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Are government subsidies enough to ensure that drug companies make the public interest a priority, or should government agencies assume responsibility for developing critical drugs that may have little or no return on investment?

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The (Free?) Market for New Antimicrobials
There used to be plenty of antimicrobial drugs on the market to treat infectious diseases. However, the spread of antimicrobial resistance has created a need for new antibiotics to replace those that are no longer as effective as they once were. Unfortunately, pharmaceutical companies are not particularly motivated to fill this need. As of 2009, all but five pharmaceutical companies had moved away from antimicrobial drug development.26 As a result, the number of FDA approvals of new antimicrobials has fallen drastically in recent decades (Figure 14.22).
Given that demand usually encourages supply, one might expect pharmaceutical companies to be rushing to get back in the business of developing new antibiotics. But developing new drugs is a lengthy process and requires large investments in research and development. Pharmaceutical companies can typically get a higher return on their investment by developing products for chronic, nonmicrobial diseases like diabetes; such drugs must be taken for life, and therefore generate more long-term revenue than an antibiotic that does its job in a week or two. But what will happen when drugs like vancomycin, a superantimicrobial reserved for use as a last resort, begin to lose their effectiveness against ever more drug-resistant superbugs? Will drug companies wait until all antibiotics have become useless before beginning to look for new ones?
Recently, it has been suggested that large pharmaceutical companies should be given financial incentives to pursue such research. In September 2014, the White House released an executive order entitled “Combating Antibiotic Resistant Bacteria,” calling upon various government agencies and the private sector to work together to “accelerate basic and applied research and development for new antimicrobials, other therapeutics, and vaccines.”27 As a result, as of March 2015, President Obama’s proposed fiscal year 2016 budget doubled the amount of federal funding to $1.2 billion for “combating and preventing antibiotic resistance,” which includes money for antimicrobial research and development.28 Similar suggestions have also been made on a global scale. In December 2014, a report chaired by former Goldman Sachs economist Jim O’Neill was published in The Review on Antimicrobial Resistance.29
These developments reflect the growing belief that for-profit pharmaceutical companies must be subsidized to encourage development of new antimicrobials. But some ask whether pharmaceutical development should be motivated by profit at all. Given that millions of lives may hang in the balance, some might argue that drug companies have an ethical obligation to devote their research and development efforts to high-utility drugs, as opposed to highly profitable ones. Yet this obligation conflicts with the fundamental goals of a for-profit company. Are government subsidies enough to ensure that drug companies make the public interest a priority, or should government agencies assume responsibility for developing critical drugs that may have little or no return on investment?

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