Estimating Canada’s Return on Investment from an Ambitious Program to Incentivize New Antibiotics

Anti-microbial drugs form the backbone of modern medicine. Yet their lifespan is naturally limited; over time, use of these drugs selects for mutations that survive exposure those same drugs, driving “anti-microbial resistance,” or AMR. Already, drug-resistant infections kill an estimated 5,400 Canadian citizens every year. In the absence of sufficient research and development (R&D) investment for new antimicrobials, deaths from drug-resistant infections could increase dramatically in the coming decade.

To address this growing crisis and solve market failures that prevent the development of new antibiotics, the Government of Canada is considering a new program that would provide minimum guaranteed revenue to the successful developers of new antibiotics. In this note, we present the results of a modelling exercise to estimate the likely return on investment (ROI) from such a program, assuming it is paired with complementary and proportionate efforts from Canada’s G7 partners. The results are necessarily imprecise due to several uncertain parameters, but nevertheless provide evidence of a very high expected ROI that is robust to different inputs and assumptions.

Key messages

  • We estimate the benefits to Canada of a new antibiotic incentive program, which would seek to generate a total of 18 new antibiotics over three decades to treat six priority pathogens. 
  • We assume that every country in the G7 + EU pays its “fair share” toward the total cost of $4.5 billion per drug; the Canadian contribution is 4.0%, or $179 million per new drug. 
  • The incentive payments would be spread over 10 years and following fulfilment Canada will be able to procure the new antibiotic for close to marginal cost.
  • Over 10 years, such a program would save 2,500 lives and generate $2.1 billion in total benefits for Canada, for an ROI of 5:1. 
  • Over 30 years, such a program would save 48,000 lives and generate $31.5 billion in total benefits for Canada, for an ROI of 20:1. 
  • The global return on investment is much larger, at 27:1 over 10 years (with 518,000 lives saved); and 125:1 over 30 years (with 9.9 million lives saved).

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