Subscription style payment model for antibiotics

A path to stimulate innovation while providing greater financial certainty.

Introduction

Many of us are using online streaming services like Netflix for entertainment. We are willing to pay monthly subscriptions, no matter how many films we watch. A subscription model like this could also be used to tackle a major global health threat – antibiotic resistance¹. To tackle antibiotic resistance, novel antibiotics are being reserved as later-line therapy for more serious and difficult to treat infections. As a result, new antibiotics are not only competing with older and cheaper drugs, but they also have lower utilization and are used for short periods². This means that the development of antibiotics is not commercially attractive because this area is linked with high cost and low returns. Consequently, few new classes of antibiotics have been discovered since the 1980s.

To stimulate development of new antibiotics, in December 2020 the UK selected two antimicrobials – Shionogi’s Fetcroja (Cefiderocol) and Pfizer’s Zavicefta (ceftazidime with avibactam) (Zavicefta), to be purchased via the Netflix-style subscription payment model. The NHS will pay pharmaceutical companies up-front for access to these antibiotics, rather than reimbursing them based on the quantity of antibiotics sold. Over the next 12 months these two products will be evaluated by NICE. The output of these evaluations will inform subscription payments each company will receive for its product. It is anticipated that these products will be made available to patients via this innovative payment system from early 2022³.

Benefits and Challenges of adopting subscription-style payment models

Subscription-style payment models provide higher financial certainty to both payers and manufacturers by reducing the risk of lower revenue for manufacturers and overspending for payers. However, there are several implementation challenges associated with this type of payment model⁴:

1. Developing standards and assessments for evaluating ‘treatment value’ which is linked to the payment received by the manufacturer
2. Uncertainty over the volume of the product used could mean overspending from the payer perspective or lower revenue than expected from the manufacturer perspective
3. Feasibility for global implementation i.e. potentially easier implementation in single-payer healthcare systems such as UK and Australia

Future impact of subscription-style payment models

There is a hope that the UK subscription model approach will inspire healthcare systems across the world to consider adopting similar models, hence providing incentives for manufacturers to strengthen the global antimicrobial pipeline. Furthermore, these models may be used to advance development in other therapeutic areas such as cell and gene therapies, rare diseases, and cancer, where treatment is acute and has high effectiveness, cost, and/or unmet need, and higher uncertainty surrounding utilization⁴.

References:

1. Ft.com. 2021. Do we need a Netflix for antibiotics?. [online] Available at: <https://www.ft.com/video/adada10f-5747-4976-a3e0-958b0165e0ef>
2. Nature.com. 2021. Why big pharma has abandoned antibiotics. [online] Available at: <https://www.nature.com/articles/d41586-020-02884-3> [Accessed 17 March 2021].
3. Perkins, M., Glover, D., Perkins, M. and Glover, D., 2021. NHS England » How the ‘NHS model’ to tackle antimicrobial resistance (AMR) can set a global standard. [online] England.nhs.uk. Available at: <https://www.england.nhs.uk/blog/how-the-nhs-model-to-tackle-antimicrobial-resistance-amr-can-set-a-global-standard/> [Accessed 17 March 2021].
4. Kmietowicz, Z., 2019. New antibiotics: NHS will test “pay for usefulness” model to stimulate research. BMJ, p.l4610.