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

• Published in: Health policy (Amsterdam) Vol. 121; no. 10; pp. 1025 - 1030
• Main Authors: Towse, Adrian, Hoyle, Christopher K., Goodall, Jonathan, Hirsch, Mark, Mestre-Ferrandiz, Jorge, Rex, John H.
• Format: Journal Article
• Language: English
• Published: Ireland Elsevier B.V 01.10.2017; Elsevier Science Ltd
• Subjects: Anti-Bacterial Agents - economics; Antibiotics; Bacteria; Bacterial Infections - drug therapy; Conservation; Delivery of Health Care - economics; Drug Discovery - economics; Drug Discovery - legislation & jurisprudence; Drug resistance; Drug Resistance, Multiple, Bacterial; Financial incentives; Health administration; Health care; Health care industry; Health care policy; Healthcare system; Healthcare-associated infection; Humans; Incentives; Insurance; Insurance model; Investments; Market dysfunction; Mitigation; Multidrug resistance (MDR) bacteria; Pathogens; Premium price model; Prices; R&D; Research & development; Resistance; Risk; Trade; Healthcare-associated infection; Antibiotics; Market dysfunction; Premium price model; Insurance model; Healthcare system; Multidrug resistance (MDR) bacteria
• ISSN: 0168-8510; 1872-6054
• DOI: 10.1016/j.healthpol.2017.07.011

•We propose a policy change to an insurance model for reimbursing new antibiotics.•Current incentives are insufficient to rekindle investment in antibiotic development.•Our analysis explores two models that aim to address these shortcomings.•A premium price model has uncertain impact and risks putting commercial return and appropriate stewardship in opposition.•An insurance model can achieve investment, reduce uncertainty for health systems, and achieve stewardship. 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.