How much money should governments spend to incentivize the development of new antibiotics?11/2/2021
How much money should governments spend to incentivize the development of new antibiotics?
As the number of infections that are anti-biotic resistant grows, we need to have more novel antibiotics in our arsenal. The problem is that many antibiotics are not commercially viable. For instance, if a new antibiotic is marginally better than the existing one, few payers will be willing to cover this cost. However, if new bacteria become resistant to the standard of care antibiotic, then the novel antibiotic would be highly valued. In short, antibiotics have a very high option value. There have been a number of approaches to try to incentivize new R&D on antibiotics, including various prizes and subscription models.
A key question is how large these incentives should be. Some previous literature have proposed the following amounts:
A paper by Outterson (2021) in Health Affairs published today aimed to update these estimates. He creates a net present value (NPV) calculation which depends on development cost (i.e., cost, duration and probability of success for any phase in the drug development process); revenues and expenses after antimicrobial approval; and the discount rate. The authors models different approaches to reach the NPV: based on global peak year sales (GPYS); based on a market entry reward paid in one year (MER1); based on subscription paid over ten years (SUB10); of based on the acquisition of a Phase II-ready asset (AQ). Using these approaches, Outterson finds that:
The authors find that subscriptions are more expensive because (i) subscriptions are delinked from actual volumes and thus manufacturers must make the drugs without potentially any compensation (beyond the subscription); and (ii) payments are pushed into the future and thus additional funds must be found to compensate for the reduced time-cost of revenues received in the future. They also find that push incentives alone are typically insufficient to bring new antimicrobials to market. The article is interesting throughout and do read the whole article here. Via Dental Tips http://www.rssmix.com/via Blogger http://jeanxrussell.blogspot.com/2021/11/how-much-money-should-governments-spend.html November 03, 2021 at 12:45AM
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