Estimating the EU'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 33,000 citizens of the European Union (EU) 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 EU is considering incentive programs that would help provide predictable and value-based compensation 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 the EU’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 the European Union (EU) 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 EU contribution is 34.0%, or $1.5 billion per new drug. 
  • The incentive payments would be spread over 10 years and following fulfilment the EU will be able to procure the new antibiotic for close to marginal cost.
  • Over 10 years, such a program would save 20,000 lives and generate $15.5 billion in total benefits for the EU, for an ROI of 4:1. 
  • Over 30 years, such a program would save 385,000 lives and generate $541 billion in total benefits for the EU, for an ROI of 11:1. 
  • 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).

Read the full brief

Rights & Permissions

You may use and disseminate CGD’s publications under these conditions.