TY - JOUR
T1 - Incentives for new antibiotics
T2 - The Options Market for Antibiotics (OMA) model
AU - Brogan, David M.
AU - Mossialos, Elias
N1 - Funding Information:
This conclusion highlights the most vexing aspect of the antibiotic development shortage: how to simultaneously stimulate research and pay for R&D costs while ensuring affordability. Traditionally, incentives to encourage research for neglected drugs have fallen into two main types – push and pull methods-each with its own shortcomings [19]. Push mechanisms focus on moving the supply curve by decreasing the cost and burden of risk to the developer. This is accomplished with direct funding from grant making bodies, tax breaks and patent pools [20]. Unfortunately, while these mechanisms facilitate research on the front end, they have no inherent ability to further reward successful completion of a drug development project, potentially misaligning the incentives of the developers and the funders.
PY - 2013/11/7
Y1 - 2013/11/7
N2 - Background: Antimicrobial resistance is a growing threat resulting from the convergence of biological, economic and political pressures. Investment in research and development of new antimicrobials has suffered secondary to these pressures, leading to an emerging crisis in antibiotic resistance.Methods: Current policies to stimulate antibiotic development have proven inadequate to overcome market failures. Therefore innovative ideas utilizing market forces are necessary to stimulate new investment efforts. Employing the benefits of both the previously described Advanced Market Commitment and a refined Call Options for Vaccines model, we describe herein a novel incentive mechanism, the Options Market for Antibiotics.Results: This model applies the benefits of a financial call option to the investment in and purchase of new antibiotics. The goal of this new model is to provide an effective mechanism for early investment and risk sharing while maintaining a credible purchase commitment and incentives for companies to ultimately bring new antibiotics to market.Conclusions: We believe that the Options Market for Antibiotics (OMA) may help to overcome some of the traditional market failures associated with the development of new antibiotics. Additional work must be done to develop a more robust mathematical model to pave the way for practical implementation.
AB - Background: Antimicrobial resistance is a growing threat resulting from the convergence of biological, economic and political pressures. Investment in research and development of new antimicrobials has suffered secondary to these pressures, leading to an emerging crisis in antibiotic resistance.Methods: Current policies to stimulate antibiotic development have proven inadequate to overcome market failures. Therefore innovative ideas utilizing market forces are necessary to stimulate new investment efforts. Employing the benefits of both the previously described Advanced Market Commitment and a refined Call Options for Vaccines model, we describe herein a novel incentive mechanism, the Options Market for Antibiotics.Results: This model applies the benefits of a financial call option to the investment in and purchase of new antibiotics. The goal of this new model is to provide an effective mechanism for early investment and risk sharing while maintaining a credible purchase commitment and incentives for companies to ultimately bring new antibiotics to market.Conclusions: We believe that the Options Market for Antibiotics (OMA) may help to overcome some of the traditional market failures associated with the development of new antibiotics. Additional work must be done to develop a more robust mathematical model to pave the way for practical implementation.
KW - Antibiotic development
KW - Antimicrobial resistance
KW - Incentive mechanisms for new antibiotics
KW - Options Market for Antibiotics
UR - http://www.scopus.com/inward/record.url?scp=84887342969&partnerID=8YFLogxK
U2 - 10.1186/1744-8603-9-58
DO - 10.1186/1744-8603-9-58
M3 - Article
C2 - 24199835
AN - SCOPUS:84887342969
SN - 1744-8603
VL - 9
JO - Globalization and Health
JF - Globalization and Health
IS - 1
M1 - 58
ER -