Pull incentives for antibiotics: How much and why? — A literature survey

Dear All (and with thanks to Kevin Outterson for co-authoring this newsletter),

The recent discussions of the NICE/NHS England pilot subscription model (detailed newsletter plus follow-up FAQ newsletter) and a new paper by Chantal Morel and colleagues on the idea of an Antibiotic Susceptibility Bonus (ASB, link) bring to the fore the question of how to value any given antibiotic for a pull incentive.

This is something that has been considered at some length but always in bits so we thought it might be useful to create a comprehensive summary of the key references on ways to value antibiotics. To that end, see the annotated references found just below the signature block.

We are sure we will have missed something – if you spot omissions, please let us know and we will update the posted version of this newsletter.

That caveat noted, it is instructive to see what we have generated. We have sorted the references into these 4 categories: 

  1. Scientific characteristics known at initial approval: Spectrum, mechanism, ease of use
    1. The focus here has been on attributes that go beyond typical HTA features.
    2. Antimicrobial spectrum relative to priority pathogen lists, mechanistic novelty, and medical attributes (e.g., oral administration) are of course fundamental.
    3. In addition, several non-typical (at least for HTA) attributes become important. In recent work, the acronym STEDI is appearing as shorthand here:
      1. Spectrum: Benefits of being able to treat with a narrow-spectrum agent in some settings (note how this use of Spectrum has a very specific meaning).
      2. Transmission: Benefits from avoiding spread of infection
      3. Enablement: Benefits from making it safe to receive medical care
      4. Diversity: Using varied antibiotics reduces resistance pressure
      5. Insurance: Value of having an antibiotic to hand in case of sudden need
    4. The public data on an approved drug should be sufficient to calculate all of these values, which is important for pull incentives.
    5. Equally important, pull incentives based on such standards are clear targets for drug developers when selecting candidate preclinical molecules: you can predict the possible value of the compound before starting Phase 1.
  2. Scientific characteristics that can only be studied over time: emergence of resistance
    1. The recent paper by Morel that triggered this newsletter is in this category, as is a 2010 paper by Kesselheim & Outterson.
    2. These papers discuss the idea of a reward for stewardship / lack of resistance.
    3. This is a good idea but systematically collecting data on emergence of resistance takes a lot of effort – it is hard to really sample the globe! But alignment of all actors on this goal is still a good thing.
  3. Top-down estimates: What is the value to society if you have an antibiotic (or the cost if you do not have one)?
    1. Depending on spectrum and indication, a new antibiotic appears to offer a global value to society of $0.5 – $12b.
    2. This wide estimate is being narrowed by more detailed modeling, but the key takeaway is that not every antibiotic deserves the same reward. The market certainly does not work that way and neither should a pull incentive.
  4. Bottom-up estimates: What pull incentive is needed to cover the cost of creating an antibiotic?
    1. A reward of $2b – $4b is needed to create an incentive that would be adequate to cover the cost of the R&D that leads to approval of a new antibiotic (including failed attempts).
    2. Duties placed on the sponsor (post-approval studies, delinked supply commitments) reduce the net value to the sponsor

This is an impressive body of work. We like the convergence on both definable scientific attributes (spectrum relative to priority pathogen lists, ease of use, etc.) and an appropriate range of rewards (low single-digit $b range). As George Box said, “All models are wrong, some are useful” … and the steady refinement we’ve seen across these approaches suggests that we have found solid footing.

Taken with recent rumblings in the US Congress regarding a subscription model much larger than the UK model (more to follow on this), we are as hopeful as we have ever been that we will make progress in this space. 

Stay safe in these unusual times … all best wishes, John & Kevin

John H. Rex, MD | Chief Medical Officer, F2G Ltd. | Operating Partner, Advent Life Sciences. Follow me on Twitter: @JohnRex_NewAbx. See past newsletters and subscribe for the future: https://amr.solutions/blog/. All opinions are my own.

Kevin Outterson, JD, Professor of Law, Boston University & Executive Director, CARB-X (these views are personal and do not necessarily reflect the views of CARB-X or any of its funders) @koutterson  

