The Economics of Antibiotic Resistance Abstract

Due to the public good characteristics of antibiotic innovation, the matching problem in their use (elaborated below), the long lifespan of many antibiotics, and the insurance value of new ones, the conventional solution for spurring innovation (patent protection) is a particularly poor fit for maximising the social benefit of the pool of antibiotics. [...] But this is not the only market failure that contributes to resistance: market failures in infection prevention mean that the use of antibiotics (and thus resistance) is more widespread than it would otherwise be, and the failure to correctly internalise the cost of environmental pollution from the production of medication also leads to sub-optimally high resistance. [...] But the costs of better infection control are typically private; the benefits are at least partly social (that is, the costs accrue to the individual undertaking better infection control, but some of the benefits are enjoyed by others and in particular people in the future). [...] Firstly, externalities: most of the costs of unnecessary use are borne by society, so patients often take antibiotics even when the personal benefits are low (that is, the private price THE ECONOMICS OF ANTIB IOTIC RES ISTANCE 14 of an antibiotic tends to be trivial relative to the external cost of promoting resistance). [...] Similarly, to the extent that small costs or frictions reduce the prevalence of basic infection control some behavioural interventions (such as the use of reminders or signs) may help, while using social pressure can increase the cost of non-compliance with basic hygiene.21 But much of the problem is public, usually in the form of infrastructure, often public goods: the state must step in to build.