Submission + - The Peculiar Economics of Developing New Antibiotics
Emanuel says that we need to use prize money as an incentive. "What if the United States government — maybe in cooperation with the European Union and Japan — offered a $2 billion prize to the first five companies or academic centers that develop and get regulatory approval for a new class of antibiotics?" Because it costs at least $1 billion to develop a new drug, the prize money could provide a 100 percent return — even before sales. "From the government perspective, such a prize would be highly efficient: no payment for research that fizzles. Researchers win only with an approved product. Even if they generated just one new antibiotic class per year, the $2-billion-per-year payment would be a reasonable investment for a problem that costs the health care system $20 billion per year." Unless payers and governments are willing to provide favorable pricing for such a drug, the big companies are going to focus their R&D investments in areas like cancer, depression, and heart disease where the return-on-investments are much higher.