There are well-developed proposals for new market mechanisms using a “subscription” model that would solve this issue. Statements have been issued at the G7 expressing support for subscription models, but pressure is needed to ensure that countries follow up on their commitments.
I’m curious how this subscription model works, or where I can read more about it! Thank you!
The basic idea is that we mostly pay for drugs based on volume (e.g. if a manufacturer charges $50 per insulin vial, they want to sell lots of vials), but that mechanism is inappropriate for novel antibiotics, since there are major societal benefits to not over using new antibiotics but retaining them as last resort drugs. This means that it is ~impossible for developers of novel antibiotics to be economically viable. A subscription model de-links payment and volume—the provider is paid for having created and made the drug available, irrespective of volume used.
There’s a nice CGD paper discussing some of the specifics of the main US proposal on pull incentives / subscription models for novel antibiotics. The website AMR Solutions has broader coverage, including of the UK’s similar model.
I’m curious how this subscription model works, or where I can read more about it! Thank you!
The basic idea is that we mostly pay for drugs based on volume (e.g. if a manufacturer charges $50 per insulin vial, they want to sell lots of vials), but that mechanism is inappropriate for novel antibiotics, since there are major societal benefits to not over using new antibiotics but retaining them as last resort drugs. This means that it is ~impossible for developers of novel antibiotics to be economically viable. A subscription model de-links payment and volume—the provider is paid for having created and made the drug available, irrespective of volume used.
There’s a nice CGD paper discussing some of the specifics of the main US proposal on pull incentives / subscription models for novel antibiotics. The website AMR Solutions has broader coverage, including of the UK’s similar model.
Fascinating, thanks! I’ll add that to my repertoire of solutions to mechanism design problems with funding!