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Antibiotic reimbursement in a model delinked from sales: a benchmark-based worldwide approach

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Summary

Despite the life-saving ability of antibiotics and their importance as a key enabler of all of modern health care, their effectiveness is now threatened by a rising tide of resistance. Unfortunately, the antibiotic pipeline does not match health needs because of challenges in discovery and development, as well as the poor economics of antibiotics. Discovery and development are being addressed by a range of public–private partnerships; however, correcting the poor economics of antibiotics will need an overhaul of the present business model on a worldwide scale. Discussions are now converging on delinking reward from antibiotic sales through prizes, milestone payments, or insurance-like models in which innovation is rewarded with a fixed series of payments of a predictable size. Rewarding all drugs with the same payments could create perverse incentives to produce drugs that provide the least possible innovation. Thus, we propose a payment model using a graded array of benchmarked rewards designed to encourage the development of antibiotics with the greatest societal value, together with appropriate worldwide access to antibiotics to maximise human health.

Introduction

Antibiotics have transformed modern medicine and society, but the development of resistance is inevitable with their use. Resistance is of particular concern as a result of the weak development pipeline and the emergence of strains for which there are few therapies.1, 2

The causes of the thin pipeline are well understood: the discovery of antibiotics is difficult, clinical development of antibiotics is constrained and costly, and economic return on new antibiotics is generally poor.3, 4, 5 The first two challenges are being addressed via collaborative public–private partnerships6 and updates to regulatory pathways.7, 8, 9, 10 However, the economic challenge of antibiotics is rooted in a fundamental tension between the need for antibiotic conservation and the need for a sales-based return on investment to recoup development costs. New antibiotics are appropriately restricted from use, thus lowering sales. This decrease in sales leads to a low projected value and has reduced private antibiotic investment.5, 7, 11, 12, 13

Furthermore, estimating the market for a novel antibiotic is difficult. For example, carbapenem-resistant Enterobacteriaceae (CRE) are one of three urgent pathogens listed in the 2013 threat assessment produced by the US Centers for Disease Control and Prevention (CDC);2 however, predicting the size of the market a decade from now is a struggle for companies. For example, the market in Sweden for such a drug effective against CRE is currently exceedingly small: the entire country recorded only 94 cases of isolation of CRE during 2007–13, with only 24 cases of symptomatic infection.14 Furthermore, an entirely new drug might not have been needed since 73% of the isolates were susceptible to at least three classes of antibiotics. In the USA, the CDC has estimated about 9000 clinical cases of CRE per year,2 but many of these will be susceptible to a few existing drugs. Thus, the actual number of CRE cases per year in the USA requiring a new antibiotic is likely to be less than 9000. If infection prevention efforts are successful, future trends would be even lower: the US National Strategy projects a 60% decrease in CRE infections in US hospitals by 2020.15 These reductions are excellent public health targets but make the commercial case even more daunting.

Section snippets

Addressing the economic challenge via a delinked model

Breaking the link between sales volume and return on investment is one possible approach to resolving the tension between antibiotic stewardship and business imperatives. Antibiotic delinkage pays companies on some basis other than sales volume, such as value or milestone-based payments. Delinkage could be implemented through payments of a predictable size and duration after successful registration of a new qualifying drug. Such payments would guarantee regulatory maintenance of the drug (eg,

Calculation of the size of delinked payments

Economic models might be useful in estimating the size of potential delinkage payments on the basis of recovering research and development costs. One model of net present value (NPV) of a new antibiotic transforms a money-losing drug to one with an NPV of US$300 million at the start of the research and development process through the promise of future payments of $500 million per year for the first 5 years after initial registration.18 The Review on Antimicrobial Resistance19 commissioned in

Analogy to the insurance value of fire prevention and control services

Antibiotics could offer insurance value merely by being available for use, hence creating an environment wherein medical care, travel, and commerce can be confidentially pursued. In this regard, antibiotics and infection control bear a striking resemblance to the fire-fighting infrastructure: the microbiology laboratory serves as the smoke detector, medical personnel are the fire fighters, and antibiotics are the water supply. All of these elements have to be established before the fire

Benchmarks for delinked incentives

Delinked incentives should require delivery to market of a qualified drug; however, they equally need to recognise that initial approval is only one step towards understanding a new drug. The updated regulatory pathways that permit initial registration with small datasets in many ways implement an adaptive (or progressive) licensing approach28 in which initial registration is presumed to be followed by further investigations. Thus, delinkage should not be front-loaded at the moment of

Limitations and further questions

This proposal has many limitations and questions for further study (panel). The benchmark payment values in table 2 need to be modelled on the basis of audited parameters and agreed by many stakeholders. Stable funding will be needed, with incremental worldwide funding in the range of $2–4 billion per year. However, since the worldwide antibiotic market is roughly $40 billion per year, investments of this magnitude are quite reasonable to preserve this life-saving class of drugs.35 Creation of

Conclusion

We need new antibiotics that have the greatest societal value. Delinked payments can be designed with a base payment linked to the registration of a new qualifying antibiotic and a set of incremental benchmark payments earned by demonstration of specific properties of the new drug. The strength of this proposal comes from the simplicity of benchmarks and their direct linkage to features offering societal value. The scheme encourages novel drugs, foresees the need for multiple drugs in a class,

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