Value-based strategies for encouraging new development of antimicrobial drugs

August 3, 2017

The Duke-Margolis Center for Health Policy is developing U.S. policy approaches that could provide better economic incentives to antimicrobial developers that successfully bring effective drugs to themarket, providing societal benefit that exceeds the cost of the incentive. Working with a broad-based advisory group, Duke-Margolis has developed a proposal for a publicly-leveraged, value-based payment
model to address these challenges in a U.S. context. The Center based its work on several principles: be part of a comprehensive strategy; promote innovation, access, and stewardship; be sustainable and
predictable, leverage public money with private funds; provide rapid access to funds upon market entry; and align with broader shifts in the U.S. healthcare system to value and quality.

Our Priority Antimicrobial Value and Entry (PAVE) Award proposal combines a market entry reward with population-based payments from public and private payers that phase in over time. The market entry reward provides funds over early years of marketing after FDA approval. Subsequent payments rely on the developer to increase revenue from population-based contracts with payers that are linked to value
to society through infection prevention, availability, support for sustainable use, and continued data collection. By leveraging both public and private support, the PAVE Award provides developers with quick access to a significant reward upon market entry as well as strong incentives for manufacturers to engage with payers in shifting reimbursement from FFS to population-based contracts that support highvalue,
sustainable use. The PAVE Award’s risk-sharing model delinks ROI from volume use to reward and support availability and appropriate use of effective antimicrobials. This model addresses the
fundamental need for public investment in drugs that combat resistant bacterial infections by resolving the current conflict between the drivers of ROI and strong stewardship programs, while reinforcing the“volume to value” shift in health care payments, and leveraging, rather than replacing, private financing. Finally, the model can complement and build upon approaches supported by private foundations, other
countries, and multinational organizations to further generate global support for the development of priority antimicrobials.