A systematic review and critical assessment of incentive strategies for discovery and development of novel antibiotics

Abstract

Despite the growing threat of antimicrobial resistance, pharmaceutical and biotechnology firms are reluctant to develop novel antibiotics because of a host of market failures. This problem is complicated by public health goals that demand antibiotic conservation and equitable patient access. Thus, an innovative incentive strategy is needed to encourage sustainable investment in antibiotics. This systematic review consolidates, classifies and critically assesses a total of 47 proposed incentives. Given the large number of possible strategies, a decision framework is presented to assist with the selection of incentives. This framework focuses on addressing market failures that result in limited investment, public health priorities regarding antibiotic stewardship and patient access, and implementation constraints and operational realities. The flexible nature of this framework allows policy makers to tailor an antibiotic incentive package that suits a country's health system structure and needs.

Introduction

Infectious microbial organisms are becoming increasingly resistant to the existing arsenal of antibiotic drugs. Antibiotics are indispensable in treating serious infections like tuberculosis, meningitis and pneumonia, preventing surgical site infections and managing immunocompromised individuals.^{1, 2} It is estimated that antimicrobial resistance (AMR) is directly responsible for 23 000 deaths annually in the United States and more than 25 000 in the European Union.^{3, 4} A conservative estimate of the economic cost of bacterial resistance is $55 billion dollars annually in the United States alone.⁵ Despite the necessity for new antibiotics, the development pipeline is constrained, especially for those that tackle lethal multidrug-resistant Gram-negative bacteria.⁶ Pharmaceutical and biotechnology firms are averse to investing in new classes of antibiotics because the market is risky and relatively unprofitable. There are promising new methods of antibiotic discovery and some novel antibiotics in development that may not translate into marketable products if firms do not perceive profit potential.^{7, 8}

The antibiotics market has a number of characteristics that makes it financially unattractive to developers. First, antibiotics are less profitable than other drug categories because national conservation programs limit sales, antimicrobials become progressively ineffective due to AMR, there is an established generics market with many substitutes, reimbursement systems encourage the use of the cheapest drug and antibiotics are often prescribed for a brief duration.^{9, 10} Second, the regulatory requirements for market approval in the United States and European Union have been uncertain and prone to change, creating additional development risk.¹¹ Third, many pharmaceutical companies have reallocated scientific talent and capacity to more profitable opportunities, thereby diminishing what antibiotic expertise and economies of scale they originally possessed.^{6, 12} Therefore, firms need to be further incentivized to invest in the discovery and development processes necessary to create marketable novel antibacterial drugs.

Investment in antibiotics can be incentivized through two broad strategies known as push and pull mechanisms.^{12, 13} Push mechanisms reduce a firm's cost of researching and developing new drugs by distributing the expenditures across multiple parties. Examples of push incentives include increasing access to research, providing research grants, offering tax incentives and establishing public–private partnerships for sharing research and development (R&D) outlays. In contrast, pull mechanisms reward successful development of a drug by increasing or ensuring future revenue. This may be in the form of outcome-based rewards such as monetary prizes, advanced market commitments and patent buyouts, or as lego-regulatory policies that accelerate the market approval process, extend market exclusivity rights and increase reimbursement prices. In addition, a combination of complimentary push and pull incentives can be used in a hybrid approach. Proposed hybrid approaches include the Antibiotic Conservation Effectiveness Program and the Options Market for Antibiotics.^{14, 15}

The European Observatory on Health Systems and Policies conducted the last major review and assessment of these push and pull incentives in 2010.¹² Since then, numerous initiatives, programs and collaborations have been implemented with the goal of developing innovative business models for antibiotics. The World Health Organization (WHO) is developing its Global Action Plan under stewardship of the Scientific and Technical Advisory Group on Antimicrobial Resistance.¹⁶ The European Commission's Innovative Medicines Initiative (IMI) is Europe's largest public–private incentive program that supports the rapid development of safe and effective medicines for patients.¹⁷ The IMI has established the New Drugs for Bad Bugs (ND4BB) initiative that aims to remove the barriers associated with antibiotic drug discovery and development through collaboration.¹⁸ Notably, DRIVE-AB is a subsidiary program within the ND4BB initiative specifically focused on developing new economic models for antibiotic development.¹⁹ The European Commission and European Investment Bank are also launching a new risk sharing and direct loans program to finance development of new antibiotics (L Matthiessen, 2015, personal communication). In the United Kingdom, Prime Minister David Cameron commissioned the O'Neill Review on Antimicrobial Resistance and in the United States President Barack Obama released the National Action Plan for Combating Antibiotic-Resistant Bacteria.^{20, 21} Think tanks such as Chatham House, Brookings Institute, Pew Charitable Trusts and Wellcome Trust are involved in the global effort through active working groups and conferences that bring together policy and business leaders from around the world.²²

The purpose of this article is to systematically review published incentive strategies to promote antibiotic research and critically assess the advantages and disadvantages of each. A framework is also proposed to assist policy makers in selecting appropriate incentives. This approach focuses on correcting the key market failures that perpetuate minimal investment in the field, while addressing antibiotic stewardship and patient access concerns, and accounting for implementation constraints.

Research methodology

A systematic review of the literature was performed to identify specific policies, mechanisms, incentives and business models for stimulating R&D in antibiotics using guidelines from the Centre for Reviews and Dissemination.²³ From this literature search, strategies were identified and classified using the push–pull framework and then their advantages and disadvantages were evaluated. Literature was initially sourced from peer-reviewed journals, augmented with gray literature, and then validated through expert opinion. Gray literature is literature not formally published such as conference proceedings, reports, legal documents and press releases.

Identification, screening and eligibility assessment of peer-reviewed and gray literature

The search protocol for peer-reviewed journals (Figure 1) was operationalized through MEDLINE via PubMed, Scopus, Econlit, Business Source Complete and CINAHL. Where possible, search results were filtered to include only literature that focused on humans, was published in the past 10 years, was in English and was either a journal article, review, systematic review, conference report or interview.

Figure 1.

Generalized search protocol.

Following compilation of initial search results, the literature was first screened using ineligibility criteria applied to titles and abstracts. Articles were deemed ineligible if they focused on clinical settings, scientific research, prescribing practices, antibiotic stewardship and any criteria that was refined in the initial search but was not applied to all databases. The second screening involved reading each article and assessing eligibility. Literature was deemed eligible and relevant to this review if it discussed one or more antibiotic R&D incentive methods.

Gray literature was screened based on eligibility as it was identified and added directly to the compilation of relevant literature. The literature search began by identifying several key review articles and searching their references for articles not already identified. Gray literature was further identified through a Google search for articles, PowerPoint presentations, advocacy statements and conference listings. Websites of key advocacy groups, think tanks and policy committees were identified and further searched for sponsored literature.

