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Incentives for R&D for New Antimicrobial Drugs


  • Adrian Towse
  • Priya Sharma


Antimicrobial resistance (AMR) is becoming a major global public health threat and has begun to command attention from European and US policy makers. An initial focus on monitoring AMR and conserving existing treatments by cutting down on misuse has been complemented by moves towards addressing the paucity of new drugs in the R&D pipeline of the pharmaceutical industry. We identify five economic challenges: the utilisation externality; the lack of incentives for R&D arising from use restrictions, low prices, and scientific and regulatory challenges; the global joint sunk nature of R&D cost; the need for access to drugs in middle and low income countries; and failures in the market for point of care diagnostics. We analyse "push," "pull" and hybrid incentives and conclude that higher prices linked to targeted use with diagnostic tests and/or an AMC-based "prize" for registering (but not necessarily using) desired new drugs would be effective, and could be linked to push measures. US and European collaboration on incentives would be desirable but not if achieving agreement leads to delays. Action on conservation needs to be global and linked to use of new products. This will not be easy given TRIPS provisions and national sensitivities on this issue as seen in the 2010 reaction to evidence on the origins of NDM-1.

Suggested Citation

  • Adrian Towse & Priya Sharma, 2011. "Incentives for R&D for New Antimicrobial Drugs," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(2), pages 331-350.
  • Handle: RePEc:taf:ijecbs:v:18:y:2011:i:2:p:331-350
    DOI: 10.1080/13571516.2011.584434

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    References listed on IDEAS

    1. Laxminarayan, Ramanan & Brown, Gardner M., 2001. "Economics of Antibiotic Resistance: A Theory of Optimal Use," Journal of Environmental Economics and Management, Elsevier, vol. 42(2), pages 183-206, September.
    2. Tomas Philipson & Stephane Mechoulan, 2003. "Intellectual Property & External Consumption Effects: Generalizations from Pharmaceutical Markets," NBER Working Papers 9598, National Bureau of Economic Research, Inc.
    3. Tomas Philipson & Stephane Mechoulan & Anupam Jena, 2006. "Health Care, Technological Change, and Altruistic Consumption Externalities," NBER Working Papers 11930, National Bureau of Economic Research, Inc.
    4. repec:ohe:monogr:000184 is not listed on IDEAS
    5. Laxminarayan, Ramanan & Brown, Gardner M., Jr., 2000. "Economics of Antibiotic Resistance: A Theory of Optimal Use," Discussion Papers 10619, Resources for the Future.
    6. DiMasi, Joseph A. & Hansen, Ronald W. & Grabowski, Henry G., 2003. "The price of innovation: new estimates of drug development costs," Journal of Health Economics, Elsevier, vol. 22(2), pages 151-185, March.
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    1. repec:eee:hepoli:v:121:y:2017:i:10:p:1025-1030 is not listed on IDEAS

    More about this item


    Antimicrobial Resistance; Incentives; Research and Development; Antibacterials; Net Present Value and Europe;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health


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