4), pages 461-470, April.
    2. Markus Herrmann & Bruno Nkuiya, 2017. "Inducing optimal substitution between antibiotics under open access to the resource of antibiotic susceptibility," Health Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 703-723, June.
    3. Naveed Chehrazi & Lauren E. Cipriano & Eva A. Enns, 2019. "Dynamics of Drug Resistance: Optimal Control of an Infectious Disease," Operations Research, INFORMS, vol. 67(3), pages 619-650, May.
    4. Joanna Coast & Richard Smith & Anne‐Marie Karcher & Paula Wilton & Michael Millar, 2002. "Superbugs II: how should economic evaluation be conducted for interventions which aim to contain antimicrobial resistance?," Health Economics, John Wiley & Sons, Ltd., vol. 11(7), pages 637-647, October.
    5. Mark Gersovitz & Jeffrey S. Hammer, 2003. "Infectious Diseases, Public Policy, and the Marriage of Economics and Epidemiology," The World Bank Research Observer, World Bank, vol. 18(2), pages 129-157.
    6. Herrmann, Markus, 2010. "Monopoly pricing of an antibiotic subject to bacterial resistance," Journal of Health Economics, Elsevier, vol. 29(1), pages 137-150, January.
    7. Joanna Coast & Richard D. Smith & Michael R. Millar, 1996. "Superbugs: Should antimicrobial resistance be included as a cost in economic evaluation?," Health Economics, John Wiley & Sons, Ltd., vol. 5(3), pages 217-226, May.
    8. Stephanie M Fingerhuth & Sebastian Bonhoeffer & Nicola Low & Christian L Althaus, 2016. "Antibiotic-Resistant Neisseria gonorrhoeae Spread Faster with More Treatment, Not More Sexual Partners," PLOS Pathogens, Public Library of Science, vol. 12(5), pages 1-15, May.
    9. Gregory J. Critchley & Gregory S. Zaric, 2019. "The impact of pharmaceutical marketing on market access, treatment coverage, pricing, and social welfare," Health Economics, John Wiley & Sons, Ltd., vol. 28(8), pages 1035-1051, August.
    10. Coast, J. & Smith, R. D. & Millar, M. R., 1998. "An economic perspective on policy to reduce antimicrobial resistance," Social Science & Medicine, Elsevier, vol. 46(1), pages 29-38, January.
    11. Reza Mahjoub & Fredrik Ødegaard & Gregory S. Zaric, 2018. "Evaluation of a pharmaceutical risk‐sharing agreement when patients are screened for the probability of success," Health Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 15-25, January.
    12. 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.
    13. Simpkin, Victoria L. & Renwick, Matthew J. & Kelly, Ruth & Mossialos, Elias, 2017. "Incentivising innovation in antibiotic drug discovery and development: progress, challenges and next steps," LSE Research Online Documents on Economics 86434, London School of Economics and Political Science, LSE Library.
    14. Kevin Outterson & Unni Gopinathan & Charles Clift & Anthony D So & Chantal M Morel & John-Arne Røttingen, 2016. "Delinking Investment in Antibiotic Research and Development from Sales Revenues: The Challenges of Transforming a Promising Idea into Reality," PLOS Medicine, Public Library of Science, vol. 13(6), pages 1-7, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Heyen, Nils B. & Zenker, Andrea & Aichinger, Heike & Bratan, Tanja & Kaufmann, Tanja & Schnabl, Esther, 2024. "Innovation without growth? Exploring the (in)dependency of innovation on economic growth," Discussion Papers "Innovation Systems and Policy Analysis" 83, Fraunhofer Institute for Systems and Innovation Research (ISI).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hui Zhang & Tao Huang & Tao Yan, 2022. "A quantitative analysis of risk-sharing agreements with patient support programs for improving medication adherence," Health Care Management Science, Springer, vol. 25(2), pages 253-274, June.
    2. Klaus Kaier & S. Moog, 2012. "Economic Consequences of the Demography of MRSA Patients and the Impact of Broad-Spectrum Antimicrobials," Applied Health Economics and Health Policy, Springer, vol. 10(4), pages 227-234, July.