Analysis

A total of 46 unique incentive strategies were identified from the literature search. The strategies encompassed single incentives and policies as well as multifaceted business models combining multiple incentives, policies and conservation mechanisms.

Expert opinion

This set of 46 strategies was presented to experts in the field including academics, advocates, industry professionals and policy makers. A total of 26 experts were initially approached, 9 experts provided feedback and 1 new strategy was added to the consolidated list. Therefore, a total of 47 strategies were reviewed.

Postreview critical analysis

Following compilation of all the incentive strategies, the incentives were then critically analyzed using criteria identified from the literature as important to creating an effective incentive package. This critical analysis forms the basis for a framework for selecting an optimal incentive package.

Identification and evaluation of incentive strategies

Push strategies

Push mechanisms (Figure 2) seek to make drug development more attractive to firms by lowering their costs of generating a new drug. These incentives are useful because they reduce the barriers to entry that preclude participation by small- and medium-sized enterprises (SMEs).²⁴ These smaller firms develop a majority of new drugs, yet frequently lack the capital to translate early preclinical research into clinical development.^{11, 24, 25, 26, 27} Anti-infectives, including antibiotics, have higher success rates than other drug categories in the final phases of development.²⁸ Therefore, early push funding can help companies reach the R&D stages that are likely to produce marketable products. In addition, an early-stage R&D payment is more valuable than an equal pull incentive paid at a later date because of the time value of money. Spellberg et al.²⁹ found that an early subsidy could be as much as 95% smaller than an equally effective future reward. Finally, these policy subsidies may be linked to discrete R&D stages or drug characteristics to ensure alignment of developer goals with public priorities.¹³

Figure 2.

Push strategies. IMI, Innovative Medicines Initiative; ND4BB, New Drugs for Bad Bugs; R&D, research and development.

There is a possibility that push incentives will fund projects that fail.¹³ In addition, developers have asymmetrically more information than funders regarding a particular project's development. Thus, there is an opportunity for developers to misrepresent their probability of success and project goals in order to attain financing.¹² Finally, research subsidies may damage operational efficiency by reducing financial pressure to economize or funder guidance may overly constrain the innovative capability of a developer.^{12, 13} The advantages and disadvantages of each push strategy, along with all other strategies, can be seen in Table 1.

Table 1. Evaluation of incentive strategies: advantages and disadvantages.