  1. Scientific characteristics known at initial approval: Spectrum, mechanism, ease of use
    1. (link) STEDI: This is shorthand for the antibiotic values of Spectrum, Transmission, Enablement, Diversity, and Insurance (STEDI) was proposed by Outterson and Rex, Translat Res 2020 based on a list of attributes first proposed by Karlsberg 2017, below.
    2. (link) Rex JH, Outterson K. Antibiotic Reimbursement in a Sales-Delinked Model: Context and a Benchmark-Based Global Approach. The Lancet Infectious Disease, 16:500-5, 2016.
      1. Proposes a point-based value based on spectrum, mechanistic novelty, medically relevant improvements, indications, pediatric data, and oral dosing. 
      2. Metrics based on (lack of) emergence of resistance are not discussed.
    3. (link) Karlsberg Schaffer S, West P, et al. Additional Elements of Value for Health Technology Assessment Decisions. Office of Health Economics Research Paper2017.
      1. Proposes adding the STEDI values to (i) Novel Mechanism and (ii) traditional HTA values of health gain, unmet need, cost offsets, and productivity benefits.
      2. Metrics based on (lack of) emergence of resistance are not discussed.
    4. (link) Daniel GW, McClellan MB, et al. Value-Based Strategies for Encouraging New Development of Antimicrobial Drugs. Duke-Margolis Center for Health Policy white paper2017. Also described in a JAMA viewpoint (link).
      1. This paper proposes a Priority Antimicrobial Value and Entry (PAVE) Award with valuation based on spectrum, drug availability, support for sustainable use, and data collection on use and outcomes.
      2. Detailed metrics are not provided.
    5. (link) Rothery C, Woods B, et al. Framework for Value Assessment of New Antimicrobials. Sheffield-York EEPRU white paper2018.
      1. This work is the economic foundation for the NHS England/NICE subscription pilot (see this newsletter).
      2. Proposes extending standard HTA frameworks by using the STEDI elements.
      3. Discusses the need to model predicted emergence of resistance as part of the baseline estimate of value.
    6. (link) Neri M, Hampson G, et al. HTA and payment mechanisms for new drugs to tackle AMR. Office of Health Economics Research Paper, 2019.
      1. Provides an integrated review of Karlsberg Schaffer, Daniel, Rothery, and the in-progress manuscript by Morton et al. 
    7. (link) Morton A, Colson A, et al. Horses for courses: how should the value attributes of novel antibiotics be considered in reimbursement decision making? Manuscript in preparation, 2020.
      1. Considers STEDI-like attributes and also points to consideration of emergence of resistance.
  2. Scientific characteristics that can only be studied over time: emergence of resistance
    1. (link) Kesselheim AS, Outterson K. Improving antibiotic markets for long-term sustainability. Yale J Health Policy Law Ethics, 11:101-67, 2011.
      1. This early paper (2011) argues for an Antibiotic Conservation and Effectiveness (ACE) program that conditions payments on continued effectiveness. Effectiveness is never defined, but drug-bug susceptibility patterns and morbidity are both considered.
      2. Part of the goal of the ACE was to reward company behavior that promoted stewardship (continued effectiveness).
    2. (link) Morel CM, Lindahl O, Harbarth S, de Kraker MEA, Edwards S, Hollis A. Industry incentives and antibiotic resistance: an introduction to the antibiotic susceptibility bonus. J Antibiot (Tokyo), 2020.
      1. Argues for the idea of an Antibiotic Susceptibility Bonus (ASB) as a performance measure component of a Market Entry Reward that is tied to “pathogen susceptibility to the product (the product’s ability to stave off resistance) at, for example, 5, 10, 15, and 20 years following market approval.”
  3. Top-down estimates: What is the value to society if you have an antibiotic (or the cost if you do not have one)?
    1. (link) Sertkaya A, Eyraud J, et al. Analytical framework for examining the value of antibacterial products. Eastern Research Group Report to US DHHS. United States Department of Health and Human Services, 2014.
      1. Using data from 2012 and before, the authors consider
        1. The Value of a Statistical Life Year (VSLY, an estimate of how much people are willing to pay to live a certain amount longer) and 
        2. Estimates of reduced Quality-Adjusted Life Years (QALYs) based on both mortality (QALYs go to zero) and morbidity (QALY is reduced during illness).
      2. These ideas are used to estimate the value to society of a new drug as ranging from $0.5b to $12.2b:
        1. $0.5b for a new drug for acute bacterial otitis media (ABOM)
        2. $9.4b for a new drug for community-acquired bacterial pneumonia (CABP), and
        3. $12.2b for a new drug for hospital- or ventilator-associated bacterial pneumonia (HABP/VABP).
        4. If you look at this paper, be sure to also look at Kevin Outterson’s updated critiques and modeling presented during the 16 Jan 2020 Duke-Margolis payor meeting … see comments below in the bottom-up modeling section. 
    2. (link) Megiddo I, Drabik D, et al. Investing in antibiotics to alleviate future catastrophic outcomes: What is the value of having an effective antibiotic to mitigate pandemic influenza? Health Economics, 2019.
      1. Estimates the value of a new oral antibiotic based on societal value if the antibiotic is held in reserve (and hence no resistance develops) vs. value if it is used and resistance emerges.
      2. This is a complex UK-focused model but it aligns with the estimates from Sertkaya: see this newsletter for a discussion.
    3. (link) NICE/NHS England Antibiotic Subscription Pilot, 2020.
      1. Implies a high-quality antibiotic has a global value of $4b.
      2. See newsletter at the link just above and be sure to read the FAQ closely.
  4. Bottom-up estimates: What pull incentive is needed to cover the cost of creating an antibiotic?
    1. (link) Sharma P and Towse A. New drugs to tackle antimicrobial resistance. 2011.
      1. The authors estimate that a reward of $1.4-1.8b is needed to produce an NPV return of $200m on an antibiotic discovery project (this paper works in Euros, we have converted to USD at the 2011 EUR/USD conversion rate of 1.3).
    2. (link) Sertkaya A, Eyraud J, et al. 2014 (same paper as cited for the top-down section).
      1. The authors estimate that a reward of $1-1.2b is needed to produce an NPV return of $100m on an antibiotic discovery project.
    3. (link) Securing New Drugs for Future Generations: The Pipeline of Antibiotics. UK Review on Antimicrobial Resistance, 2015 (May). The other reports from the UK AMR review are found here.
      1. Estimates a need to pay $1.6-3.7b on a global basis to provide the return needed to drive antibiotic innovation.
    4. (link) Towse A, Hoyle CK, et al. 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. Health Policy, 121:1025-30, 2017.
      1. Estimates the eNPV of an antibiotic R&D program at -$0.5b to -$1.5b.
      2. Hence, the value of a global Pull reward needs to cover this negative NPV.
      3. Post-approval costs are estimated at $20-60m rather than the $300-400m that is known recognized as required (see similar comment for Ardal 2018 just below).
    5. (link) Ardal C et al. DRIVE-AB Report: Revitalizing the antibiotic pipeline: stimulating innovation while driving sustainable use and global access. 2018.
      1. Used Monte Carlo agent-based simulations to demonstrate the impact of a pull incentive.
      2. Estimates a need to pay $1b per novel agent on a global basis to provide the return needed to drive innovation.
      3. Assumes post-approval costs of only $10m, a value that has recently been shown to be a significant underestimate (go to this newsletter for a detailed discussion of the superb 2019 ASM-ESCMID Bootcamp on this topic).
    6. Outterson K. Unpublished manuscript in preparation that addresses critiques of the Sertkaya/ERG report with updated data. A recent presentation on this work in progress at the 16 Jan 2020 Duke Margolis meeting suggested that pull incentive values in $2-4B range are needed for a positive NPV, with continued high levels of support for push incentives. Go here for the materials from that meeting – jump to 4h 49m to hear Kevin’s presentation.

