title: Systems, not pills: The options market for antibiotics seeks to rejuvenate the antibiotic pipeline.
abstract: Over the past decade, there has been a growing recognition of the increasing growth of antibiotic resistant bacteria and a relative decline in the production of novel antibacterial therapies. The combination of these two forces poses a potentially grave threat to global health, in both developed and developing countries. Current market forces do not provide appropriate incentives to stimulate new antibiotic development, thus we propose a new incentive mechanism: the Options Market for Antibiotics. This mechanism, modelled on the principle of financial call options, allows payers to buy the right, in early stages of development, to purchase antibiotics at a discounted price if and when they ever make it to market approval. This paper demonstrates the effect of such a model on the expected Net Present Value of a typical antibacterial project. As part of an integrated strategy to confront the impending antibiotic crisis, the Options Market for Antibiotics may effectively stimulate corporate and public investment into antibiotic research and development.
authors.affiliation: Department of Orthopaedic Surgery, University of Missouri School of Medicine, United States.
authors.forename: David M
authors.initials: DM
authors.lastname: Brogan
authors.affiliation: LSE Health, London School of Economics and Political Science, United Kingdom. Electronic address: E.A.Mossialos@lse.ac.uk.
authors.forename: Elias
authors.initials: E
authors.lastname: Mossialos
mesh_terms: D000900:Anti-Bacterial Agents / Q000627:therapeutic use*; D055808:Drug Discovery / Q000191:economics*; D004345:Drug Industry / Q000191:economics* / Q000706:statistics & numerical data; D006801:Humans; D007449:Investments / Q000458:organization & administration* / Q000706:statistics & numerical data
chemical_list: D000900:Anti-Bacterial Agents
keywords: Antibiotics; Incentives; Options market; Research and development