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A shot in the arm for new antibiotics

Nature Biotechnology volume 37, pages 1110–1112 (2019)Cite this article

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To the Editor — On 1 October, a new US Centers for Medicare and Medicaid Services (CMS) rule comes into effect that enhances economic incentives for newer antibiotics administered in US hospitals1. The rule represents an economically significant post-approval (‘pull’) incentive to boost antibiotic development2. If it is followed by further regulatory action in the coming year, it may prove to be the largest antibiotic pull incentive ever created by the US government. Although the new rule is a welcome shot in the arm for antibiotic discovery and development, the current moribund state of the antibacterial R&D ecosystem means that other incentives, such as a ‘market entry reward’, are still needed to fully incentivize drug companies to embrace (rather than leave) this space3.

When US Congress created Medicare in 1965, hospitals were paid a small markup over their costs. This gave US hospitals an economic incentive to spend more, since Medicare footed the bill. In 1983, President Regan signed a new law designed to control runaway hospital cost inflation. This Inpatient Prospective Payment System (IPPS) largely replaced cost-based reimbursement with bundled payments based on the comprehensive hospital expenses associated with a particular diagnosis. The major conditions that characterized inpatient hospitalization were collected into ‘diagnostic-related groups’ (DRGs) and assigned a fixed price per inpatient stay4. Most private insurers in the United States have also adopted the DRG system.

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Fig. 1

IQVIA data from Alan Carr, Needham; FDA; CMS.

References

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  1. Boston University, Boston, MA, USA

    Kevin Outterson

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Correspondence to Kevin Outterson.

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K.O. is the executive director of CARB-X, funded by three governments (US, UK and Germany) and two foundations (Wellcome Trust and Gates). CARB-X is a non-profit accelerator of preclinical and phase 1 antibacterial research that awards grants worldwide.

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Outterson, K. A shot in the arm for new antibiotics. Nat Biotechnol 37, 1110–1112 (2019). https://doi.org/10.1038/s41587-019-0279-8

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