Antibacterial resistance is a growing global problem. According to the most recent statistics from the Centers for Disease Control and Prevention (CDC), at least 2 million people acquire serious infections with bacteria that are resistant to one or more of antibacterial drugs designed to treat those infections in the United States alone. Of these, approximately 23,000 die as a result of drug-resistant infections. Even though estimates vary widely, the economic cost of antibacterial resistance in the United States could be as high as 20billionand35 billion a year in excess direct healthcare costs and lost productivity costs, respectively (U.S. Centers for Disease Control and Prevention, 2013). Despite the potential of new antibacterial products to reduce the social burden associated with resistant infections, some of the large companies have been exiting the markets for antibacterial drugs and vaccines in recent years and have also failed to respond to the possible social value of opportunities in production of rapid diagnostic products. These market exits have been driven by the most basic of reasons: insufficient return to capital invested in development of these products. Consequently, governments across the globe are looking to identify ways to stimulate the development of antibacterial products. This study, conducted by Eastern Research Group, Inc. (ERG) under contract to the U.S. Department of Health and Human Services (HHS), Office of the Assistant Secretary for Planning and Evaluation (ASPE) and partly funded by FDA, develops an analytical decision-tree model framework that can be used to assess the impacts of different possible market incentives on the private and social returns to product development of new antibacterial products (in contrast to those already under development). Using the model developed, we evaluate the private and social returns associated with the following types of antibacterial products for a hypothetical developer at the beginning of pre-clinical research phase: - Antibacterial drugs for oral or intravenous (IV) administration designed to treat; - Acute bacterial otitis media (ABOM); - Acute bacterial skin and skin structure infections (ABSSSI); - Community acquired bacterial pneumonia (CABP); - Complicated intra-abdominal infections (CIAI); - Complicated urinary tract infections (CUTI); and - Hospital acquired/ventilator associated bacterial pneumonia (HABP/VABP). - A new vaccine effective in preventing acute bacterial otitis media (ABOM), and - A new rapid point-of-care diagnostic designed to identify methicillin-resistant Staphylococcus aureus (MRSA) that can cause serious infections, such as skin or wound infections, pneumonia, or infections of the blood.
The study also considers the level needed to reach a private value of 100millionatthestartofpre−clinicalresearchforahypotheticaldeveloperforthefollowingfourcategoriesofincentivesthatencompassthemajorityofstrategiesthathavebeenproposedinthepolicyliterature:−Intellectualproperty(IP)extensions;−Taxincentives;−Modificationstotheclinicaltrialprocessandapprovalstandardsaimedatshorteningthedrugdevelopmentprocess;and−Privategrants,awards,andprizesforantibacterialproductresearchanddevelopment.Forantibacterialdrugs,wefindthattheaveragevaluetothedeveloperconsideringwhethertostartpre−clinicalresearchrangesfromalowof−4.5 million for HABP/VABP to a high of 37.4millionforCABP,fallingshortofthe100 million threshold. However, when parameter uncertainty is considered, the lower bound of private returns could potentially range from -23.5million(HABP/VABP)to−15.8 million (ABSSSI), substantially lower than the 100millionthreshold,andtheupperboundfrom126.7 (HABP/VABP) to 330.0million(CABP),considerablyabovethe100 million threshold. The primary drivers for the observed wide range of results are attributable to, in order of importance, the total market size, the real opportunity cost of capital, and the total time to market model parameters. Value of the incentives to the developers would be higher at later stages of development, meaning that once a drug successfully reaches certain milestones, incentives to further develop it increase. However, we focus on the value at the point the developer is considering whether to start the pre-clinical stage. Note that this study considers the developer’s private value from the point of the current state of science. Assessing advancements in translational research and basic pathogen biology were outside the scope of this project. However, we note that such advancements have the potential to impact private value of a drug at the start of pre-clinical studies. For example, improved understanding of pathogen biology can cut pre-clinical research time and can yield compounds with higher average efficacy entering human trials. To assess the extent to which these private values fall short of the societal importance of drugs, we estimate the potential social value for these antibacterial drugs. Similar to private returns, we find that there is wide variation in the estimated social values across the different indications.
The primary drivers for the observed wide range of social EPV results are attributable to, in order of importance, the model parameters for the percentage in disease duration for patients that do not respond to commonly used antibacterial drugs; phase 1 clinical trial success probability; pre-clinical R&D success probability, and the real annual social rate of discount.
