Margolis Team Recommends Improving Access to Life-Saving Antibiotics for Medicare Beneficiaries

Subscription Model of Payment Would Improve Incentives

WASHINGTON, DC -- A “subscription model” is an alternative payment model that could help increase the development, availability, and appropriate use of priority antibiotics to combat rising levels of antimicrobial resistance (AMR), according to researchers at the Duke-Margolis Center for Health Policy in a Health Affairs blog published today.

Nearly 3 million Americans  – nearly one in a hundred --  contract antibiotic-resistant infections every year, and more than 35,000 people die as a result, according to a 2019 report from Center for Disease Control and Prevention (CDC). Medicare beneficiaries are the segment of the U.S. population most susceptible to death and complications from antibiotic-resistant microbes.

“Part of the reason the number of pathogen threats has grown is because our current antibiotics are increasingly ineffective in combatting infections, and few new drugs are being developed,” said Monika Schneider, PhD, a Duke-Margolis managing associate. She co-authored the blog post and a related issue brief with Duke-Margolis Center Director Mark McClellan and Senior Research Assistant Nicholas Harrison.

“While public and private sector efforts are working to address the need for increased development of antibiotics, none of these initiatives have resolved the greatest barrier -- low expected manufacturer revenue and limited market opportunities for new drugs,” Schneider said.

A subscription model would pay a set fee to manufacturers based on the availability of a drug to help protect a population, rather than paying based on the volume of the drug actually used.

The Duke-Margolis issue brief, developed with support from Wellcome Trust, specifically outlines how Medicare could pay for new antibiotics on a population-basis, through a recurring fee that is linked both to the evidence generated on a new antibiotic and its demonstrated value in addressing antimicrobial resistance. As the largest U.S. and global health care payer and the “lifetime” payer for Medicare beneficiaries, the Centers for Medicare & Medicaid Services (CMS), is in a unique position to take the lead in advancing broad-based payment reforms to antimicrobial resistance therapies, according to the Duke-Margolis researchers.

They argue this approach would better reflect the value of the antibiotic to the population being covered, particularly Medicare beneficiaries who would have less risk of a resistant infection because an effective alternative is available to prevent its spread.

The new 2020 CMS rule brought significant reforms to antibiotic reimbursement in the in-patient setting, with the goal of encouraging antimicrobial resistance innovation. In particular, the CMS rule aims to neutralize the difference in costs to a hospital for the use of generic versus new antibiotics.

“While the CMS rule, and its antibiotic payment reforms, are a positive step toward mending a fragile antibiotics market and supporting innovation in the space, we urge the adoption of a subscription model approach,” Schneider said . “A subscription approach would more directly align antibiotic payments with public health goals, like appropriate use and stewardship, and with Medicare’s shift from volume- to value-based payments for other important components of medical care.”