Currently, 1.3 million global deaths are attributed to antimicrobial resistance (AMR) annually, and this number has been projected to rise to 10 million by 2050 (Murray et al., 2022; O’Neil, 2016). Antimicrobial resistance (AMR) arises from pathogens evolving to survive against therapeutics such as antibiotics and antifungals. Resistance to therapeutics makes conditions more difficult and expensive to treat and increases the risk of disease spread and severe illness. As resistance becomes more pervasive, the drugs once used to treat common conditions are no longer effective, and treatment options become more scarce and more expensive. Eventually, there is a risk that modern treatments such as chemotherapy or transplantation, where infections are more likely, may no longer be in the patient’s best interest due to the high risk of resistant, untreatable infections.
AMR affects all countries, but low-resourced settings amplify its drivers and consequences, affecting low- and middle-income countries most severely (Hocking et al., 2021). As this global health challenge rapidly expands, combating AMR will demand a multisector approach with diagnostics playing a pivotal role in stewardship and surveillance efforts.
UChicago’s Market Shaping Accelerator recognizes the need for innovation of new diagnostic tools and the opportunity for market shaping to be used to align incentives to promote their adoption. AMR diagnostics is one of the seven ideas included in Phase II of MSA’s Innovation Challenge 2023. In this post, we delve into the reasons why AMR diagnostics are an exciting target for market shaping.
Role of diagnostics in combating AMR
Diagnostic tools can enable targeted prescribing and transmission-disrupting interventions which have the potential to alter the selective pressures that facilitate the rapid growth of AMR. When bacteria, viruses, fungi, and parasites are exposed to drugs, the susceptible microbes are killed and microbes with resistant mechanisms survive. Over time, this leads to the propagation of the resistant strain. Unnecessary exposures to antimicrobials increase germs’ opportunities to develop resistance mechanisms and can accelerate the spread of resistance. By changing prescription practices and implementing transmission-disrupting practices, the rise of resistance could be slowed or even reversed (see examples, Melander et al., 2004, Woodworth et al. 2018).
A leading cause of the growth of AMR is antimicrobial overuse and misuse. When prescribers are unable to identify the specific pathogen affecting patients – due to the lack of diagnostics or delayed results – they may mis-prescribe the use of antimicrobials or over-rely on broad-spectrum antibiotics. This problem exists globally and across all levels of healthcare facilities. In U.S. ambulatory care settings, an estimated 28% of antibiotics are unnecessarily prescribed for conditions that are unlikely to be caused by bacteria infection (Hersh et al., 2022). Additionally, multi-day blood cultures needed to determine pathogen identification and susceptibility of sepsis or healthcare-acquired infections lead to the overuse of broad-spectrum antibiotics. In these cases, the time to treatment initiation is a strong predictor of mortality, so the standard of care is to use broad-based, powerful antibiotics until the results from a blood culture are reported days later at which point the more targeted therapeutics can be used. Faster diagnostic results would limit the need for the usage of broad-spectrum drugs and slow the emergence of resistance to these critical resources (Ferreyra et al., 2022; Kollef, 2008).
Rapid diagnostics can also allow for the faster and more targeted implementation of infection-control measures. Once a resistant infection is identified, measures can be taken to prevent transmission beyond the normal standard of care. For example, transmission-disrupting interventions can include heightened infection control in the hospital, heightened contract tracing, and partner education for STDs. By targeting the transmission of resistant strains, such interventions may have the potential to reverse the rise of resistance to current antimicrobials (McAdams et al., 2019; Ardal et al., 2019).
Market failures of AMR diagnostics
Diagnostic innovations require high fixed costs for research and development, but the structure of the diagnostics market makes it difficult for companies to be able to recoup their upfront investments. Commercial markets and users of diagnostic tests do not consider public health benefits, which leads to underinvestment in innovation and underadoption.
Diagnostic reimbursement structure: Despite the critical role that diagnostics play in guiding effective treatment strategies, the current reimbursement model in the U.S. healthcare systems (as well as many other countries) fails to provide adequate incentives for the development of innovative technologies. The traditional fee-for-service reimbursement structure does not account for the healthcare savings and public health benefits from accurate and targeted treatment enabled by advanced diagnostics. Additionally, the lengthy process of gaining reimbursement approval and coding for new diagnostic technologies creates substantial barriers for companies striving to introduce advanced and effective innovations.
Externalities to public health: The use of diagnostics leads to the public benefit of reduced transmission, longer antibiotic lifespans, and reduced healthcare burden, but their commercial costs are incurred by individual patients or insurers. The non-internalized harm of overprescription can lead prescribers faced with uncertainty to err on the side of overprescribing rather than denying treatment.
While patients receive some benefit from more accurate treatment, the wedge between the private and social benefits can result in a lower adoption rate than would be socially ideal. For example, if generic antibiotics are less expensive than the diagnostic used to determine prescription, payors may pressure the healthcare professional to prescribe without a test. However, these additional costs of diagnostics may be far less than the social value of averted resistance development.
Limited purchasing power of low-income countries: The majority of AMR burden is in low- and middle-income countries which are resource-constrained and have less ability to pay monopoly pricing to biotech companies for novel technologies. Because of the limited market rewards in these settings, companies choose to direct research funding to other targets.
The opportunity for market shaping
The value of a new diagnostic depends on its adoption rate and ultimately its ability to induce a change in prescriber behavior. The extent of behavior change will depend on the circumstances in which the diagnostic is introduced including the availability of alternative antimicrobials, awareness of the risks from AMR, and the price and accuracy of the test itself (Altonananzas et al., 2021). Innovations that are left unadopted by the market fail to add social value and could negatively signal other companies to avoid investing in the market.
Innovation and adoption are related challenges that pull mechanisms are well suited to solve. Pull funding payouts can be tied to uptake such that firms are incentivized to create diagnostics that are attractive and accessible to healthcare providers. Further, a pull mechanism could be shaped to include a commitment by a major health system to adopt the test if a target product profile is met. Linking pull funding and commercialization allows a pathway for novel diagnostics to overcome the “valley of death” of innovation.
Key questions in designing a market-shaping proposal
Diagnostic improvements are needed across a variety of settings and use cases (high-income countries, low-income countries, primary and hospital-based care), each with specific challenges. To develop a target product profile and suitable pull mechanism, the Phase II team will aim to identify an especially high-impact diagnostic target and quantify the benefits and costs of spurring its development. Key questions that will impact this decision-making include the following:
- What symptomatic condition and type of test is the highest priority target?
- Is the targeted use environment conducive to a change in behavior? Are there other factors or resource constraints that would limit a diagnostic’s impact?
- How can the pull mechanism be structured to incentivize the adoption of the new diagnostic?
- Could the diagnostic be used across a wide range of healthcare settings in both high and low-resourced settings?
- How can the long-term benefits of averted antimicrobial misuse be modeled?
These are just a few of the questions that will be answered through the team’s work in Phase II of the Innovation Challenge. The team is led by Dr. Akhil Bansal, a physician and the founder of AMR Funding Circle, and advised by Prof. David McAdams, Duke Fuqua School of Business.
Working in the AMR area or want to get in touch with MSA about our work in this area? Please reach out to [email protected].
