Working Paper: CEPR ID: DP15512
Authors: Lucas Bottcher; Hans Gersbach
Abstract: Starting from a general framework for the study of antibiotic-resistance, we introduce a market-based refunding scheme that incentivizes companies to develop antibiotics against resistant bacteria and, in particular, narrow-spectrum antibiotics that target specific resistant bacterial strains. Successful companies can claim a refund from a newly-established antibiotics fund that partially covers their development costs. The refund involves a fixed and variable part. The latter increases with the use of the new antibiotic for resistant strains-the "resistance premium"-and it decreases with the use for non-resistant bacteria-the "non-resistance penalty". We outline how such a refunding scheme can solve the so-called "antibiotics dilemma", which states that new antibiotics againstresistant bacteria are of high societal value, but unattractive for companies, since sales are low. We illustrate that the refunding scheme can cope with various sources of R&D uncertainty and we discuss how the antibiotics fund could be financed.
Keywords: antibiotic-resistance; antibiotics dilemma; R&D incentives; refunding scheme; narrow-spectrum antibiotics; R&D uncertainty
JEL Codes: D62; H20; I10; L65; O30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| refunding scheme (H23) | development of narrow-spectrum antibiotics (L65) |
| refunding scheme (H23) | better treatment protocols (C22) |
| refunding scheme (H23) | lower share of resistant strains (L42) |
| refunding scheme (H23) | cope with R&D uncertainties (O32) |
| development of narrow-spectrum antibiotics (L65) | reduce prevalence of resistant strains (L42) |