Despite the high degree of variability, even the lower bounds of these social values are greater than the estimated private ENPVs by orders of magnitude across all of the indications. Moreover, for CABP, CUTI, and HABP/VABP, the 90 percent lower bounds of social values are greater than the 90 percent upper bounds of private values for the same indications.
Using the decision-tree framework developed, we estimate the private and social value for a new ABOM vaccine at 515.1million(whichisgreaterthanthe100 million threshold) and 2.281billion,respectively.Similarly,theprivateandsocialvaluefornewrapidpoint−of−carediagnosticdesignedtoidentifymethicillin−resistantStaphylococcusaureus(MRSA)thatcancauseseriousinfectionsisestimatedat329.0 million and 22.1billion,respectively.Thegapbetweenthecurrentprivateandpublicvaluesofdrugdevelopmentsuggestthatincentivesaredesirabletostimulatethedevelopmentofdrugstotreatthesixindicationsconsidered,whetherthroughincentivesdescribedinthisreportorpublicresearchinvestment.However,giventhedegreeofuncertaintyassociatedwithdifferentmodelparametersandthelimitedscopeofthisproject,itisdifficulttoascertainthenecessarylevelsofsuchincentives.Thesizeofthesocialbenefitsfromdevelopinganewantibacterialdrugisalsohighlyuncertainandbasedontheimprovementinoutcomesfromahypotheticalnewdrug.Itisalsoimportanttonotethatsimultaneousinstitutionofconservationmechanisms,suchaseducationcampaignstopromoteprudentuse,andotherstewardshipprograms,alongwiththetypesofantibacterialdrugproductionincentivesconsideredarelikelytoaltertheincentivelevelsidentifiedinthisstudy.Conservationincentives,bytheirverynature,tendtoreducethepotentialmarketsizefornewantibacterialdrugstherebynecessitatinghigherproductionincentivelevelstoboostprivatereturnstothe100 million threshold
Antibacterial resistance is a growing global problem. According to the most recent statistics from the Centers for Disease Control and Prevention (CDC), at least 2 million people acquire serious infections with bacteria that are resistant to one or more of antibacterial drugs designed to treat those infections in the United States alone. Of these, approximately 23,000 die as a result of drug-resistant infections. Even though estimates vary widely, the economic cost of antibacterial resistance in the United States could be as high as 20billionand35 billion a year in excess direct healthcare costs and lost productivity costs, respectively (U.S. Centers for Disease Control and Prevention, 2013). Despite the potential of new antibacterial products to reduce the social burden associated with resistant infections, some of the large companies have been exiting the markets for antibacterial drugs and vaccines in recent years and have also failed to respond to the possible social value of opportunities in production of rapid diagnostic products. These market exits have been driven by the most basic of reasons: insufficient return to capital invested in development of these products. Consequently, governments across the globe are looking to identify ways to stimulate the development of antibacterial products. This study, conducted by Eastern Research Group, Inc. (ERG) under contract to the U.S. Department of Health and Human Services (HHS), Office of the Assistant Secretary for Planning and Evaluation (ASPE) and partly funded by FDA, develops an analytical decision-tree model framework that can be used to assess the impacts of different possible market incentives on the private and social returns to product development of new antibacterial products (in contrast to those already under development). Using the model developed, we evaluate the private and social returns associated with the following types of antibacterial products for a hypothetical developer at the beginning of pre-clinical research phase: - Antibacterial drugs for oral or intravenous (IV) administration designed to treat; - Acute bacterial otitis media (ABOM); - Acute bacterial skin and skin structure infections (ABSSSI); - Community acquired bacterial pneumonia (CABP); - Complicated intra-abdominal infections (CIAI); - Complicated urinary tract infections (CUTI); and - Hospital acquired/ventilator associated bacterial pneumonia (HABP/VABP). - A new vaccine effective in preventing acute bacterial otitis media (ABOM), and - A new rapid point-of-care diagnostic designed to identify methicillin-resistant Staphylococcus aureus (MRSA) that can cause serious infections, such as skin or wound infections, pneumonia, or infections of the blood.
