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August 3, 2017

Addressing Antimicrobial Resistance and StewardshipThe Priority Antimicrobial Value and Entry (PAVE) Award

Author Affiliations
  • 1Robert J. Margolis, MD, Center for Health Policy at Duke University, Washington, DC
JAMA. Published online August 3, 2017. doi:10.1001/jama.2017.10164

Antimicrobial-resistant infections affect more than 2 million people annually in the United States alone, accounting for an estimated 23 000 deaths and estimated economic costs of $55 billion.1 Recent projections suggest that an estimated 300 million people worldwide could die prematurely in the next 35 years because of antimicrobial-resistant infections.2 Physicians are more frequently prescribing antibiotics of last resort (such as colistin and carbapenem), raising concerns that once-curable infections will have no viable treatments.3

Health care payment systems generally do not provide sufficient or appropriate incentives for the development of antimicrobial drugs. Availability of antimicrobials for resistant bacteria has high public health value. When a patient treated for a resistant infection pays for the use of a drug (through out-of-pocket payments, insurer payments, or both), the payment reflects their own benefit, not the much larger benefit that accrues to the vast majority of individuals who never incur a serious, resistant infection. Availability of antimicrobials and appropriate use in limited populations not only helps prevent the spread of resistant infections, it permits surgeries and other intensive medical interventions because physicians know these agents are available if needed.

With volume-based payments, driving sales is the way manufacturers generate additional drug revenues. However, high-volume use, whether from inappropriate prescribing or increased use of broad-spectrum antibiotics instead of more targeted treatments, is a major contributor to the development of antimicrobial resistance.4,5 Clinicians must take steps to ensure more judicious use of antimicrobials. But to the extent such stewardship programs are effective, they further diminish the financial rewards for developing priority antimicrobials.

As a result, returns on investment for manufacturers of antimicrobial agents are low relative to the value of these products, leading to a diminished pipeline of new agents and continued pressure to overuse available drugs. Most pharmaceutical companies have discontinued antimicrobial drug development, and those that remain are working on a small number of drug candidates.

To address this increasingly important global public health challenge, the UN General Assembly6 and other international organizations have issued calls for action. Groups including Chatham House, Review on Antimicrobial Resistance, DRIVE-AB (Driving Reinvestment in Research and Development and Responsible Antibiotic Use), and the Global Union for Antibiotics Research and Development have developed recommendations for economic “pull” incentives in the form of market entry rewards, that would provide a large cash award on new drug approval. Rewards would be given for drugs approved for the highest-priority pathogens (such as carbapenem-resistant Enterobacteriaceae or resistant Neisseria gonorrhoeae), with the goal of substantially increasing the return on investment for an effective new antimicrobial and “delinking” payment from the volume of use.

Even though some countries have expressed support for such proposals, there are barriers to implementing them, including in the United States. Most important is limited public funds: it has been estimated that an award of $1 billion to $2 billion would be required to provide a sufficient return on investment,7 a formidable amount in an era of fiscal challenges, even if countries pool resources. Moreover, in most proposals, the drug would then be administered through a government program—an approach that does not fit well with the US infrastructure for delivering and paying for care.

In the United States, some proposals have focused on a transferable exclusivity voucher (TEV) that would provide a voucher for a 6- to 12-month exclusivity extension on the development and launch of a high-priority antimicrobial drug. The recipient company would be able to apply the exclusivity to a product of its choice, or the TEV could be sold by the recipient to another company. This proposal avoids direct government financing. However, funding is generated by higher drug prices in other therapeutic areas due to longer market exclusivity. Transferable exclusivity vouchers do not generate additional leverage available to ensure ongoing availability and stewardship of the drug.

To address these issues and complement global initiatives, the Priority Antimicrobial Value and Entry (PAVE) award has been proposed.8 This proposal would use limited public funds—perhaps derived from the sale of a TEV—to shift to a value-based payment approach for new, high-priority antimicrobial drugs.

The PAVE award is envisioned as a limited market entry reward that could augment rather than replace payments from public and private payers but would require that those payments transition to value- rather than volume-based methods. That is, the limited market entry reward would provide funds for the first years the product is on the market. For example, in years 1 and 2, the PAVE award would provide the majority of the annual revenue (>75%), but by year 5, the majority of the annual revenue would be expected to come from value-based contracts, with lesser contributions from fee-for-service reimbursement and the PAVE Award. These funds would phase down over the award period (5 years), and their annual continuation would be contingent on manufacturers negotiating contracts with insurers that tie payments to antimicrobial availability and performance in covered populations rather than volume. For example, these approaches could include per-member per-month payments tied to measures of reliable drug availability, effective stewardship (eg, appropriate prescribing and stewardship measures), and continued collection of clinical data. Such alternative payment models for antimicrobials would align with broader US trends in payment reform to focus on value and could be particularly helpful to address the problem of antimicrobial overuse. The population-based payment models would not require payers to pay more but would restructure those payments in a way that better reflects high-value, sustainable antimicrobial use—a US version of the global proposals for “delinkage” of volume of drugs sold to return on investment.

The PAVE award could complement and build on approaches proposed by private foundations, other countries, and multinational organizations to further generate global support for the development of priority antimicrobials, but it could do so in a manner that reflects the pluralistic structure of the US health care system. The PAVE award could be part of a comprehensive strategy that also includes “push” incentives for antimicrobial development, such as the public-private partnerships implemented now by the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator (CARB-X) and the Biomedical Advanced Research and Development Authority (BARDA), which fund preclinical and clinical research, respectively. The award would be available only for a limited set of qualifying, high-priority antimicrobials, with specific eligibility and monitoring criteria set by public health experts, such as like those involved in existing CARB-X and BARDA initiatives.

The proposed PAVE award would require a shift to a new payment model for antimicrobials, and implementation will require collaboration by a range of stakeholders, all of whom stand to benefit from the availability of effective, high-priority antimicrobials used in a sustainable manner. This model builds on and reinforces the shift to quality and value in US health care, with payments more directly linked to public health benefits and total costs. Along with strong push mechanisms that remove some of the financial risk associated with initial development of drug candidates, these measures could make a major contribution to the global effort to create and sustain a robust pipeline of antimicrobials that address current and growing public health needs—and would do so through an approach well suited to the reforming US health care system.

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Article Information

Corresponding Author: Mark B. McClellan, MD, PhD, Duke University, 1201 Pennsylvania Ave NW, Ste 500, Washington, DC 20004 (mark.mcclellan@duke.edu).

Published Online: August 3, 2017. doi:10.1001/jama.2017.10164

Conflict of Interest Disclosures: All authors have completed and submitted the ICMJE Form for Disclosure of Potential Conflicts of Interest and none were reported.

Funding/Support: This work was supported by funds from the US Food and Drug Administration and from Merck & Co.

Role of the Funder/Sponsor: The funders had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; or decision to submit the manuscript for publication.

Additional Contributions: We acknowledge the feedback and guidance that we received from our Antimicrobial Payment Reform Advisory Group. This group brought together diverse perspectives from stakeholders who often have competing interests, including drug manufacturers, payers, clinicians, health systems, academia, and patient representatives. We thank them for the time and effort that they contributed to the development of this proposal.

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