The economics of life-saving diagnostics

LONDON – It has been almost nine years since the UK Review on Antimicrobial Resistance (AMR), which I chaired, published its final recommendations. Since then, I have occasionally checked in on the progress made toward our 29 specific proposals and consistently ended up disappointed. Despite the attention our work received at the time, very few of our suggestions have been implemented.

In conducting the review, my team and I drew on our diverse past experiences and sources of expertise to address both the supply and the demand side of the problem, namely, the lack of effective treatments or alternatives, both on the market and in the development pipeline, and the excessive use of current antibiotics. As I have noted before, raising funds to develop novel antibiotics through “push incentives” (support for basic research) has had some success. But beyond one promising UK initiative, there has been little progress toward introducing stronger “pull incentives” (rewards) for pharmaceutical companies, and there has been almost no action on our other supply-boosting recommendations.

In terms of reducing demand, one big victory is the reduced use of antimicrobials in agriculture in some parts of the world. This partly reflects shifting consumer preferences in favor of antibiotic-free foods; but it also follows from policies that are similar or even identical to what we recommended.

As an economist, I always considered our most important recommendation to be the one pushing for affordable rapid diagnostics. This technological solution is key to ensuring that those who are ill get the right treatment, but also that antimicrobials are not applied unnecessarily. Permanently reducing the demand for antimicrobials is one of the most important steps we can take.

Yet very little has happened in this area, despite the rapid development and diffusion of relevant technologies like AI. Why is this? One big issue, most likely, is that the cost of diagnosis still exceeds the cost of simply prescribing an antibiotic. While the proper use of diagnostics would deliver substantial benefits by slowing the spread of AMR, this is a positive externality that is not captured in the current market.

Pharmaceutical companies and others would remedy this market failure by simply allowing for a significant rise in the price of antimicrobials, arguing that this would incentivize the industry to research useful new drugs. But such proposals ignore the fact that many people across advanced, middle-, and low-income economies would not be able to afford high-priced drugs. A higher price point would discriminate according to a patient’s means, when what we actually want is to discriminate according to their medical needs.

Thus, our own recommendation was for developed countries to legislate bans against prescriptions of antimicrobials in the absence of rapid diagnostics, and for global stakeholders to create stronger incentives for the development and use of such tests in low- and middle-income countries. One of our chief influences was Gavi, the Vaccine Alliance’s successful Advance Market Commitment (AMC) model to promote vaccines across the developing world.

Another complication is that diagnostics can differ markedly depending on the disease in question. Thus, some have been approaching the problem through the lens of specific illnesses, such as gonorrhea, where treatment-resistance is a rapidly growing issue, strep throat, or sepsis, specifically in newborns. Current estimates show that 400,000 to 700,000 babies die every year from sepsis either because they needed antibiotics but didn’t receive them, or because they received them unnecessarily. In either case, the root problem is an absence of diagnostic tools.

Recognising that accessible diagnostic tools for neonatal sepsis would be transformational, a host of researchers, including some who helped shape Gavi’s model, have come together to develop an AMC for such technologies. They estimate that if a diagnostic test was widely used, 100,000 babies’ lives could be saved every year, and antibiotic use among this patient population would fall by 20 per cent.

I remain honoured to have served as the chair of the Review on AMR. But the job is far from finished. Over the next 18 months, those of us working on the issue will be publishing new papers on the new AMC, how it should be financed, and which organization or organizations are best positioned to oversee it. A breakthrough in diagnostics could well trigger a powerful chain reaction to contain the wider AMR threat.

Jim O’Neill is a former chairman of Goldman Sachs Asset Management and a former UK Treasury minister.Copyright: Project Syndicate, 2025. www.project-syndicate.org