Antibiotic-resistance: we need better incentives

(…) And going to the hospital has itself become alarmingly risky. Already, 1.7 million people in the U.S. acquire infections in the hospital each year, resulting in 99,000 deaths, according to the Centers for Disease Control and Prevention.

(…) “A lot can happen in the several days that it takes for the doctor and the patient to determine that the first antibiotic that was given didn’t work,” Mellon said.

We were traveling and thus missed Megan McArdle’s Ocober 2011 analysis. I highly recommend a careful read to reflect on the scale of the problem and some possible policy solutions. There are a number of problems contributing to poor investment incentives plus poor incentives to maximize the utility of new molecules.

(…) The problem is, efforts at promoting conservation may discourage innovation—and vice versa. Some hospitals now require infectious-disease doctors to sign off on the use of newer and more powerful antibiotics. But this has a cost. “When a new antibiotic comes out,” Pfizer’s Utt says, “physicians don’t necessarily use it—they tend to hold it in reserve. So by the time it’s being used, it’s already used up part of its marketable patent life.” As a result, fewer large firms may want to spend the time and money to get these drugs approved—according to the IDSA, only two major drug companies (GlaxoSmithKline and AstraZeneca) still have strong active research programs, down from nearly 20 in 1990. Antibiotics are not big moneymakers: Every time a doctor writes a prescription for Lipitor, Pfizer may gain a customer for decades. But short-course drugs like antibiotics sell perhaps a dozen doses.

(…) Those same critics suggest that perhaps we should take this out of the invisible hands of the market. Historically, we’ve solved tragedy-of-the-commons problems either through privatization, as Britain did with its land, or through nationalization, as many nations have done with their military and police. If the market doesn’t work, why not try the government?

Even many libertarian types agree that the commons problem seems to call for stronger state controls over antibiotics. But how far should that go? Government and academia perform vital basic research, but they haven’t delivered a lot of working drugs. “What would be nice,” says Daemmrich, “would be to have free-market mechanisms reward new-drug discovery even as the use of antibiotics was limited to infections that don’t go away on their own.”

One possibility is to have the government buy all the antibiotics on a sliding scale: so many billion dollars for a first-in-class antibiotic, half that amount for a second-in-class, and so forth. The government could then restrict the antibiotic’s use. I’ve posed this possibility to people at pharmaceutical companies and gotten a surprisingly warm reception. Another idea, proposed by Outterson and a colleague, Harvard’s Aaron Kesselheim, is to change the reimbursement system so that companies get paid more when fewer of their drugs are prescribed, as part of a conservation plan. “Let’s say Bayer had a diagnostic test that could quickly tell whether you had a bacterial or viral infection. Right now, the only thing that this would do is knock down their unit sales [of antibiotics]. We should reward companies like Bayer if they bring out a diagnostic like this—their unit sales might decrease by half, but if so, we should quadruple their unit price.” Or we could have special rules for antibiotics patents: instead of a 20-year term, make them renewable annually for drug companies that promote conservation.

These ideas sound elegant and simple in a magazine article. In the real world, they’d be messy and controversial. The government would be getting into the business of fixing prices. Likely, it would overshoot, handing windfall profits to firms, or undershoot, leaving us without enough drugs to treat emerging resistant infections. But the potential for such mistakes shouldn’t stop us from trying to pursue creative public-private solutions. We just need to be prepared to face a lot of yelling.

Especially since the way to reward conservation is not entirely clear. Laxminarayan notes, “Whether resistance develops is not entirely a function of what the manufacturer does—it’s a function of what other manufacturers do as well.” Not to mention doctors, and patients, not all of whom are, ahem, entirely compliant.

If you are not totally depressed, read the June 14, 2011 McArdle analysis “How Superbugs Will Affect Our Health Care Costs. That article is based on “The ‘return of our old enemies in an untreatable form’” by the Remapping Debate. Please read both articles for discussion of the following two figures — these two trends can only end very badly:

Note that the first chart does not include the resurgence of multidrug resistant (MDR) and extensively drug resistant (XDR) tuberculosis.