We previously made the case for why neonatal sepsis diagnostics should be a global health priority; we proposed an advance market commitment (AMC), a promise to reward firms for developing and scaling up a successful diagnostic, as a way to address inadequate commercial incentives to invest in this life-saving technology.

But establishing an effective AMC requires more than simply announcing a pot of money. It requires a design tailored to the problem of neonatal sepsis diagnostics, countries to participate, and commitments from funders. Clarifying these details, in turn, calls for a mix of health, economics, and policy expertise.

We are therefore establishing a working group to take on these tasks, led by Lord Jim O’Neill, who chaired the UK Government’s ‘The Review on Antimicrobial Resistance.’ This effort builds on the success of the $1.5 billion pneumococcal AMC, which was incubated by a CGD working group and drew on the expertise of MSA’s faculty directors Rachel Glennerster, Michael Kremer, and Christopher Snyder.

We believe this collaborative working group will do more than inform AMC design—it will provide useful inputs for policymakers and firms advancing diagnostic innovation.

Why AMR diagnostics demand a specialized approach

Antimicrobial resistance (AMR) poses a unique public health challenge that has prompted novel funding approaches to promote innovation. The UK-pioneered subscription models and the European Commission’s proposed transferable data exclusivity voucher program aim to incentivize antibiotic development while promoting responsible use practices that limit the development of resistance. However, efforts to catalyze diagnostics innovation have been more limited. Diagnostics receive about 8 percent of total AMR research and development expenditure. Despite the call for a diagnostic market stimulus in the 2016 Review on Antimicrobial Resistance, no funding mechanism designed specifically for diagnostic innovation has been implemented to date.

Diagnostic innovation presents unique challenges. Developers face unclear evidence requirements and struggle to demonstrate clinical value in ways that can easily be tied to reimbursement. Further, the nature of AMR creates misaligned incentives: the social benefits of diagnostic-guided antibiotic stewardship aren’t fully captured by individual patients or clinicians, who may err on the side of caution in prescribing antibiotics even when they are not necessary.

Pull incentives, such as an AMC, are particularly useful for diagnostics innovation because they link payments to output and outcomes. This approach would tie payments to the delivery of tests that meet predefined criteria for performance, affordability, and usability, providing firms with a target to aim for, criteria to satisfy, and a financial incentive to overcome remaining challenges.

For pull incentives to actually motivate firms, they must be structured and sized to compensate firms for incurring the costs and risks of completing the journey from research and development to regulatory approval, procurement by health systems, and adoption by physicians. The pull incentive also needs backing from funders and participating countries. Getting this right requires specialized and interdisciplinary expertise—as reflected in the composition of our working group.

The working group’s core activities

1. Designing an effective AMC

AMC design requires well-defined success criteria, payment structure, and reward size. The working group will establish clear target product profiles (TPPs) that specify what criteria diagnostic tools must meet to qualify for AMC payments, as well as how these criteria will be evaluated. TPPs will balance utility for clinical decision-making, cost-effectiveness, and the ability to scale to reach target populations in low- and middle-income countries (LMIC). This work builds on existing World Health Organization efforts in designing a TPP for neonatal sepsis diagnostics.

Next, the working group will gather key information to determine the appropriate size and structure of reward payments. Economic experts will model the stages, costs, and risks of development to determine the size of additional funding incentives needed. To understand the expected adoption of a diagnostic, the working group will conduct comprehensive market assessments for various TPP options, which will inform test prioritization and provide firms’ revenue expectations regarding pricing and market structure. Using this information, the working group will design different payment structures that best motivate innovation while ensuring affordability and scale.

2. Facilitating country participation

Real policy interest from countries would strengthen the demand signal of the AMC and attract firms to these markets. Such interest could be demonstrated by offering a clear and credible path through regulatory approval to procurement by country health systems.

To facilitate this, the working group will map approval and procurement processes across key LMIC markets to identify common barriers and explore opportunities for streamlined requirements where possible. It will assess how neonatal sepsis diagnostics could be incorporated into current standards of care within existing resource-constrained settings. The group will also engage health ministries to clarify what evidence and implementation support are needed to integrate these diagnostics into existing care protocols. In addition, the working group aims to identify opportunities for countries to support innovation efforts, for instance, by providing access to clinical trial networks and shared data infrastructure.

3. Mobilizing funding

Securing investment from donors and procurement interest from countries requires demonstrating clear value and impact. The working group will produce health economic analyses showing the cost per life saved and AMR reduction potential across different implementation scenarios.

Why this requires interdisciplinary collaboration

Designing effective TPPs requires balancing clinical utility with cost-effectiveness. Accordingly, the TPP drafting process requires deep engagement from clinical experts who understand the criteria that drives clinical value and AMR benefits, as well as health economists who can assess cost-effectiveness and help strike the right balance between ideal test characteristics and specifications that deliver value at an accessible price. It also requires the expertise of global health organizations that have worked on TPPs for neonatal sepsis diagnostics and related areas.

Country engagement and regulatory mapping demands policy and regulatory experts who understand procurement processes, political economy constraints, and how to build institutional support across diverse LMIC contexts.

Innovation incentive design requires industrial organization economists who can develop tractable quantitative models to characterize market behavior and estimate firms’ expected returns. Their modeling must be informed by diagnostics development experts who understand the practical hurdles developers face, manufacturing and supply chain requirements, and bottlenecks that prevent promising technologies from reaching patients.

By bringing these perspectives together, the working group will ensure the proposed AMC is economically sound, clinically relevant, cost-effective, politically feasible, and practically implementable.

Value beyond the funding mechanism

While the working group’s primary goal is to launch a successful AMC for neonatal sepsis diagnostics, its activities will generate significant spillover benefits for the broader diagnostics innovation ecosystem.

The process of designing AMC eligibility criteria requires establishing clear TTPs and evidence requirements. These specifications are public goods that can benefit related policy efforts, for instance, by providing a common standard that countries, health system organizations, and innovators can coordinate around. Similarly, mapping regulatory pathways and identifying opportunities for streamlined approval creates clearer roadmaps that benefit innovators regardless of whether they pursue the AMC opportunity.

Many of the analyses our working group will conduct—market assessments, health economic modeling, care pathway studies—are expensive and often duplicated across organizations. By coordinating these efforts and sharing results, the working group will reduce duplication while providing evidence that all developers and countries can benefit from.

Looking forward

We are thrilled to establish this working group with Lord Jim O’Neill as chair and a distinguished group of experts from across the global health community. Our end goal is a fully funded AMC that incentivizes the development and delivery of lifesaving neonatal sepsis diagnostics—technology that could save hundreds of thousands of newborn lives annually and reduce the AMR burden.

If successful, both the AMC design and our collaborative approach could offer a template for addressing other critical diagnostic gaps. The eligibility criteria, payment structures, and integration with country procurement could be adapted to other high-priority diagnostic needs, from tuberculosis to novel viruses with pandemic potential. Meanwhile, the working group’s activities—establishing clear TPPs, clarifying evidence requirements, and identifying opportunities to streamline regulations—could offer a model for policymakers seeking to create supportive pathways for socially valuable innovation.