What is the revenue guarantee/subscription model? 

The European Commission is proposing that the EU develop and implement “procurement mechanisms for access to new and existing antimicrobials that would guarantee revenue for antimicrobials marketing authorisation holders, regardless of sales volumes” (COM (2023) 190 final). In this blog we set out: 

  • What a revenue guarantee means 
  • How big an EU guarantee is needed to incentivise innovation 
  • Evidence from pilots in Sweden and the UK 
  • How a revenue guarantee scheme could be implemented within the EU? 
  • Whether a revenue guarantee is the best option for Europe. 

Revenue guarantee and subscription models are similar and related types of pull incentive providing guaranteed payment(s) upon an agreed milestone (such as meeting a required product profile, receiving marketing authorisation, and/or making the product available in the necessary volumes or having the capacity to do so). In the context of AMR, revenue guarantees and subscriptions are typically ‘volume-delinked’ (meaning the size of the payment is not contingent on the quantity of the antibiotic that is sold) to provide protection from low sales volumes and to help ensure stewardship principles are followed. The only difference is that a revenue guarantee tops up any sales revenue to the guaranteed amount, and a subscription model deducts sales revenue from the agreed subscription. The net effect is the same.   

As with TEV (see insight 2 in this series), if aggregated global revenues through revenue guarantees and subscriptions, (+/- other push and pull funding and traditional volume-linked reimbursement), are large enough, companies should be attracted to invest in antibiotic development.  

How big does it need to be? 

The revenue guarantee will only be effective if the global aggregated sum is sufficient to attract investment to bring new antibiotics to market. As noted in the first blog of this series, estimates in Outterson (2021) are the most up-to-date and appropriate for estimating the required magnitude of the global pull incentive (Brassel et al., 2023). The estimates are based on a review of cost and success estimates for antibiotics and are presented according to a variety of scenarios. The author’s preferred best estimate for a subscription style delinked agreement over a 10-year period is global revenues over 10 years of $3.1 billion when a drug is acquired that is ready for Phase 2 trials (i.e. there is an element of “push” funding, which may represent the most plausible development pathway for innovative antibiotics). Both Outtersor (2022) and Towse and Silverman (2022) have proposed G7+EU as appropriate contributors to a global revenue guarantee. This suggests an EU share of the global incentive of 34-39% (depending on date and exchange rates used). Using 39% of $3.1bn, gives $1.21 billion per drug, or, approximately $121m per annum for 10 years.  

Two qualifications to these values. First, they have been calculated assuming a net present value (NPV) of >0, which should be considered the minimum required to pull a new antibiotic to market, given that other therapeutic areas offer higher NPVs. Second, to ensure appropriate incentives for the development of high value products, those contributing to the global revenue guarantee should ideally conduct some form of value assessment to determine the value of the product (and thus the size of the payment) for their local population and context so more important products get higher payments. 

Has this model been tested? 

A partially delinked revenue guarantee model has been piloted in Sweden, with results reported in 2023. The pilot included five antibiotics across four manufacturers, and promised a guaranteed minimum subscription payment (€356k) in return for the company maintaining a ‘security stock’ of each product available for use in Sweden (Folkhälsomyndigheten, 2023). The model was partially delinked, with regions continuing to pay for medicines used as they usually would. If the annual aggregated payment from the regions was lower than the guaranteed minimum payment, the central Government contributed the difference. We can note that the Canadian Overcoming Resistance Report (2023) adapts this model to the Canadian system, but sets the revenue guarantee at a higher level, intending to pay Canada’s fair share of the R&D reward. 

The model effectively ensured the availability of certain antibiotics in Sweden, with Sweden gaining access to some new medicines earlier than comparable countries. The model was simple, transparent, and reasonably flexible. However, the pilot highlighted that the volume of safety stock to be held must be continuously evaluated, as there can be difficulties redistributing unneeded products, and that the model must allow for cancelations and the establishment of new agreements based on medical need. Further, the payment level was not value based, and, as noted above, was not designed to incentivise the development of new antibiotics, only to make available in Sweden products that has already been developed.  We note that the model could be adapted to provide Sweden’s fair share of the R&D reward, and thus be used to incentivise antibiotic development, as per the Canadian model.  

