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Economic Incentives for the Development of Rapid Point-of-Care (POC) Diagnostic Devices for C.Difficile, Carbapenem-Resistant Enterobacteriaceae (CRE), and Neisseria Gonorrhoeae

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Antibacterial resistance is responsible for excess morbidity, mortality, and medical costs around the globe. Estimates vary widely, but the economic cost of antibacterial resistance in the United States could be as high as $20 billion and $35 billion a year in excess direct healthcare costs and lost productivity costs, respectively. CDC’s most recent report on U.S. antibiotic resistance threats identifies three microorganisms as urgent threats: C. diff, CRE, and drug-resistant Neisseria gonorrhoeae. To help combat the spread of these bacteria, CDC recommends promoting the development of new antibiotics and developing new diagnostic tests for resistant bacteria.

Drawing on the analytical decision-tree model framework developed by Sertkaya et al. (2014), this study assesses the private and social impacts of developing hypothetical rapid POC diagnostics for the detection of C. difficile, CRE, and N. gonorrhoeae. The study also considers the level of incentive needed to reach a private value equivalent to that of a rapid POC device with $100 million in peak-year sales. For C. difficile, CRE, and N. gonorrhoeae infections under baseline market scenarios, we find that the expected net present value (ENPV) for a hypothetical rapid POC device ranges from -$19.0 million to $289.1 million. To evaluate the extent to which these private returns align with the societal impact of the infections, we estimate the societal willingness to pay (WTP) to avoid mortality and morbidity associated with C. difficile, CRE, and N. gonorrhoeae infections to be $178 billion in 2016 dollars. C. difficile infections (CDI), with a social burden of $166 billion, represents close to 95 percent of the total annual burden of all three infections. Of the $166 billion in social burden associated with CDI, over 97 percent is due to mortality.

The gap between the private and public returns to rapid POC device development suggests that incentives are desirable to stimulate the development of diagnostics to detect the three infections considered in this analysis. The following incentives were examined: tax incentives; modifications to the clinical study process and FDA review standards; private grants, awards, and prizes; and changes to reimbursement level.