Investing in antibiotics to alleviate future catastrophic outcomes: What is the value of having an effective antibiotic to mitigate pandemic influenza?
Megiddo, Itamar ; Drabik, D. ; Bedford, Tim ; Morton, Alec ; Wesseler, J.H.H. ; Laxminarayan, Ramanan - \ 2019
Health Economics 28 (2019)4. - ISSN 1057-9230 - p. 556 - 571.
antibiotics - antibiotics resistance - insurance value - pandemic influenza - real options analysis - secondary bacterial infections
Over 95% of post‐mortem samples from the 1918 pandemic, which caused 50
to 100 million deaths, showed bacterial infection complications. The introduc-
tion of antibiotics in the 1940s has since reduced the risk of bacterial infections,
but growing resistance to antibiotics could increase the toll from future
influenza pandemics if secondary bacterial infections are as serious as in
1918, or even if they are less severe. We develop a valuation model of the
option to withhold wide use of an antibiotic until significant outbreaks such
as pandemic influenza or foodborne diseases are identified. Using real options
theory, we derive conditions under which withholding wide use is beneficial,
and calculate the option value for influenza pandemic scenarios that lead to
secondary infections with a resistant Staphylococcus aureus strain. We find that
the value of withholding an effective novel oral antibiotic can be positive and
significant unless the pandemic is mild and causes few secondary infections
with the resistant strain or if most patients can be treated intravenously.
Although the option value is sensitive to parameter uncertainty, our results
suggest that further analysis on a case‐by‐case basis could guide investment
in novel agents as well as strategies on how to use them.