Strategy	Advantages	Disadvantages
Push strategies
Supporting open access to research	Lowers antibiotic research costs60  Allows early identification of feasible targets61  Facilitates collaboration among developers61  Creates a knowledge commons that minimizes research duplications and speeds dissemination of new information and technology12	Relies on goodwill of researchers, industry and universities12  Patent culture may prohibit open source contributions61  Few open source tools that go beyond online data repositories  Does not address the core bottleneck of the R&D process
Grants for scientific personnel	Lowers competition for skilled researchers12  Can complement other collaborative efforts such as open access to research	Research interest does not guarantee tangible results12  Funded scientists not committed to antibiotic R&D12  Long lead time for investment64
Direct funding	Lowers early R&D costs that prohibit participation of SMEs12 Allows direct targeting of R&D towards specific priorities12 Expert technical and managerial help useful to SMEs with less experience	Risk of project failure placed on funder12  Prone to problems of transparency and principal–agent discrepancies12 Risk of changing political agenda12 Not well suited to support late stages of development69
Conditional grants	Adds element of antibiotic stewardship to the incentive of direct funding13 See advantages of direct funding	Challenge to ensure developers honour their conservation commitments See disadvantages of direct funding
Funding translational research	Promotes synergy across the value chain12	Potential for conflicts of interest71  May impose perverse incentives to researchers71  Requires new IP laws to address subsequent innovation born from collaboration
Tax incentives	Easy to implement and familiar to governments; lower administration costs12 Reduces problems of information asymmetry73 Market remains in charge of determining where investment is profitable; government dictates broad goals Allows firms to innovate in ways that suit their particular strengths73 Lowers incentive for firms to direct R&D towards high profit, short sighted projects12 Can be tailored to specifically benefit SMEs over large cap firms74 Allow knowledgeable firms, not governments, to dictate the allocation of R&D investments27	No mechanism to control cost incurred by government74  Government is not able to direct R&D into areas of high social return; less transparent than direct funding32 Risk borne by government that funded R&D projects will fail12 Incentive to employ creative accounting to maximize tax claim77 Firms that make low revenues, generally SMEs, do not benefit from tax incentives78, 79
Refundable tax credits	Promotes participation of SMEs39  See advantages of tax incentives	See disadvantages of tax incentives
Product development partnerships	Allows sponsor to set the target product profile and guide development77 Non-profit PDPs reduce need to maximize profit through sales12 Spread funder risk over a portfolio of projects12 PDPs pool expertise from all aspects of the development process81 Appeal to large cap firms that value a project as too risky or because the potential market will be too small12 Appeal to SMEs that lack the capital to overcome early-stage development barriers82	Financial risk borne by sponsor that a funded project may fail32  Challenge to manage the interests of multiple stakeholders32  Prone to problems of transparency and principal–agent discrepancies40 Government may not be best suited to determine viability a project40
Pull strategies
Outcome-based pull strategies
Lump sum monetary prize	Rewards only successful antibiotics12  Promotes clear communication between funder and developer; avoids principal–agent problems12 Requires minimal additional infrastructure or regulation Can be offered by nongovernmental organizations as well as governments Strong incentive for developers to carry drug R&D through phase III clinical trials12	Does not help SME overcome initial R&D barriers41  All risk borne by developers41  Difficult to set optimal scope of reward12  Sets a maximum value for the drug thus limiting the level of R&D into the drug Prone to changing political agenda41 Challenge to determine how to reward follow-on innovators83
Milestone monetary prizes	Allow funder to direct R&D12  Pull SMEs through the entire R&D process12  See advantages of lump sum monetary prizes	Risk of funding projects that ultimately fails12  See disadvantages of lump sum monetary prizes
Pay-for-performance	Prescribers and developers have a direct incentive to minimize overuse12 Can be implemented within existing regulatory frameworks Allows government to establish clear stewardship goals and rewards12	Technically challenging to monitor antibiotic effectiveness, resistance, and appropriate use Difficult to use as a direct incentive to stimulate research Measures may provide perverse incentives to game the system12
Patent buyout	Funder gains control over antibiotic price and volume; supports conservation and access goals12 Rewards only successful development12 Promotes clear communication regarding antibiotic characteristics; avoids principal–agent problem12 Funder can license out IP12	All development risk borne by developer41  Requires large financial outlay from funder10  High cost to buyout makes political support challenging  Industry barriers to public ownership of IP41, 58  Risk of funding suboptimal drug; little remaining funding to purchase drug improvements41, 84 New agency may be needed to manage acquisition of IP41, 63 Pricing buyout technically difficult10, 41
Payer license	Funder gains control over antibiotic price and volume; supports conservation and access goals10 Permits competitive pricing for license if multiple players10 Rewards only successful development12 Not committed to rolling over license if drug becomes suboptimal10 Maintain patent ownership with developer58	Requires annual renegotiations of licenses; expensive transaction cost10 Minimal R&D incentive over other mechanisms10 Pricing license technically difficult Risk of changing political agenda All development risk borne by developer
Optional reward	Gives developer greater flexibility with regards to revenue source13 See advantages of patent buyout	If developer chooses to keep the patent then there remains significant incentive to over-market the antibiotic13 See disadvantages of patent buyout
Research tournament	Competition may stimulate an increase in quality of submissions85 Tournaments with multiple rounds allow for selection of a few promising ideas85 Attracts developers that believe they have a competitive advantage or a promising molecule12	Collusion degrades the quality of submissions30  Winner not incentivized to produce and distribute product12  Risk of funding failed projects  Tournaments are not well suited to promote new drug development in the expensive and risky late stages of R&D12 SMEs may not have the resources to compete with large cap firms, limiting the effect of competition12
Advanced market commitment	Only rewards successful development12  Price guarantee lowers risk for developer12  Prices are set based on a county's ability to pay; improves patient access86 Does not require significant changes in regulatory statutes or laws; reward determined through the market 42	Challenging to set drug specifications beforehand12  Maintains artificially high prices in some countries; limits patient access12 Government commitment to purchase may led to acquiring inferior products12, 13 No guarantee on volume means developer revenues are still highly dependent on sales volume12
Antibiotic Health Impact Fund	Antibiotics offered at marginal cost; improve access43  Reward based on health impact encourages firms to provide access to the poor or in developing countries where impact would likely be greatest43 Profitability of projects tied to global public health impact; aligns firm incentive with global priorities43 Fewer patent litigations as generic distribution would increase developer profits43 Incentive for developer to limit unnecessary use; opportunity to coordinate with hospitals and patients43 Funder only pays for health impact; cost effective use of public resources43 Global solution to a global problem; based on an internationally coordinated action plan43	Original AHIF would be voluntary; undermines conservation incentives of the AHIF43 Requires substantial upfront payments Does not provide any push for developing new antibiotic; particularly a problem for SME International coordination complicated New global agency needed to manage AHIF43 Industry barriers to public ownership of IP41, 87 Global surveillance and assessment of health impact pose significant cost and technical challenge 41, 87 Significant uncertainty over health impact reduce R&D incentive41 Challenge to determine which drugs meet the criteria for inclusion
Antibiotic Innovation Funding Mechanism	Decouples profits from sales volume; reinforces conservation efforts44 Decouples profits from prices; improves equity of access44 Encourage open sharing of relevant information, materials, and technology44 Global solution to a global problem; based on an internationally coordinated action plan44 Consumption fee helps self-sustain the fund and encourage appropriate use44 Payments throughout development chain encourage SME participation44	Tax may hinder appropriate use at point of care62  Monetary prizes must be significant to incentivize R&D12  Milestone prizes place risk on funder12  High cost to buyout makes political support challenging12  Difficult to set optimal scope of reward12  International coordination and politics complicates the management of the fund Industry barriers to public ownership of IP58, 63
Strategic Antibiotic Reserve	Acts as insurance policy against growing AMR, pandemics, or bioterrorism10, 14 See advantages for patent buyout and payer license	Exceptionally high public cost to buy first-in-class drug10  Risk of cross-resistance undermining drug effectiveness without benefit from use65 See disadvantages for patent buyout and payer license
Service-availability premiums	Partially decouples profits from sales volume; promotes conservation efforts31 Acts as insurance policy against growing AMR, pandemics or bioterrorism31 Shift responsibility of long-term patient access to the antibiotic to the developer31 Reimburses the developer for all the ancillary services required for delivery of antibiotics, particularly in emergencies31 The premiums can be linked to mutually agreed key performance and conservation indicators31	Developer still incentivized to maximize sales before end of patent  Challenge to determine an appropriate size of annual fee  Difficult to incorporate key performance indicators linked to annual payments
Lego-regulatory pull strategies
Accelerated assessment and approval	Lowers cost of developing antibiotics12  Speeds up access to antibiotics66	May compromise safety and efficacy of approval process67, 68  Slows approval process for non-antibiotic drugs12  Does not benefit SMEs that have difficulty reaching the clinical trial assessment stages12 Increase public cost to expedite review and fund quickly released antibiotics
Market exclusivity extensions	Developer can recoup R&D costs that may not have been covered by a patent's effective life Monopoly prices can reduce inappropriate use of antibiotics46 An indefinite patent could place the responsibility of an antibiotic's long-term sustainability with developer70	High prices limit patient access and place significant financial burden on the health system70 Reduces pressure to develop new drugs12 Developer incentive to maximize sales before end of patent12 Delay generic entry and competition32
Wild-card extensions/ transferable intellectual property rights	Flexible reward that can be tailored to the stage of innovation the government wishes to incentivize72 Only rewards completed projects12 Sale of TIPR allows SMEs to benefit12	No mechanism to ensure efficacy of new antibiotic47  Transfers a rent to consumers of blockbuster drugs TIPR are applied to47 Distorts market signals by attaching reward to unrelated drug75
Conservation-based market exclusivity	Makes developers financially accountable for antibiotic resistance46 Aligns industry profit goals with public antibiotic stewardship goals See advantages of market exclusivity extensions	Requires expensive monitoring of antibiotic effectiveness  Maintains artificially high prices; limits patient access and places significant financial burden on the health system12 Does not prevent resistance outside the implementing country76 Cross-resistance can reduce effectiveness through no fault of developer65
Liability limitations	Incentivizes antibiotics for bioterrorism that are difficult to thoroughly test12 No upfront costs to the government12 Promote R&D of rare bacterial pathogens that may have little financial return to the developer without exposing themselves to potential lawsuits12	Extension of liability protection beyond those needed for national defense may instigate a slippery legal slope Insulation from liability may incentivize companies to be more reckless and push for broader indications for usage; may require closer government monitoring80