In 2020, the England National Health Service (NHS) piloted a fully delinked pull incentive for paying for antimicrobials. The National Institute for Health and Care Excellence (NICE) and NHS England trialled a volume-delinked subscription-type model for two antibiotics for severe infections resistant to the last line of antibiotics (NICE, 2022). As well as de-linkage, the value assessment sought, for the first time, to account for the value of the antibiotics beyond the value to the individual patient to enable NICE and NHS England to tailor the subscription fee to the broader, population-level value of each antibiotic. Challenges to implementing the pilot included the methodology to determine payment levels, the resources required for the value assessment process and the high uncertainty of estimates used in the value assessment process (Leonard, et al., 2023). The subscription fee was capped at £10million per year for 10 years, which may not be sufficient to constitute England’s fair share (see Brassel et al., 2023) of a global pull incentive.  

Following the pilot, NHS England published proposals for a new scheme (NHS England, 2023). The proposals would see eligible new antibiotics valued via a scoring system (with criteria covering effectiveness and unmet need, pharmacology and health system effects) and, as a result, placed into one of four corresponding value bands with different annual payment levels of: £5million, £10 million, £15 million, £20 million, for three years in the first instance, with the contract extendable up until patent expiry (with a maximum of 15 years). Crucially, upon reassessment, depending on the NICE assessed results, NHS England has the right to move the product up or down the bands, or to terminate the contract if the product no longer warrants a subscription contract. 

How could a revenue guarantee be implemented? 

Health is largely a Member State responsibility, although the EU has a role in improving public health, including mitigating sources of danger to human health (which could be considered to include AMR) (European Parliament, 2023). As such, there are potentially three routes: 

  1. EU procurement using an EU budget; 
  2. EU procurement mechanism but with member states paying all (or most) of the costs; 
  3. A voluntary member state scheme, with the EU seeking to coordinate member state efforts.  

The European Commission report on bringing AMR Medical Countermeasures to the Market (2023) explores the legal feasibility of (variations of) options 1 and 2 and seems to indicate that they are plausible pathways (European Commission, European Health and Digital Executive Agency, 2023). Elsewhere, member states have suggested the Health Emergency Preparedness and Response Authority (HERA) within the Commission as a potential facilitator of a collaborative pull incentive, whilst allowing member states to tailor specific schemes to their individual needs (option 3). Ardal et al. (2021) in an influential paper proposed a model for a voluntary multinational revenue guarantee, involving a joint tender and a common contract template (including clauses around national access and stewardship) with member states choosing whether or not to opt in and how much to reimburse each product. A recent Policy Brief (Ardal et al. 2023) goes further, proposing “a pre-defined, non-negotiable financial commitment per country” (based on GDP) organised by HERA and the EMA with member states choosing to opt-in or out.   

Is an EU revenue guarantee feasible?  

In the case of an EU funded revenue guarantee, member states would need to agree the additional EU budget and delegate powers to agree the priorities, the value of any contracts, and the supply and stewardship conditions. However, it may be optimistic to expect member states to be willing to cede this degree of authority to the European Commission given the concerns that have been expressed about surplus vaccines procurement.   

In the case of option 2, EU procurement but member state funding, the mechanism could involve opting in or opting out of the procurement. HERA could lead the procurement with the EMA assisting by assessing the efficacy and safety of an antibiotic against WHO and other criteria of need. There is a risk of ‘free riding’, whereby potential contributors leave it to others to participate assuming they will still reap the benefits. This would either lead to an insufficient and ineffective pull incentive, or those countries who do choose to opt in paying higher than their fair share. The European Commission cannot mandate participation, nor block non-participating countries from receiving access to EMA approved new products. However, these member states may not benefit from the terms negotiated by the EU. 

Willingness of some member states to pay more is possible, as Member States have already stated their preference for a direct and transparent pull incentive such as a revenue guarantee, and there is basis for political collaboration and trust between states. Reputation for contributing may serve as an additional incentive to participate within the context of political collaboration within the EU (linked to the economic notion of a ‘repeated game’). Furthermore, the benefit of an effective revenue guarantee outweighs the cost by an estimated 18:1 (Towse and Silverman Bonnifield, 2023), so there is a strong incentive for any Member State to support the success of the pull incentive.  

To encourage this optional participation, a centrally coordinated incentive should: i) work to build trust and awareness of the public health burden of AMR between Member States, ii) actively engage with all Member States on the practical implementation of the incentive, and iii) communicate the strong return on investment, highlighting that should the incentive fail, noncompliance is more costly than compliance. 

Critically, any centrally coordinated initiative (options 1 and 2) should ensure consistency of eligibility criteria across jurisdictions (so that the global sums add up for innovators), and consistency in supply arrangements at the member state level. It can also involve a centralised mechanism for assessing the level of reward needed, working, for example, with the EMA to establish clinical efficacy, or some other form of EU HTA process.  Option 3 however risks a lot of delay and lack of coordination, with increased opportunity for freeriding.  