Current funding opportunities:

  • Dates for the 2020 funding rounds for Novo REPAIR Impact Fund will be announced May 2020. Go here for current details.
  • 2020 funding rounds for CARB-X have not been announced.
  • The Global AMR R&D Hub’s dynamic dashboard (link) summarizes funders and projects by geography, stage, and more.


Upcoming meetings of interest to the AMR community:

  • 28 Apr 2020 (online, 17:00-18:30 CEST): GARDP REVIVE webinar. Title: “Inhaled antimicrobials: Do we get the drug to the bug?” Speaker: Harm A. W. M. Tiddens. Go here to register.
  • 9 Jul 2020 (online, 09:00-10:30 CEST): GARDP REVIVE webinar. Title: “The challenges and opportunities for antimicrobial R&D in low- and middle-income countries – India case study.” Speaker: Anand Anandkumar. Go here to register.
  • 17 Jul-2 Aug 2020 (Marine Biology Laboratory, Woods Hole, MA): Residential course entitled “Molecular Mycology: Current Approaches to Fungal Pathogenesis.” This 2-week intensive training program has run annually for many years and gets outstanding reviews. Go here for details.
  • 29 Jul-2 Aug 2020 (Philadelphia, PA): Small World Initiative Instructor Training Workshop – training for undergraduate professors and high school teachers in wet lab techniques, parallel curricula, pedagogical instruction to engage students in the hunt to find new antibiotics in soil. Go here to register.
  • 4 Aug 2020 (Silver Spring): FDA workshop entitled “Development Considerations of Antifungal Drugs to Address Unmet Medical Need.” Go here to register.
  • 5 Aug 2020 (Silver Spring): FDA workshop entitled “Developing Antifungal Drugs for the Treatment of Coccidioidomycosis (Valley Fever) Infection.” Go here to register.
  • 24-25 Aug 2020 (Basel): BEAM-, Novo REPAIR-, CARB-X-, DZIF-, ND4BB-, ENABLE-supported (among a long list!) Conference on Novel Antimicrobials and AMR Diagnostics. Details are here.
  • September 2020. University of Sheffield (UK). Applications are being taken for a new 1-year (full-time) or 2-year (part-time) Masters of Science course in Antimicrobial Resistance. The program runs annually from September and covers microbiology, clinical practice and policy. The course webpage is here.
  • 9-10 Sep 2020 (Washington, DC): US PACCARB public meeting. Go here for details.
  • 22-25 Sep 2020 (Albuquerque, New Mexico): Biannual meeting of the MSGERC (Mycoses Study Group Education and Research Consortium). Save-the-date announcement is here, details to follow.
  • 17-25 Oct 2020 (Annecy, France): Interdisciplinary Course on Antibiotics and Resistance (ICARe). This is a soup-to-nuts residential course on antibiotics, antibiotic resistance, and antibiotic R&D. The course is very intense, very detailed, and gets rave reviews. Registration is here and is limited to 40 students.
  • 26-29 Oct 2020 (Rotterdam), Annual ESPID meeting (European Society for Pediatric ID, #38)
  • 10-13 Apr 2021 (Vienna): Annual ECCMID meeting (#31)
  • 20-24 June 2021 (Toronto): International Symposium on Pneumococci and Pneumococcal Diseases (ISPPD-12). Go here for details.
  • 3-7 Jun 2021 (Anaheim), ASM Microbe 2021. Go here for details.

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