Anti-trust waivers	Encourages developers to hold antibiotics in reserve until needed12 Allows developers to cooperate to limit resistance12	Discourages competition and entry of generics; maintains high prices and lowers access12 Lack of threat of generic entry may stifle innovation47 Once a single drug in a class loses its patent, the ability of developers to control resistance through collusion fails70
Sui generis rights	Makes developers financially accountable for antibiotic resistance12 Encourage developers to be more conservative with indications and volume12	Maintains high prices; hinders patient access and places significant financial burden on the health system Unclear how this would affect the patent system as a whole12 Lack of threat of generic entry may stifle innovation47
Value-based reimbursement	Natural incentive for R&D into novel and high priority antibiotics46 Society pays for what it benefits from and values14 Higher prices can minimize inappropriate use of antibiotics14, 45 Dis-incentivizes low value knock-on R&D Opportunity for re-evaluation of reimbursement rates to reflect changes in antibiotic effectiveness14	Requires a substantial increase in reimbursement rates14  Requires expensive and slow health technology assessment of many drugs on the market14 Does not directly provide early-stage capital infusion needed by SMEs to overcome R&D barriers12 Strong link between developer revenue and sales volume; incentive to overmarket and promote antibiotics
The Generating Antibiotics Incentives Now Act	Government provides guidance and resources to developers to clarify authorization requirements and lego-regulatory processes12, 61 See advantages of market exclusivity extensions and accelerated assessment and approval	Eligibility definition is slow, inflexible and does not specify standards for safety and efficacy10, 88 Does not include any provisions for antibiotic conservation and appropriate use of new antibiotics89 GAIN market exclusivity extensions run concurrently with patent protection, and may not provide benefit to drugs that have a substantial period of exclusivity through their patent extension50 See disadvantages of market exclusivity extensions and accelerated assessment and approval
Limited Population Antibacterial Drug approval	Improves antibiotic access for patients38  Lowers development costs90  Regulatory body can monitor a LPAD's safety and efficacy38 Encourages firms to R&D drugs that combat rare pathogens and newly resistant strains of bacteria90 Narrow indication encourages LPAD antibiotics to be prescribed conservatively91	Difficult for physicians to administer an LPAD in accordance with its labeled indication as diagnostic services remain slow90 High prices on LPADs can prohibit patient access90
Priority review vouchers	Facilitates faster patient access to drugs expedited with vouchers92 Ability to sell to other firms allows SMEs to benefit from the program12 Possibility for voucher application to blockbuster drugs draws large cap firms to antibiotics market	Creates competition uncertainty in the entire pharmaceutical market32, 92 In the United States, requirement for holders to inform the Food and Drug Administration 1 year in advance of filing for a new drug application greatly diminishes value of a priority review voucher32 May compromise safety and efficacy of approval process67, 68 Reduced incentive to bring the antibiotic to market after the voucher has been sold49 Vouchers in the European Union are complicated by the decentralized regulatory system12
New technology add-on payment	Lowers revenue uncertainty by ensuring patient access50  NTAP rewards only successful, novel innovation50  Program has resulted in a decrease in Medicare spending51	Program's eligibility definition lacks clarity51  NTAP payments may be too low and do not provide enough of a mark-up to sufficiently incentivize developers51 Increased hospital reimbursement removes hospital efficiency incentives to conserve use of an antibiotic10
Developing an Innovative Strategy for Antimicrobial Resistant Microbes Act	Reduces the reimbursement risk for the developer53  Only successfully developed antibiotics are funded53  Reimbursement is attached to antibiotic stewardship53  Brings together key stakeholders to find a solution  See advantages of NTAP	See disadvantages of NTAP
21st Century Cures Act	Integrates an additional funding source that can be used for push incentives See advantages of LPAD approval and TIPR	Donation requirement may discourage firms from purchasing TIPR from successful antibiotic developers See disadvantages of LPAD approval and TIPR
Hybrid strategies
Special drug designation status	Orphan drug designation already exists in the United States and European Union12 Historically effective at stimulating R&D of drugs with poor reimbursement prospects Push funding promotes participation from SMEs32 See advantages of accelerated assessment and approval, market exclusivity extensions, direct funding, and tax incentives	Funding only covers clinical phases; minimal funding for necessary preclinical research93 Current orphan drug legislation focuses on long-term/chronic diseases; broad spectrum antibiotics not suitable for this designation High prices limit patient access and place significant financial burden on the health system12 Developer incentive to maximize sales12 See disadvantages of accelerated assessment and approval, market exclusivity extensions, direct funding and tax incentives
Options market for antibiotics	Allows countries to pool resources together and with nongovernmental organizations to incentivize R&D15 Funders can diversify their risk across developers and between drugs at different stages of development15 SMEs can receive the needed early funding to overcome initial R&D barriers15 Potential for secondary market that brings needed capital and liquidity to market15 Allow previously benched antibiotics to be reinstated based on improved profitability prospects15 Funder's purchase commitment controls some sales volume; promotes conservation efforts15 Options strike price can be set at the drug's marginal cost that delinks profit from sales volume15	Does not completely delink developer profit from sales volume unless the strike price is set at marginal cost Early investment places significant risk on the investor15 Prone to principal–agent problems as developers may try to game the system to secure more funding15 Does not directly encourage follow-on innovation unless multiple projects are funded in early stages15 Technically challenging to price the call options15
Office of Health Economics' model	Shares risk between funder and developer55  Partially delinks sales volume from developer profit; promotes conservation efforts55 Flexible local pricing allows price to reflect variation in resistance across regions55	Challenge to determine an appropriate size of annual fee to generate investment Local pricing may be difficult to implement in a free trade zone or within a single country Unclear how follow-on innovation will be incentivized Difficult to incorporate conservation criteria linked to annual payments
Antibiotic Conservation Effectiveness Program	Integrates well into existing quality reporting metrics14  See advantages of conservation-based market exclusivity, anti-trust waivers and value-based reimbursement14	Significant public cost from regulatory changes and monitoring  See disadvantages of conservation-based market exclusivity, anti-trust waivers and value-based reimbursement
Project BioShield Act	Creates a guaranteed market to fill federal stockpile needs and establish a credible purchasing agreement94 Milestone payments help SMEs with early development costs12 Allows access to antibiotics not yet approved by Food and Drug Administration in times of emergency94 See advantages of accelerated assessment and review, milestone prizes, direct funding and AMCs	Political indecision over purchase commitments has increased uncertainty for developers32, 53 Annual funding makes long-term planning difficult12 Contracts have generally been too small to attract large cap firms32 Not specifically targeted at antibiotics useful to the public Poor liability protection limits the effectiveness of the incentive32 See disadvantages of accelerated assessment and review, milestone prizes, direct funding, and AMCs
Rewarding Antibiotic Development and Responsible Stewardship Program	All key components of program already exist in the United States (NTAP and Project BioShield)56 Only rewards successful development Reduces reimbursement risk for developer56 Delinks revenue from volume and price (if guarantee large); reinforces conservation efforts and equity of access10	Higher prices afforded by NTAP erode the conservation efforts of the guarantee10 NTAP removes stewardship incentive of lower-priced diagnostic-related groups10 Hospital-based and United States centric; difficult to scale up Long period of NTAP risks overpaying for suboptimal drug in the future10
Antibiotics as Public Goods	Decouples profits from sales volume; reinforces conservation efforts10 Involves developing countries in R&D of antibiotics57 Focuses on early-stage development; lowers barriers of entry for SME57 Open source approach encourages collaboration among all stakeholders (particularly developing countries)95 Public ownership allows marginal cost pricing; improves equity of access10, 57 Global solution to a global problem; based on an internationally coordinated action plan	Early stage patent buy-out places high risk on funder97  Scientific risk with emphasizing only natural products as a source of new antibiotics96 Requires large financial outlay from funder Industry barriers to public ownership of IP New global agency required to publicly manage acquisition of patents57 Pricing buyout technically difficult International coordination and politics complicates the management of the fund
LPAD Plus	Decouples profits from sales volume; reinforces conservation efforts10 See advantages of LPAD Approval	Can increase uncertainty of developer revenue10  Pricing conservation incentive technically difficult10  See disadvantages of LPAD Approval
WHO Global Consortium	Funder gains control over antibiotic price and volume; supports conservation and access goals10, 13 Push incentives encourage crucial participation of SMEs12, 27 Push funding through entire value chain36 Public funding of clinical trials increases transparency and sharing of important clinical data,36, 37 Purchase commitments give strict control over volume and generic distribution36 Global solution to a global problem; based on an internationally coordinated action plan36	Pricing buyout technically difficult12  Almost all risk borne by public35  Challenge to generate significant international funding for such as consortium35 Industry barriers to public ownership of IP58 New entity may be needed to manage the entire supply chain35 Risk funding projects which fail12 Pushback from animal sector35, 98 Prone to principal–agent problem12
GlaxoSmithKline Delinkage Model	Funder gains control over antibiotic price and volume; supports conservation and access goals10 License negotiated before critical late-stage trials; reduces developer risk58 Funder not forced to roll over license if antibiotic becomes suboptimal10 Push incentives encourage crucial participation of SMEs58	Strategy not fully formulated10  Requires annual renegotiations of licenses; expensive transaction cost10 Pricing license technically difficult Early funding places financial risk on funder12 Enables developer inefficiency12 Prone to principal–agent problem12
Mechanisms to fund incentives
Fast-track option for funding	Flexible funding to finance multiple types of incentives59  Efficiency gains for both the developer and the public59  Allows developers that do not wish to participate in antibiotic development to contribute funds59	Only a funding mechanism and does not directly incentivize R&D  Fast regulatory review may compromise safety41, 67, 68  May require new auction system59
Antibiotic Corporate Bond	Flexible funding to finance multiple types of incentives31  Allows developers that do not wish to participate in antibiotic development to contribute funds Patent extensions could be offered to nonpharmaceutical industries31	Only a funding mechanism and does not directly incentivize R&D  Offering patent extensions to nonpharmaceutical industries raises legal issues31 Creates competition uncertainty in the markets patent extensions are offered Creates inequity in the patent system by allowing wealthy firms to outbid SMEs for patent extensions31 High prices associated with market exclusivity limit patient access and place significant financial burden on the health system31
Antibiotic Innovation and Conservation fee	Induces conservation of antibiotics through higher prices40  Fee can be adjusted to reflect value and risk of use of antibiotic40 Helps to sustain R&D funding programs and stewardship programs40	Only a funding mechanism and does not directly incentivize R&D  Tax may hinder appropriate use at point of care62

