Towards A Post-Antibiotic Era: AMR and the State of Global Health Policy

Claire Chen & Jeremy Welborn


Antimicrobial resistance (AMR) is a tremendously important issue on a global scale- drug resistance, specifically to antibiotics, is on the rise, and R&D in antibiotics has not kept up. This AMR ‘gap’ won’t be closed without fixing how returns are awarded; it requires scrapping the traditional approach that ties revenues to volume for an innovative approach that rewards value. ‘Delinkage’ of value and volume is an exciting, emerging topic among those involved in the antibiotic space. This review will attempt to introduce some of the ideas central to resolving the AMR crisis.

When President Barack Obama signed an executive order in September 2014 to combat antimicrobial resistance, he elevated one of the most complex challenges in global health to new prominence in the public eye. Antimicrobial resistance, also known as AMR, poses a potentially devastating threat to the utility of modern medicine and the health of the global population. Antimicrobials are the most effective treatments for infectious diseases, given their effectiveness, safety, and relative affordability. The modern antimicrobial revolution began in the 1920s with the discovery of penicillin by Alexander Fleming, and has flourished up until this day. However, the overuse and misuse of microbial drugs has led to serious consequences. The term AMR describes situations in which microbial drugs that had been effective against a particular microbe no longer work in the microbe’s biology that have left it resistant.1 AMR is particularly concerning because it is on the rise in antibiotics; while research and development in antibiotics has fallen behind, a growing number of these invaluable treatments have suddenly failed to combat the infectious diseases and viruses they were created to destroy. If the trend continues, the world is heading towards a future full of untreatable infections. As British Prime Minister David Cameron’s observed, “If we fail to act, we are looking at an almost unthinkable scenario where antibiotics no longer work and we are cast back into the dark ages of medicine.”2

President Obama’s executive order created a new inter-agency task force charged with developing a national strategy to combat AMR.3 However, to fully close the AMR gap- formed by a combination of rising infections and decreasing investment in developing new antibiotics, a novel approach is required. This article aims to explore the gravity of the AMR gap in today’s health care systems, before diving into a “delinkage” approach, which if adopted, will replace the traditional business model for antibiotics with a sustainable platform for new research and development.

The Growing Threat

In recent years, AMR has risen to the forefront of global public health concerns due to its imminently harmful social and economic impacts. In particular, the WHO’s 2014 health report on the global surveillance of AMR found that the ability to treat common infections in communities and hospitals is now at risk. For one, resistance to one of the most widely used antibacterial drugs for the oral treatment of urinary tract infections caused by E. coli – fluoroquinolones- is very widespread.4 In addition, there were an estimated 450,000 new cases of multidrug-resistant tuberculosis around the world in 2012.4

Even as AMR destabilizes health care systems, it also presents profound cost implications to economic systems. At present, the annual cost of antibiotic-resistant infections is already estimated to be between US$21 million and US$ 34 million.5 In other parts of the world, losses to GDP have been estimated at 0.4% to 1.6%.6

Causes of the Threat

AMR is a complex challenge that’s rooted in several critical contexts. As the Chatham House think tank summarizes, resistance is in part an evolutionary response to antibiotic usage, so many policy options seek to outpace evolution through faster introduction of new antibiotics, in a quasi-arms race between drugs and bugs.7 Unfortunately, drug-resistant strains of bacteria have only increased in the past years, while “market failure” has occurred in the pharmaceutical industry, which has seen no new classes of antibiotics in the past twenty-five years.8 This evolutionary concern is exacerbated by the inappropriate prescription of antibiotics, caused by misaligned incentives and a lack of information. Consequentially, the rate at which antibiotics become obsolete is accelerated. In particular, medical systems may incorporate perverse incentives for antibiotics to be overprescribed. For example, drug sales in China form a significant part of hospitals’ income, and until 2010, physicians’ pay was linked to the sales of prescription drugs. One study found that 98% of patients in a Beijing Children’s hospital were prescribed antibiotics for a common cold.9 Equally, if not more pervasive, is the harm of misinformation, particularly in regions where antibiotics can be purchased over the counter in pharmacies or local marketplaces. In India, for example, pharmacy sales of strong antibiotics that should be considered the last line of defense increased six fold between 2005 and 2010.9

Due to AMR’s global impact, it can be viewed in an ecological paradigm that treats antibiotic resistance as a common pool resource, similar to forestry or any other exhaustible resource. Long-term, sustainable management of common pool resources demands global cooperation and balance between the conservation and generation of new products.10 As such, a solution to AMR will require teamwork and cooperation between the many stakeholders who affect the process, including but not limited to scientists, biotechs and pharmaceutical companies, investors, governments, health technology assessors, hospitals, providers and payers.

Evidently, the traditional approach is currently insufficient in terms of generating the innovation necessary to incentivize rapid production of novel antibiotics. Rather than approaching AMR as a common pool resource, traditional “linkage” sets up a system in which sales volumes and price determine the return on investment for a drug. In other words, pharmaceutical companies must pursue volume-driven sales volume to stay afloat, which is problematic because high sales are incompatible with drug resistance. While selling surplus antibiotics rakes in revenue in the short term (buoyed by particularly aggressive sales when the drug is exclusive), it eliminates drug efficacy as resistance develops, driving revenue streams down over time. This trend has kept Big Pharma weary of significant investment in the antibiotic space. On top of this, successful stewardship or conservation efforts effectively decrease demand for antibiotics, further incentive to forgo investment. To fix the AMR gap between rising resistance and reduced drug development, we require a fundamental redesign for returns in antibiotics R&D.10

