Ultimate, great find. I think this the part to which you were referring (pg 51).
President’s Council of Advisors on Science and Technology September 2014
(2) Delinkage. Another approach that has attracted considerable recent attention is the idea of ‘delinking’ antibiotic usage from revenues. Under such schemes, a successful developer of an antibiotic that addresses an important public health need would receive a financial reward that is not directly tied to the usage of the drug. A variety of incentive models have been proposed, including user licenses, lump sum prizes, patent buy-outs, and payments to hold drugs in strate- gic reserve.54 These models would provide reduced risk to potential developers (the economic reward is defined), reduced risk to users (their cost is contained), and would allow the resulting antibiotics to be managed as a strategic resource so as to preserve their effectiveness for criti- cal uses. In addition, these models would not create incentive for a drug maker to increase sales of the antibiotic in order to make more money. One option would be complete delinkage. In this case, a drug developer might receive from the Federal Government a one-time lump sum payment that serves as a patent buyout and reward for bringing a new antibiotic to market. The Federal Government could contract with the drug company to produce antibiotic as needed, and limit clinical use to specific circumstances and certain pre-defined conditions. Under complete delinkage, buyouts in the range of $1 billion might be required. Another option would involve partial delinkage, where a drug developer would receive a re- ward for developing the drug and would sell the drug, but would agree to certain stewardship requirements. BARDA has used such rewards successfully to incentivize the development of medical countermeasures to bioterrorism threats, encouraging companies to complete devel- opment of Phase 3 candidates by offering rewards in the range of $400-500 million. Congress established a $5.6 billion Special Reserve Fund to fund advance market commitments; the fund has been used to purchase 12 products for the Strategic National Stockpile and to support the advanced research and development efforts. BARDA could create an Antibiotic Incentive Fund (AIF) to provide advance market commitments (AMC) and milestone payments as incentives for bringing a new antibiotic to market. The ad- vance market commitment could be structured to secure the market availability of a given number of doses per year, determined by projected demand, over a given number of years, at a specified price. As a condition of receiving a payment from the AIF, the Federal Government could require industry partners to develop and implement stewardship plans and apply other considerations (e.g., patent buyouts, restricted marketing, royalty payments, pricing discounts, etc.). Incentive payments in the range of $400 million per drug would likely be required. At one advanced drug candidate per year, this would correspond to average annual funding of $400 million – although an AIF would be ideally structured with no-year advance appropriation (e.g., $4 billion over ten years) to allow flexibility in when funds are spent. Assuming a success rate of 50%, such an investment might lead to an average of 0.5 new approved drugs per year (that is, one every two years).