Abbreviations: AHIF, Antibiotic Health Impact Fund; AMC, Advanced Market Commitment; AMR, antimicrobial resistance; GAIN Act, Generating Antibiotic Innovation Now Act; IP, intellectual property; LPAD, Limited Population Antibacterial Drug; NTAP, new technology add-on payment; PDP, product-development partnership; R&D, research and development; SME, small- and medium-sized enterprises; TIPR, transferable intellectual property rights; WHO, World Health Organization.

Pull strategies

Outcome-based pull strategies

Outcome-based pull incentives (Figure 3) raise project valuation by increasing future revenue through promised monetary rewards. In contrast to push mechanisms, outcome-based pull incentives only compensate successful development. Given that all R&D risk is borne by the developer, firms are motivated to maximize efficiency and adhere to efficacy requirements set by the funder.^{13, 30}

Figure 3.

Outcome-based pull strategies.

However, financial risk and uncertainty are substantial deterrents for many potential market participants. This is particularly relevant to SMEs that may lack the resources to move from early-stage research to late-stage clinical trials. It is also difficult to determine an appropriate magnitude for the prize that must sufficiently motivate developers while remaining cost effective. In addition, it is a challenge to define the optimal set of drug characteristics linked to the reward so that they are neither perversely specific nor too general.¹² Finally, an effective outcome-based pull system relies on a government that is willing to stand by long-term guarantees.

Lego-regulatory pull strategies

Lego-regulatory pull incentives (Figure 4) are government policies that indirectly facilitate higher market returns for firms that launch a new antibiotic. Similar to outcome-based mechanisms, lego-regulatory strategies reward only successful research and thereby maximize R&D efficiency and motivation. In addition, by basing the incentive on market factors such as price and market exclusivity, lego-regulatory mechanisms circumvent the issue of determining an appropriate reward size.¹²

Figure 4.

Lego-regulatory pull strategies. AMR, antimicrobial resistance; IP, intellectual property; US, United States.

However, like outcome-based mechanisms, the financial risk of R&D is borne by the developer, thus excluding those firms that do not have substantial capital to market a promising antibiotic. Furthermore, many lego-regulatory mechanisms involve market exclusivity extensions that may dampen competition and innovation. When patents are extended, generic manufacturers are prevented from entering the market earlier and originators are less inclined to develop successive antibiotics that could cannibalize their exclusive market.¹²

Hybrid strategies

Each push, outcome-based pull and lego-regulatory pull mechanism has distinct advantages and disadvantages, but none provide a comprehensive solution to address the market failures outlined above. There is an increasing consensus that a single approach is not an adequate solution.^{12, 31} Therefore, a combination of the above incentives or a hybrid strategy (Figure 5) that balances the varying attributes of the mechanisms may be needed.

Figure 5.

