Missing Pieces of the Puzzle to Address Market Failures for Antibiotics: Delinked Payment Systems and Insurance Value

Neil Hawkins (), Adrian Towse () and Amanda Adler ()
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Neil Hawkins: School of Health and Wellbeing, University of Glasgow
Adrian Towse: Office of Health Economics
Amanda Adler: University of Oxford

PharmacoEconomics - Open, 2025, vol. 9, issue 5, No 1, 707-712

Abstract: Abstract Too few companies develop new antibiotics because of the threat of market failure. To address this, a ‘delinked’ payment, distinct from the usual payment model for drugs, makes payments to manufacturers that do not depend on the volume of antibiotic prescribed. A delinked system removes incentives to overpromote antibiotic use. If total payments are high enough, this system should provide incentives for manufacturers to develop new antibiotics. This assumes that using antibiotics remains consistent with antimicrobial stewardship, a coordinated approach to prescribing antimicrobials responsibly. A delinked system can address market failure that occurs when a disproportionate degree of clinical benefit from a new antibiotic occurs after patent protection ends, reducing the ‘reward’ to the innovator. Determining value in a delinked payment system requires that the health service estimates the lifetime value of an antimicrobial product, and then decides what proportion of that value to include. These values depend in part on ‘STEDI’ values including the ‘insurance’ value new antibiotics would offer in reducing society’s risk of major health loss from possible future major episodes of antibiotic resistance. Estimating insurance value requires estimating the health consequences of catastrophic outcomes. Payments in a delinked system can incorporate an ‘insurance premium’. We use the example of the UK’s delinked payment scheme to illustrate issues and solutions.

Date: 2025
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DOI: 10.1007/s41669-025-00591-1

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