Is a revenue guarantee the best option for Europe? 

Member States have voiced their preference for a direct financial incentive with a clear cost structure, with payments delinked from volume that allows Member States to tailor to their own needs. Revenue guarantees meet these requirements. 

In the Table below we show that a European-wide revenue guarantee scheme has significant potential meet the criteria that determine the features of a successful pull incentive (see insight 1), albeit option 2 offers the best route forward.  

Tabel: Critical aspects of an effective pull incentive met by a European revenue guarantee

The table demonstrates that many critical aspects of an effective pull incentive would be met by a European revenue guarantee. Notably, payment levels can be adjusted to take account of other pull incentives (such as a TEV) or push incentives (such as funding a clinical trial). 

If timely progress is to be made, concerted efforts (e.g. via a HERA-led pilot) to overcome any remaining practical or political barriers should commence now. 


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Årdal et al., 2023. A Pan-EU/EEA Pull Incentive for Antimicrobial Innovation and Access. DRIVE-AB Policy Brief. Available at: https://drive-ab.eu/news/drive-ab-policy-brief-a-pan-eu-eea-pull-incentive-for-antimicrobial-innovation-and-access/ 

Brassel S., Firth I., Oliver E., Hampson, G., Towse A. & Steuten L., 2023. Incentivising New Antibiotics: Designing a Value-Based Delinked Pull Incentive Mechanism. OHE Contract Research. Available from https://www.ohe.org/publications/incentivising-new-antibiotics-designing-value-based-delinked-pull-incentive-antbiotics/ 

CCA (Council of Canadian Academies). (2023). Overcoming Resistance. Ottawa (ON): Expert Panel on Antimicrobial Availability, CCA. Available at https://cca-reports.ca/reports/pull-incentives-for-high-value-antimicrobials/ 

European Commission, European Health and Digital Executive Agency, Study on bringing AMR medical countermeasures to the market – Final report, Publications Office of the European Union, 2023, https://data.europa.eu/doi/10.2925/442912 

European Parliament. 2023. Fact Sheets on the European Union: Public Health. Available at: https://www.europarl.europa.eu/factsheets/en/sheet/49/public-health  

Folkhälsomyndigheten, Public Health Agency of Sweden. 2023. Tillgänglighet till visa antibiotika. Available at:  https://www.folkhalsomyndigheten.se/contentassets/07fcf723e25240e5b837b7baed99666e/tillganglighet-till-vissa-antibiotika-en-pilotstudie-av-en-alternativ-ersattningsmodell.pdf  

Leonard C, Crabb N, Glover D, Cooper S, Bouvy J, Wobbe M, Perkins M. Can the UK ‘Netflix’ Payment Model Boost the Antibacterial Pipeline? Appl Health Econ Health Policy. 2023 May;21(3):365-372. doi: 10.1007/s40258-022-00786-1. Epub 2023 Jan 17. PMID: 36646872; PMCID: PMC9842493.  

NHS England, 2023. The Antimicrobial Products Subscription Model: Consultation on Proposals. Available at: https://www.engage.england.nhs.uk/survey/the-antimicrobial-products-subscription-model/user_uploads/antimicrobial-products-subscription-model–consultation-document–1.pdf  

Non-paper (2022). Novel stimuli for the development and keeping on the market of antimicrobials. Available at: https://www.politico.eu/wp-content/uploads/2022/12/01/Non-paper-Transferable-exclusivity-voucher-for-AMR-2.pdf  

Outterson, 2021. Estimating The Appropriate Size Of Global Pull Incentives For Antibacterial Medicines. Health Affairs. VOL. 40, NO. 11. 

Outtserson, 2022. Estimating the EU “Fair Share” of a Global Antibacterial Pull Incentive. Available at: https://www.ispor.org/docs/default-source/euro2022/2022.pdf?sfvrsn=4f27512a_0  

Towse and Silverman Bonnifield, 2022. An Ambitious USG Advanced Commitment for Subscription-Based  Purchasing of Novel Antimicrobials and Its Expected Return on Investment. Centre for Global Development. Policy Paper 277. Available at: https://www.cgdev.org/sites/default/files/ambitious-usg-advanced-commitment-subscription-based-purchasing-novel-antimicrobials.pdf 

Towse and Silverman Bonnifield, 2023. G7 Investments in New Antibiotics Would Pay Off – For Everyone. Available at: https://www.ohe.org/insight/g7-investments-in-new-antibiotics-would-pay-off-for-everyone/