Hybrid strategies. AMC, Advanced Market Commitment; EU, European Union; LPAD, Limited Population Antibacterial Drug; NTAP, new technology add-on payment; PDP, product-development partnership; P4P, pay-for-performance; US, United States.

Mechanisms to fund incentives

Some proposed strategies focus on how to fund the incentives discussed above (Figure 6). These mechanisms are not incentives themselves, but could be used to augment an incentive package and relieve some of the financial burden inherent to incentivizing R&D of antibiotics.

Figure 6.

Mechanisms to fund incentives. R&D, research and development.

Framework for selection of incentive strategies

Market criteria to create an attractive and supportive environment for investment

A plethora of potential incentive strategies exist, each with their own merits, drawbacks and level of complexity. Therefore, a framework would be useful to assist policy makers in selecting a comprehensive and effective incentive package. Given the serious market failures outlined earlier, the key goal of any antibiotics incentive package is the creation of an attractive and supportive environment for investment. To achieve this, the following market criteria must be met:

1. Improve the overall net present value (NPV) for new antibiotic projects.

2. Enable greater participation of SMEs.

3. Encourage participation by large pharmaceutical companies.

4. Facilitate cooperation and synergy across the antibiotic market.

Improve the overall NPV for new antibiotic projects

Net present value is the sum of all costs and revenues of a given project adjusted for the time value of money and risk of failure. It is a general measure of the profitability of a project. Sharma and Towse³² estimated the current risk-adjusted NPV for developing an antibiotic to be −$50 million. In contrast, the risk-adjusted NPV for a neurological drug is +$720 million, and for a musculoskeletal drug this figure soars to +$1.15 billion. As long as the NPV for antibiotic projects remains negative or relatively low, any company looking to maximize profits will not spend significant resources on this class of drugs. Financial incentives that increase revenues, decrease costs or lower the risk of R&D make investment more appealing to all market players. Sharma and Towse³² suggest that a reasonable target for NPV should be $200 million to make investment in antibiotics competitive with other therapeutic classes.

Enable greater participation of SMEs

Small biotech corporations and spinoffs from university research labs hold promising, novel ideas and actually make up a majority of pharmaceutical R&D market share. Munos²⁴ found that between the early 1980s to early 2000s, the proportion of all new drugs attributable to SMEs had increased from 23% to 70%. However, SMEs have much smaller capital reserves than large pharmaceutical companies, hindering the transition from initial research to expensive late-stage trials required for market approval. This is particularly detrimental to antibiotic development because the probability of clinical trial success for an antibiotic is positively weighted toward the later phases.³³ Thus, incentives that provide milestone payments, early seed money or reduce their cost of initial R&D allow smaller firms to move a promising antibiotic into the more favorable late-stage clinical trials.

Encourage participation by large pharmaceutical companies

Large market capitalization (large cap) pharmaceutical companies do not have the same capital restrictions faced by most SMEs. If a project is determined to be significantly profitable, then large pharmaceutical firms can often secure the needed funding. However, they are more concerned with the antibiotic market's uncertainty with regard to size, risk, volatility and regulation. Large cap companies need annual revenues of ∼$800 million for a drug to remain profitable.³⁴ In contrast, SMEs often only need to generate revenues of $100 to $200 million per year.³⁴ For this reason, large companies seek greater revenue certainty and regulatory transparency. These come from credible market commitments as well as large financial rewards for successful antibiotic development.

Facilitate cooperation and synergy across the antibiotic market

There is an opportunity to encourage cooperation and synergy among key industry, academic and government players in the antibiotic market. This involves sharing information, resources and expertise among stakeholders to create additional value in the market. The ideal incentive would reward collaboration by encouraging firms to cooperate to meet public health goals, share important human resources, streamline the supply chain and improve regulatory transparency. Not only do these incentives indirectly reduce the cost of antibiotic R&D, but they also help to align public and private priorities.

A market-based framework for incentive selection

The primary goal of an incentive package is to create an attractive and supportive market for investment in antibiotics. As discussed above, this is accomplished by improving the NPV of antibiotic R&D projects, lowering barriers for SME participation, encouraging large cap companies to invest in the market and facilitating cooperation and synergy among all stakeholders. The following framework (Table 2) is an incentive classification system based on these four market criteria.

Table 2. Market-based framework for selection of incentive strategies.

Incentive type	Definition
1 Broad-spectrum market incentives	Meet all four market criteria
2 Participation-focused incentives	Improve NPV and entice both SMEs and large cap firms to invest in antibiotic R&D but may not facilitate cooperation and synergy
3 Collaboration and synergy-focused incentives	Facilitate cooperation and synergy
4 SME-focused incentives	Improve NPV and primarily benefit just SMEs but may not facilitate cooperation and synergy
5 Large cap-focused incentives	Improve NPV and primarily benefit just large cap firms but may not facilitate cooperation and synergy
6 Weak market incentives	Incentives or funding mechanisms that only meet one of the four market criteria

Abbreviations: NPV, net present value; R&D, research and development; SME, small- and medium-sized enterprises.

It then follows that an incentive package that aims to create a supportive and attractive market for investment in antibiotics could be created through:

1. A single type 1 incentive.

2. A combination of type 2 and type 3 incentives.

3. A combination of type 3, type 4 and type 5 incentives.

Type 6 incentives could be used, but tend to be weaker market incentives and may be less effective at generating investment and market interest. As seen in Table 3, each incentive has been classified into one of the six types, depending on its ability to meet the market criteria.

Table 3. Classification of incentive strategies using the market-based framework.

Type 1: Broad-spectrum market incentives
PDP (Ps)  Special drug designation (H)	Antibiotics as public goods (H)  WHO global consortium (H)
Type 2: Participation-focused incentives
Refundable tax credit (Ps)  Milestone prizes (Pl)  AIFM (Pl)	OMA (H)  Project BioShield (H)  GlaxoSmithKline's Delinkage (H)
Type 3: Cooperation/synergy-focused incentives
Supporting open access (Ps)  Funding translational research (Ps)  AHIF (Pl)  LPAD (LR)	Anti-trust waivers (LR)  RADARS Program (H)  LPAD Plus (H)
Type 4: SME-focused incentives
Grants for scientific personnel (Ps)  Direct funding (Ps)  Conditional grants (Ps)  Service-availability premiums (Pl)	Patent buyout (Pl)  Optional reward (Pl)  Strategic Antibiotic Reserve (Pl)
Type 5: Large cap-focused incentives
Tax incentives (Ps)  Lump sum monetary prize (Pl)  Payer license (Pl)  AMC (Pl)  Accelerated assessment and approval (LR) Market exclusivity extensions (LR) Conservation-based market exclusivity (LR) TIPR (LR) Liability protection (LR)	Sui generis rights (LR)  Value-based reimbursement (LR)  GAIN Act (LR)  Priority review vouchers (LR)  NTAP (LR)  DISARM (LR)  21st Century Cures Act (LR)  Office of Health Economics' Model (H)  ACE Program (H)
Type 6: Weak market incentives
P4P (Pl)  Research tournament (Pl)  Antibiotic corporate bond (F)	Fast-track option for funding (F)  AIC fee (F)