Tackling AMR: A Delinkage Approach

The delinkage approach is essentially a new business model for antibiotic development that seeks to address the flaws with the present AMR situation by removing the link between the funding of antibiotic R&D and sales volumes. Under delinkage, companies will earn income from a different set of criteria. In essence, delinkage proposes three simultaneous improvements to antibiotic development:

  1. Corrects incentives for companies to invest in R&D and bring new products to the market at the right time.
  2. Creates incentives to protect antibiotics from overuse and premature resistance.
  3. Facilitates incentives to ensure global access to life-saving antibiotics. In a properly constructed system, antibiotic delinkage results in increased total company revenues for antibiotics, encourages long-term global cooperation by stakeholders, and preserves and enhances access to all individuals without regard for ability to pay.10

The World Health Organization, as part of its Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property, solicited proposals on health R&D that featured significant delinkage elements as one of its assessment criteria. Of the many projects, the WHO selected the patent buy-out prize funds model for further review.10

Patent Buyout Prize System

A patent buyout prize system approach features the government buying out rights to the antibiotic, which are then allocated publicly to private recipients. The basic benefit is that in the prize system, returns are tied to value, whereas in the traditional patent system, reimbursement is tied to volume. By delinking volume and value, governments can in turn address each of the three essential areas that arise out of this health failure. They can form an easily enforceable regulatory framework to address incentives for inappropriate use, since they themselves are responsible for allocation to health care givers. They can improve the incentives that drive developers to ignore the issue of access, and target antibiotics where the need is rampant but the means are scarce. And finally, they can set incentives for R&D investment by providing an adequate prize for drug development.10 This is not the first time advocates have argued for a prize system over the traditional patent system. Recently, Senator Bernard Sanders agitated for a Prize Fund for HIV/AIDS, a delinkage-driven bill to achieve similar aims for antiretrovirals and similar HIV/AIDS treatments. Sanders’ bill yields insight into some of the technical aspects of introducing a delinkage-driven system into the existing health care ecosystem, and seeks to award prize payments for innovation in treatment and innovation in research. His proposal would be funded by an annual fee paid by health insurers. Evidently, there is a precedent of policymakers seeking alternatives from the patent system.11

Still, there are drawbacks tied to this delinkage approach. Working out appropriate awards, i.e. figuring out what an innovation is worth is a glaring and giant challenge. Rewards – right away – would have to be on the scale of up to several billion dollars. To incentivize investment over time, an additional fee could have to be brought in in the future. And just as there are risks of skewed incentives on the private side, there are risks on the public side. Governments are flawed too. The solution to these types of challenges is to create public-private partnerships to act as watchdogs all throughout development, distribution, and beyond. This remains a crucial area of consideration. And the issues that arise in this delinkage approach are common across almost all approaches. Without question, there are several costs to consider; yet these costs should not be thought of as absolute but relative. AMR is growing at a significant rate; failing to reform the present system when already, the United States loses $35 billion estimated yearly in indirect costs due to decreased productivity (2008 dollars) is short-sighted.12 Perhaps a patent buyout prize system is the solution required to prevent the world from, as Dr. Keiji Fukuda of the WHO described, “Heading towards a post-antibiotic era, in which common infections and minor injuries, which have been treatable for decades, can once again kill.”13

About the Authors

Claire Chen is a freshman at Harvard University where she is majoring in Economics. After graduation, she hopes to explore a career in health policy. She would like to credit her seminar leaders Dr. Saini and Dr. Choy, along with the fearless Jeremy Welborn for a fantastic semester. Jeremy Welborn is a freshman at Harvard University who hails from Newton, Massachusetts. This fall he applied for a freshman seminar in global health, and was fortunate enough to engage with professionals and physicians in the global health space. He tag-teamed with the wonderful Claire Chen to explore the exciting challenge of AMR in this review article.


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  2. Walsh, Fergus. “PM Warns of Antibiotic Resistance.” BBC News. July 1, 2014. Accessed December 3, 2014.

  3. Young, Saundra. “President Signs Order to Fight Superbugs.” CNN. September 18, 2014. Accessed December 21, 2014.

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  5. Spellberg, B., Blaser, M., Guidos, R. J., et al. Combating Antimicrobial Resistance: Policy Recommendations to Save Lives. In Clinical Infectious Diseases: an Official Publication of the Infectious Diseases Society of America, 2011, 52:S397-428.

  6. Smith, R. D., Yago, M., Millar, M., et al. Assessing the Macroeconomic Impact of a Healthcare Problem: The Application of Computable General Equilibrium Analysis to Antimicrobial Resistance. In Journal of Health Economics, 2005, 24:1055-75.

  7. Outterson, Kevin. 2014. New Business Models For Sustainable Antibiotics. Working Groups On Antimicrobial Resistance. London: Chatham House.

  8. Walsh, Fergus. “PM Warns of Antibiotic Resistance.” BBC News. July 1, 2014. Accessed December 3, 2014.

  9. The Dangers Of Hubris On Human Health. 2013. Global Risks 2013. World Economic Forum.

  10. Outterson, Kevin. 2014. New Business Models For Sustainable Antibiotics. Working Groups On Antimicrobial Resistance. London: Chatham House.

  11.,. 2014. ‘S.626- Prize Fund For HIV/AIDS Act’.

  12. Centers for Disease Control and Prevention,. 2014. Antibiotic Resistance Threats In The United States. U.S. Department of Health and Human Services.

  13. World Health Organization,. 2014. WHO’S First Global Report On Antibiotic Resistance Reveals Serious, Worldwide Threat To Public Health.