New Medicare Technology Add-on Payment Could Be Used as a Market Support Mechanism to Accelerate Antibiotic Innovation

Despite growing antibiotic resistance, the clinical drug development pipeline for antibiotics has been sparse largely because of an unsustainable business model. We illustrate three models to accelerate antibiotic development, using Medicare new technology add-on payments as a market support mechanism. The first two models subsidize drug development for Medicare beneficiaries, and the third model applies a payment for every patient with a resistant infection to essentially create a funding pool. We found that the reimbursement required to sustain research and development would range from $637 to $121,365, depending on the payment model and the incidence of the resistant infection in question. With a $300 million public research subsidy, the payment for an antibiotic would drop to between $273 and $10,396 per course. Our market support model could increase the likelihood of attracting private investment for antibiotic development.