How do we Get and Pay for New Antibiotics? Proposed New Models for Value Assessment and Contracting for Payment.

Article by: Adrian Towse

This presentation to the Australian Society for Antimicrobials (ASA) meeting in Melbourne on 27th February 2020, draws on OHE research funded by the Wellcome Trust, on adapting HTA methods and contracting for new antibiotics. It analyses UK (NICE and NHSE) plans to introduce a subscription model (delinking use of new antibiotics from payments for making the products available) and suggests that Australia could also pilot such an approach.

Antibiotics available today are becoming obsolete at a fast pace, and industry development pipelines of antibiotics are weak. Prices for new antibiotics are low (because they do not reflect the value of these products to society) and sales volumes are also low (because infectious disease clinicians want to conserve new drugs for use in multi-drug resistant patients to preserve the effectiveness of these drugs for as long as possible). As a result, revenues are too low to justify R&D investment.

Various initiatives, for example CARB-X and the G20 AMR R&D hub, are seeking to increase R&D, notably through the use of ‘push’ incentives. However, without an effective market (a ‘pull’ incentive) there will not be enough new antibiotics. 

Solving the value assessment challenge.

Value assessment of new drugs is typically based around RCTs to show clinical superiority against a comparator treatment. This is a problem for new antibiotics because estimates of effectiveness in patients to be treated are typically based on non-superiority trials and non-clinical data (such as PK/PD and in-vitro microbiological data) which are typically not accepted by HTA agencies. Moreover, a considerable part of antibiotic value arises from externalities (benefits and costs to the non-treated individuals) which are not measured in RCTs. The typically ‘not included’ elements of the value of new antibiotics appear to be much larger than the immediate health gain to the patient.

We need HTA bodies to (i) accept new approaches to measuring effectiveness and (ii) to value these ‘not included’ elements, beginning with those, such as the value of reduced transmission, that have the greatest impact on overall value, and for which it is possible to generate evidence. Research has been done but more is needed to improve measurement of these effects. Expert elicitation will be crucial to get estimates to inform assessment of these ‘not included’ elements of value.

Solving the contractual challenge

Most pricing & reimbursement arrangements agree on a price per pill. This is a problem for new antibiotics because stewardship arrangements limit use of the drug during the period of patent protection to optimise long term social value.  These low volumes will not provide a return on investment for developers. Several proposals have been put forward in Europe and the USA for delinking payments for new antibiotics from the volumes used. The UK proposals by NICE and NHS England have the overall objective to put in place a subscription model for purchasing antibiotics and ensure that learnings are shared with the international community.  There are three elements:

  1. Selection of candidate drugs: with a pilot planned of 2 drugs, one new and one existing, with separate procurement lots, and the use of procurement through ‘competitive dialogue’.
  2. Valuation: with use of modified NICE HTA processes including use of pre-clinical data (e.g. PK/PD data) to estimate health gain, and expert opinion to estimate cost savings and AMR specific elements of diversity; transmission; enablement; spectrum benefits; and the insurance benefits of the new antibiotic.
  3. Contracting: which is expected to be a fully delinked subscription model, with pre-agreed payments linked to delivery of data and of product when needed. The period of the contract is not yet specified, but it could be 5 years, renewable with new data.

The UK AMR 5 year vision was launched in January 2019; the pilot launched in July 2019; a stakeholder update was given in Nov 2019; draft documents are expected in March /April 2020.

Like the UK, Australia has high quality HTA valuation expertise for new vaccines and for new drugs. The experience of its ‘Netflix’ style subscription model for Hep.C DAA drugs indicated to rest of the world Australia’s ability to undertake innovative contracting arrangements. It has the skills to introduce a subscription model along the broad lines of the UK approach with three elements:

  1. Selection process for candidates (The UK is planning 2 products initially)
  2. Valuation process – recognition that expert opinion will inform conventional HTA approaches, with the need for ad hoc approaches whilst more detailed approaches are developed
  3. Contracting – multi-year ‘delinked’ contract with an obligation to supply in line with clinical protocols that enforce appropriate stewardship of existing and new antibiotics.

There is the challenge of a Federal scheme displacing State funding for hospital drugs. This is comparable in some ways to the UK challenge of replacing decentralised hospital contracts finances with a national subscription contract.

The more experience the international community develops in contracting for new antibiotics, the sooner we will learn how to get this right. 

Please see slides below:

A short four-page summary of the OHE research project is available to download as a PDF. A podcast based on the presentation can be listened to here


The research on which this presentation was based was funded by the Wellcome Trust.

The trip to Australia to speak at Antibiotics 2020 was funded by MSD (Merck & Co.)

Related Research:

Ferraro, J., Towse, A. and Mestre-Ferrandiz, J., 2017. Incentives for New Drugs to Tackle Anti-Microbial Resistance. OHE Briefing. London: Office of Health Economics. RePEc.

Karlsberg Schaffer, S., West, P., Towse, A., Henshall, C., Mestre-Ferrandiz, J., Masterson, R. and Fischer, A., 2017. Assessing the Value of New Antibiotics: Additional Elements of Value for Health Technology Assessment Decisions. OHE Briefing. London: Office of Health Economics. RePEc.

Towse, A., Hoyle, C., Goodall, J., Hirsch, M., Mestre-Ferrandiz, J., Rex J. 2017. Time for a Change in How New Antibiotics are Reimbursed: Development of an Insurance Framework for Funding New Antibiotics based on a Policy of Risk Mitigation. Health Policy



Posted in Health Technology Assessment, Drug Development/R&D, Countering AMR | Tagged Presentations