Abbreviations: ACE, Antibiotic Conservation Effectiveness; AHIF, Antibiotic Health Impact Fund; AIC, Antibiotic Innovation and Conservation; AIFM, Antibiotic Innovation Funding Mechanism; AMC, Advanced Market Commitment; DISARM, Developing an Innovative Strategy for Antimicrobial Resistant Microbes; F, incentive funding mechanism; GAIN Act, Generating Antibiotic Innovation Now Act; H, hybrid push–pull incentive; LPAD, Limited Population Antibacterial Drug; LR, lego-regulatory incentive; NTAP, new technology add-on payment; OMA, options market for antibiotics; P4P, pay-for-performance; PDP, product-development partnership; Pl, pull incentive; Ps, push incentive; RADARS, Rewarding Antibiotic Development and Responsible Stewardship; SME, small- and medium-sized enterprises; TIPR, transferable intellectual property rights; WHO, World Health Organization.

Factoring in public health objectives: stewardship and access

Beyond creating a viable market for antibiotics, an incentive package should reinforce broader public health objectives pertaining to AMR. There are two key public health objectives that are interrelated with the economic aspects of an antibiotics market:

1. Promoting antibiotic stewardship.

2. Improving patient access to new antibiotics.

Promoting antibiotic stewardship

Research and development of antibiotics also needs to be sustainable in addition to being profitable. The traditional patent-based business model rewards developers through market exclusivity, providing the opportunity to command high prices. Once a patent expires, the market is flooded with generic drugs that compete based on sales volume in a race against impending resistance.¹⁰ This unsustainable business model reinforces the overmarketing and overconsumption of antibiotics that has contributed to high levels of AMR. Simply increasing developer return on investment does not address this problem directly. Numerous experts have proposed antibiotic business models that reinforce conservation efforts by completely severing a developer's return on investment from sales volume and price (for example, Antibiotic Health Impact Fund (AHIF), Antibiotics as Public Goods and Rewarding Antibiotic Development and Responsible Stewardship Program (RADARS)). This concept is known as delinkage and is beneficial for three key reasons.¹⁰ First, it provides developers with a concrete return on investment that is extraneous to the market. Second, delinkage removes the motivation for developers to oversupply their antibiotic. Third, it facilitates access to new antibiotics for those who need them most. Other experts advocate the use of demand-side antibiotic usage fees to internalize the negative externalities accompanying antibiotic use (for example, Antibiotic Innovation and Conservation (AIC) fee and Antibiotic Innovation Funding Mechanism (AIFM)). This fee can then be used to finance other incentive mechanisms such as milestone payments or end prizes.

Improving patient access to new antibiotics

Patient access to new antibiotics plays an important role in controlling the spread of AMR and preserving existing antibiotics. However, under the current patent-based business model, developers are incentivized to distribute their new antibiotics based on ability to pay instead of need.¹⁰ This may not be a problem for countries with universal access to pharmaceuticals. However, for those countries without complete public pharmaceutical coverage, drug prices remain a significant hurdle to patient access. This issue can be complicated by conservation-related restrictions on antibiotic use as well as technical challenges with distribution. This may be overcome by transferring or licensing out a new antibiotic's patent to the government along with the responsibility of distribution and equitable access (for example, patent buyout and payer license). Other proposals streamline the regulatory approval process to allow new antibiotics with significant therapeutic value to reach the market faster (for example, Limited Population Antibacterial Drug (LPAD) approval and special drug status).

Factoring in public health objectives

Selection of incentives using the above market framework must be done with consideration of public health goals. An incentive package that meets the four market criteria may not effectively support these public health goals. For instance, the type 1 incentive, special drug designation, does not align developer promotion and marketing goals with conservation priorities. In this case, an additional incentive or incentives are necessary to augment this package. Aspects of conservation could be encouraged through conditional grants and pay-for-performance (P4P) prizes alongside the special drug designation incentives that stimulate market investment. In some cases, incentives may directly contravene public health objectives. For example, market exclusivity extensions and value-based pricing directly incentivize firms to continue overmarketing antibiotics and distributing based on ability to pay. For this reason, these types of incentives may need to be altered or not included in the package. Market exclusivity extensions could be swapped out for conservation-based market exclusivity extensions and value-based pricing could require continual reassessment to reflect antibiotic effectiveness.

Factoring in implementation feasibility

Not only does any potential incentive package need to be comprehensive, it must also be feasible. Many of the proposals discussed have been developed on a theoretical level, but rarely tested or deployed. Although design of appropriate incentives is challenging, it pales in comparison with the political, regulatory, industry and financial hurdles that may be faced during implementation. A comprehensive strategy that is unwieldy, too complex and financially unreasonable provides no advantage. Therefore, more pragmatic design constraints must be considered. These will ultimately reflect a nation's political priorities, operational realities and industry demands concerning:

1. The size of the incentives.

2. The timing of incentive delivery.

3. Governance of the incentive package.

4. International coordination.

5. Intellectual property rights.

There are obvious financial constraints on the size of the incentive, as well as differing philosophies on the role of direct government involvement. A related challenge concerns managing the selected incentive package. A new regulatory agency or governing body may be required to determine public health priorities, define the optimal number and depth of drug specifications linked to incentives, calculate socially fair rewards and monitor development progress. This is especially important as many of the recent proposals operate on a global scale and require coordination, input and agreement across borders (for example, AHIF, AIFM and WHO Global Consortium). This new organization could operate under a new agency or as part of an existing forum such as the G-20.

It is increasingly recognized that delinking sales volume from financial motivation to develop antibiotics is valuable to controlling AMR and facilitating equitable access to novel antibiotics.¹⁰ Several delinkage models such as patent buyouts, AHIF and AIFM are based on the concept of transferring intellectual property (IP) to the public domain that poses a major hurdle to implementation. From a public health perspective it makes sense to shift control of new antibiotic IP from the private to the public domain, but this change poses a risk to the industry. Many pharmaceutical companies want to keep patent rights because it provides additional assurance that costs can be recouped if incentives and policies are reneged or are inadequate. If transferring IP to the public domain is not feasible, these types of delinkage models become irrelevant. However, if this were the case, delinkage can still be created through incentives such as payer licenses, guaranteed revenue minimums or advanced market commitments (AMCs). Table 4 summarizes our assessment of each incentive strategy based on the market criteria, the public health objectives and implementation feasibility.

