What is the value of antibiotics? And how should we pay for them?

Abstract: The existing business models for antibiotics fail to promote antibiotics stewardship to preserve our existing portfolio of drugs, while at the same time funding for research and development has been insufficient in recent decades. Only two novel classes of antibiotics have been introduced since the 1970s. A number of groups (e.g., DRIVE-AB and EEPRU) have discussed how antibiotics differ from other health technologies and have developed conceptual frameworks for valuing them.

We explore two models for valuing antibiotics. First, we explore the option value of preserving an antibiotic for an extreme event. We consider an example of secondary bacterial infections during pandemic influenza. Second, we present a “delinked” model — removing the link between reimbursement for use and sales — that the UK government is testing. We study these models to understand how to value antibiotics, what the structure of the fixed and volume-based payments in the delinked model should look like, and how we may be able to use expert judgment to support the model.