    3. Belay, Dagim G. & Jensen, Jørgen D., 2020. "‘The scarlet letters’: Information disclosure and self-regulation: Evidence from antibiotic use in Denmark," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    4. John B. Horowitz & H. Brian Moehring, 2004. "How property rights and patents affect antibiotic resistance," Health Economics, John Wiley & Sons, Ltd., vol. 13(6), pages 575-583, June.
    5. Farasat A.S. Bokhari & Franco Mariuzzo & Weijie Yan, 2019. "Antibacterial resistance and the cost of affecting demand: the case of UK antibiotics," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2019-03, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    6. Bokhari, Farasat A.S. & Mariuzzo, Franco & Yan, Weijie, 2024. "Antibacterial resistance and the cost of affecting demand: The case of UK antibiotics," International Journal of Industrial Organization, Elsevier, vol. 95(C).
    7. Eswaran, Mukesh & Gallini, Nancy, 2016. "Rescuing the Golden Age of Antibiotics: Can Economics Help Avert the Looming Crisis?," Economics working papers nancy_gallini-2016-9, Vancouver School of Economics, revised 04 Jul 2016.
    8. Eswaran, Mukesh & Gallini, Nancy, 2017. "Can Competition Extend the Golden Age of Antibiotics?," Microeconomics.ca working papers -2017-9, Vancouver School of Economics, revised 19 Oct 2017.
    9. Catherine A. Goodman & Paul G. Coleman & Anne J. Mills, 2001. "Changing the first line drug for malaria treatment—cost‐effectiveness analysis with highly uncertain inter‐temporal trade‐offs," Health Economics, John Wiley & Sons, Ltd., vol. 10(8), pages 731-749, December.
    10. David H. Howard, 2004. "Resistance‐induced antibiotic substitution," Health Economics, John Wiley & Sons, Ltd., vol. 13(6), pages 585-595, June.
    11. Bethany Cooper & Walter O. Okello, 2021. "An economic lens to understanding antimicrobial resistance: disruptive cases to livestock and wastewater management in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(4), pages 900-917, October.
    12. Joanna Coast & Richard Smith & Anne‐Marie Karcher & Paula Wilton & Michael Millar, 2002. "Superbugs II: how should economic evaluation be conducted for interventions which aim to contain antimicrobial resistance?," Health Economics, John Wiley & Sons, Ltd., vol. 11(7), pages 637-647, October.
    13. Elamin H. Elbasha, 2003. "Deadweight loss of bacterial resistance due to overtreatment," Health Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 125-138, February.
    14. Roy Lothan & Noa Gutman & Dan Yamin, 2022. "Country versus pharmaceutical company interests for hepatitis C treatment," Health Care Management Science, Springer, vol. 25(4), pages 725-749, December.
    15. Gregory J. Critchley & Gregory S. Zaric, 2019. "The impact of pharmaceutical marketing on market access, treatment coverage, pricing, and social welfare," Health Economics, John Wiley & Sons, Ltd., vol. 28(8), pages 1035-1051, August.
    16. Byron B. Carson, 2022. "Individuals and Externalities in Economic Epidemiology: A Tension and Synthesis," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 37(Fall 2022), pages 1-24.
    17. La Torre, Davide & Liuzzi, Danilo & Marsiglio, Simone, 2021. "Epidemics and macroeconomic outcomes: Social distancing intensity and duration," Journal of Mathematical Economics, Elsevier, vol. 93(C).
    18. Lhermie, Guillaume & Wernli, Didier & Jørgensen, Peter Søgaard & Kenkel, Donald & Lin Lawell, C.-Y. Cynthia & Tauer, Loren William & Gröhn, Yrjo Tapio, 2019. "Tradeoffs between resistance to antimicrobials in public health and their use in agriculture: Moving towards sustainability assessment," Ecological Economics, Elsevier, vol. 166(C), pages 1-1.
    19. Levaggi, Rosella, 2014. "Pricing schemes for new drugs: A welfare analysis," Social Science & Medicine, Elsevier, vol. 102(C), pages 69-73.
    20. 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.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:socmed:v:298:y:2022:i:c:s0277953622001241. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/315/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.