Incentives for R&D for New Antimicrobial Drugs

Antimicrobial resistance (AMR) is becoming a major global public health threat and has begun to command attention from European and US policy makers. An initial focus on monitoring AMR and conserving existing treatments by cutting down on misuse has been complemented by moves towards addressing the paucity of new drugs in the R&D pipeline of the pharmaceutical industry. We identify five economic challenges: the utilisation externality; the lack of incentives for R&D arising from use restrictions, low prices, and scientific and regulatory challenges; the global joint sunk nature of R&D cost; the need for access to drugs in middle and low income countries; and failures in the market for point of care diagnostics. We analyse "push," "pull" and hybrid incentives and conclude that higher prices linked to targeted use with diagnostic tests and/or an AMC-based "prize" for registering (but not necessarily using) desired new drugs would be effective, and could be linked to push measures. US and European collaboration on incentives would be desirable but not if achieving agreement leads to delays. Action on conservation needs to be global and linked to use of new products. This will not be easy given TRIPS provisions and national sensitivities on this issue as seen in the 2010 reaction to evidence on the origins of NDM-1.