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The critical impact of time discounting on economic incentives to overcome the antibiotic market failure

Nature Reviews Drug Discovery volume 11, page 168 (2012)Cite this article

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As summarized in a recent article (Antibacterial R&D incentives. Nature Rev. Drug Discov. 10, 727–728 (2011))1, numerous 'push' and 'pull' economic incentives have been proposed to rekindle the antibiotic pipeline2,3,4,5,6. These have been the subject of discussions in both the United States and Europe1,4.

Push incentives act early in research and development (R&D) and are generally of smaller monetary amounts than pull incentives, which do not become operative until after a drug is approved for use in humans. Until recently, the relative potency of push and pull incentives at promoting new R&D in the antibiotic area had been uncertain. However, an analysis by Sharma and Towse6 found that a key pull incentive — extended market exclusivity — had minimal impact on improving the net present value (NPV) of antibiotics. By contrast, push incentives may be of greater value. Because pull incentives should result in larger amounts of revenue than push incentives, the assertion that pull incentives are less economically valuable than push incentives may be counterintuitive. However, as we show below, push incentives may be 95% smaller than pull incentives and still yield similar value.

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Authors and Affiliations

  1. and the Division of General Internal Medicine, Brad Spellberg is at the David Geffen School of Medicine at the University of California Los Angeles, Los Angeles Biomedical Research Institute at Harbor-University of California at Los Angeles Medical Center, 1124 West Carson Street Torrance, California 90502, USA.,

    Brad Spellberg

  2. Priya Sharma is at the Office of Health Economics, 105 Victoria Street, London SW1E 6QT, UK.,

    Priya Sharma

  3. John H. Rex is at AstraZeneca, 35 Gatehouse Drive, Waltham, Massachusetts 02451-1215, USA.,

    John H. Rex

Authors
  1. Brad Spellberg
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  2. Priya Sharma
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  3. John H. Rex
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Corresponding author

Correspondence to Brad Spellberg.

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Competing interests

In the past 12 months, B.S. has received: research grants and contracts from Cubist, Pfizer and Eisai; consulting fees paid into an institutional account from GlaxoSmithKline, Pfizer, Basilea, The Medicines Company, Achaogen, Trius, Eisai, Meiji, Polymedix and BioCritica; and speaker's fees from Cubist, AstraZeneca and Achaogen. J.H.R. is an employee and shareholder of AstraZeneca. P.S. declares no competing financial interests.

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Supplementary information S1 (figure)

Economic model demonstrating timelines of extended exclusivity options. (PDF 462 kb)

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Spellberg, B., Sharma, P. & Rex, J. The critical impact of time discounting on economic incentives to overcome the antibiotic market failure. Nat Rev Drug Discov 11, 168 (2012). https://doi.org/10.1038/nrd3560-c1

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