The study also considers the level needed to reach a private value of 100millionatthestartofpre−clinicalresearchforahypotheticaldeveloperforthefollowingfourcategoriesofincentivesthatencompassthemajorityofstrategiesthathavebeenproposedinthepolicyliterature:−Intellectualproperty(IP)extensions;−Taxincentives;−Modificationstotheclinicaltrialprocessandapprovalstandardsaimedatshorteningthedrugdevelopmentprocess;and−Privategrants,awards,andprizesforantibacterialproductresearchanddevelopment.Forantibacterialdrugs,wefindthattheaveragevaluetothedeveloperconsideringwhethertostartpre−clinicalresearchrangesfromalowof−4.5 million for HABP/VABP to a high of 37.4millionforCABP,fallingshortofthe100 million threshold. However, when parameter uncertainty is considered, the lower bound of private returns could potentially range from -23.5million(HABP/VABP)to−15.8 million (ABSSSI), substantially lower than the 100millionthreshold,andtheupperboundfrom126.7 (HABP/VABP) to 330.0million(CABP),considerablyabovethe100 million threshold. The primary drivers for the observed wide range of results are attributable to, in order of importance, the total market size, the real opportunity cost of capital, and the total time to market model parameters. Value of the incentives to the developers would be higher at later stages of development, meaning that once a drug successfully reaches certain milestones, incentives to further develop it increase. However, we focus on the value at the point the developer is considering whether to start the pre-clinical stage. Note that this study considers the developer’s private value from the point of the current state of science. Assessing advancements in translational research and basic pathogen biology were outside the scope of this project. However, we note that such advancements have the potential to impact private value of a drug at the start of pre-clinical studies. For example, improved understanding of pathogen biology can cut pre-clinical research time and can yield compounds with higher average efficacy entering human trials. To assess the extent to which these private values fall short of the societal importance of drugs, we estimate the potential social value for these antibacterial drugs. Similar to private returns, we find that there is wide variation in the estimated social values across the different indications.
The primary drivers for the observed wide range of social EPV results are attributable to, in order of importance, the model parameters for the percentage in disease duration for patients that do not respond to commonly used antibacterial drugs; phase 1 clinical trial success probability; pre-clinical R&D success probability, and the real annual social rate of discount.
Despite the high degree of variability, even the lower bounds of these social values are greater than the estimated private ENPVs by orders of magnitude across all of the indications. Moreover, for CABP, CUTI, and HABP/VABP, the 90 percent lower bounds of social values are greater than the 90 percent upper bounds of private values for the same indications.
Using the decision-tree framework developed, we estimate the private and social value for a new ABOM vaccine at 515.1million(whichisgreaterthanthe100 million threshold) and 2.281billion,respectively.Similarly,theprivateandsocialvaluefornewrapidpoint−of−carediagnosticdesignedtoidentifymethicillin−resistantStaphylococcusaureus(MRSA)thatcancauseseriousinfectionsisestimatedat329.0 million and 22.1billion,respectively.Thegapbetweenthecurrentprivateandpublicvaluesofdrugdevelopmentsuggestthatincentivesaredesirabletostimulatethedevelopmentofdrugstotreatthesixindicationsconsidered,whetherthroughincentivesdescribedinthisreportorpublicresearchinvestment.However,giventhedegreeofuncertaintyassociatedwithdifferentmodelparametersandthelimitedscopeofthisproject,itisdifficulttoascertainthenecessarylevelsofsuchincentives.Thesizeofthesocialbenefitsfromdevelopinganewantibacterialdrugisalsohighlyuncertainandbasedontheimprovementinoutcomesfromahypotheticalnewdrug.Itisalsoimportanttonotethatsimultaneousinstitutionofconservationmechanisms,suchaseducationcampaignstopromoteprudentuse,andotherstewardshipprograms,alongwiththetypesofantibacterialdrugproductionincentivesconsideredarelikelytoaltertheincentivelevelsidentifiedinthisstudy.Conservationincentives,bytheirverynature,tendtoreducethepotentialmarketsizefornewantibacterialdrugstherebynecessitatinghigherproductionincentivelevelstoboostprivatereturnstothe100 million threshold
Australia has a long history of institutional minimum wage determination. We examine the features and the changes in the minimum wages system. We identify its enduring characteristics, its place the Australian system in an international context and see where Fair Work Australia is located in relation to previous arrangements. We ask why a minimum wage system is still required and we examine the legacy of the Australian Industrial Relations Commission and its predecessors in minimum wage determination
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