Table 4. Criteria-based assessment of incentive strategies.

Example applications of the framework

Given the market failures endemic to antibiotic R&D, an incentive package should first correct market deficiencies. The framework outlined above is useful for this purpose. The package can then be augmented to address public health issues regarding antibiotic conservation and patient access. The following are three examples of the application of the above framework in devising an appropriate incentive strategy.

Scenario 1: A single type 1 incentive

The WHO's Global Consortium for stimulating antibiotic R&D is a well-rounded, hybrid model with five parts: (1) support at the drug discovery stage through milestone prizes and an open source platform, (2) grants for academics, SMEs and big pharmaceutical firms to lower development barriers and risk, (3) patent buyout prizes for proven novel antibiotics, (4) public funding of clinical trials and (5) advance purchase commitments to preserve antibiotics.^{35, 36} The WHO model attempts to create a product-development partnership (PDP) across the entire pharmaceutical value chain, or what is referred to as a global consortium. The WHO Global Consortium explicitly addresses each of the six objectives. Early milestone payments enhance project NPV by reducing early costs that can have an even greater impact overall because of the time value of money. SME participation is explicitly encouraged with early-stage grants and an open source platform. Public funding of clinical trials appeals to large and small firms alike by reducing overall project costs and risk.³⁷ Patent buyouts facilitate antibiotic stewardship by negating the need for excessive marketing or production. However, to be attractive, these end prizes would need to be sufficiently large, and calculating this in such a way to minimize waste while providing sufficient incentive may prove difficult. Patient access could be assured by partnering with worldwide generic producers who could keep costs low for patients.¹⁰ Still, the consortium itself, along with its financing for public trials and end prizes, would have to be publicly financed, shifting costs and risk to the public sector. Given the massive scope of this model, there are numerous implementation issues that pose serious challenges to overcome. These include attaining adequate public funding for grants, patent buyouts and clinical trials, coordinating a new global entity to manage the consortium and liaising with industry to reach an agreement on IP rights.¹⁰

Scenario 2: A combination of a type 2 and type 3 incentives

The Options Market for Antibiotics (OMA) model is a hybrid mechanism that allows government or nongovernmental organization purchasers to invest in a drug in early-stage development. In this model, funders may purchase the right to buy a specified number of antibiotics at a reduced price, if and when the antibiotic ever made it to market.¹⁵ In many ways, this could be considered a form of milestone payments, but with a future discount for options holders. The early payments, if large enough, could both improve the overall NPV and enable greater participation of SMEs. Larger pharmaceutical firms may be attracted by the risk-sharing element of the venture, in that funders may pay when antibiotics are in early clinical development. This also indirectly signals a potential commitment to purchase the product upon marketing approval. Lower prices or even marginal cost pricing at marketing approval will help to facilitate patient access. In addition, antibiotic stewardship can be promoted by combining the OMA with an AMC. Bulk purchasing commitments would shift control of sales volume to the sponsor and allow for appropriate distribution of the antibiotic. However, such a scheme would do little to directly facilitate cooperation among corporations, unless it was combined with modifications to anti-trust laws. If enacted in isolation, anti-trust waivers could hinder patient access to medicine by allowing collusion among producers to maintain artificially high prices. The goal of such reforms would be to promote cooperation and synergy across the antibiotic market.¹² Although cooperation would be desirable in the early development phases, it would not be desirable in the marketing phase with regards to setting prices. Such reforms could be applied to the OMA model by allowing companies to share early-stage data, potentially increasing the transitional probabilities from one phase to the next in later development.

Scenario 3: A combination of type 3, type 4 and type 5 incentives

The Antibiotic Conservation Effectiveness (ACE) Program is a hybrid strategy that combines outcomes-based and lego-regulatory pull mechanisms with the objective of promoting antibiotic conservation. The Program has four key components: (1) P4P payments centered on public health and conservation goals, (2) conservation-based market exclusivity, (3) value-based reimbursement that ties drug pricing to the effectiveness of the drug and (4) anti-trust waivers that allow coordination of conservation activities between developers.¹⁴ Given the pull-centric nature of the ACE Program, this incentive package particularly targets large cap pharmaceutical companies. Therefore, it would be beneficial to augment this package with a SME-focused incentive such as direct funding. Antibiotic research addressing specific health priorities can be targeted through direct funding and can include expert technical and managerial help that may prove useful to SMEs with less experience. The ACE Program does not facilitate patient access nor promote cooperation and synergy between industry and the government. Thus, there is role for a LPAD approval system in this incentive package. Under the LPAD approval system, the safety and efficacy of an antibiotic targeting a newly resistant pathogen would be examined through smaller, faster and less costly clinical trials. LPAD-designated antibiotics would be limited to a narrow indication for which there is a particularly high patient need and therapeutic benefit. With this system the regulatory agency would provide significant guidance to the developer and continue monitoring the effectiveness of the drug beyond approval.³⁸

In transitioning from single incentives to more complex, international business models, implementation becomes significantly more difficult. A feasible, yet comprehensive, incentive strategy likely will include a wide selection of smaller incentives that collectively address market and public health aspects as opposed to a revolutionary antibiotic business model. In our opinion, the ideal package would include several incentives that facilitate cooperation and synergy throughout the market, one or two R&D-linked push incentives and a large pull incentive rewarding successful development.

Conclusion

Antimicrobial resistance is a complex health policy problem. Multiple market failures make it financially unattractive for pharmaceutical and biotechnology companies to invest in antibiotic discovery and development. This problem is complicated by incentives to oversell antibiotics and distribute based on ability to pay instead of need. This systematic literature review has identified 47 incentives that could be used to encourage and accelerate R&D of novel antibiotics. These incentives have been classified using the push–pull framework and their individual advantages and disadvantages have been evaluated. However, given the large number of possible incentive schemes, a decision framework is needed to help select an effective package of incentives. An ideal solution will tackle the market deficiencies that have resulted in the stagnant market, address the public health priorities that reflect the growing need for a sustainable solution to AMR and operate within implementation constraints. Because of the complexity of the problem, we suggest first developing an incentive package that addresses the core market failures. This can be further enhanced to achieve public health objectives such as antibiotic conservation and patient access. The above framework acknowledges that there are multiple viable solutions to stimulating antibiotic discovery and development that will ultimately be determined by government priorities, industry demands and operational realities unique to a particular country.

The authors declare no conflict of interest.