Promoting Antibacterial Drug Development: Select Policies and Challenges

Aylin Sertkaya (), Amber Jessup and Hui-Hsing Wong
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Aylin Sertkaya: Eastern Research Group, Inc.
Amber Jessup: Office of the Assistant Secretary for Planning and Evaluation, Office of Science and Data Policy
Hui-Hsing Wong: Office of the Assistant Secretary for Planning and Evaluation, Office of Science and Data Policy

Applied Health Economics and Health Policy, 2017, vol. 15, issue 1, No 12, 113-118

Abstract: Abstract Background The development pipeline for antibacterial drugs has not met the demand of hospitals and healthcare providers struggling to cope with increasing problems of antibacterial resistance. Although the challenges associated with antibacterial drug development have been known for some time, previous efforts to address them have not been sufficient. There remains an urgent need for targeted incentives to foster antibacterial drug development while encouraging prudent use. Objective We examine the effects of two types of incentives, a 5-year delay in competition from generics and a lump-sum US$50 million prize payment upon successful US Food and Drug Administration approval, on antibacterial drug company returns. Methods We use the decision-tree framework developed in a study for the US Department of Health and Human Services, which models the drug company’s decision process as a revenue maximizer under uncertainty. Results Our results show that, to maximize societal benefit, such incentives need to take into consideration the indication(s) the new antibacterial drug is designed to treat as well as the drug development stage. Conclusions Optimal policies should maximize the difference between societal benefit, primarily measured as the reduction in public health burden from the development of a new antibacterial drug that treats an infectious disease while ensuring prudent use, and social cost. Here, we show that the two types of policies examined under-incentivize early-stage developers (i.e., do not achieve the desired outcome) and over-incentivize late-stage developers (i.e., achieve the desired outcome but at a cost that is higher than needed) ceteris paribus.

Date: 2017
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DOI: 10.1007/s40258-016-0279-5

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