Ann. N.Y. Acad. Sci.

ISSN 0077-8923

A N N A L S O F T H E N E W Y O R K A C A D E M Y O F SC I E N C E S
Issue: Antimicrobial Therapeutics Reviews

Resistance diagnosis and the changing economics

of antibiotic discovery
David McAdams
Fuqua School of Business and Economics Department, Duke University, Durham, North Carolina

Address for correspondence: David McAdams, Fuqua School of Business and Economics Department, Duke University,
100 Fuqua Drive, Durham, NC 27707. david.mcadams@duke.edu

Point-of-care diagnostics that can determine an infection’s antibiotic sensitivity increase the profitability of new
antibiotics that enjoy patent protection, even when such diagnostics reduce the quantity of antibiotics sold. Advances
in the science and technology underpinning rapid resistance diagnostics can therefore be expected to spur efforts to
discover and develop new antibiotics, especially those with a narrow spectrum of activity that would otherwise fail
to find a market.

Keywords: antibiotic resistance; point-of-care diagnosis; narrow-spectrum drugs; monopoly pricing

Introduction otics will be effective at speeding recovery. An antibi-

Antimicrobial development must allow pharmaceutical com-
panies realistic returns on their investment. This is crucial if
society is to obtain new agents.
–Richard Wise, Chair, British Society of Antimicrobial
Chemotherapy Urgent Need Initiative, 2011
With the continuing rise of multidrug-resistant bac-
teria and the recent emergence of bacteria that are
resistant to all or nearly all known antibiotics, the
need for new antibiotics (and new antimicrobials
more broadly) has become a pressing global con-
cern. According to the Review on Antimicrobial
Resistance (AMR Review), “drug-resistant infec-
tions could kill an extra 10 million people across the
world every year by 2050 [and from now until then]
cost the world around $100 trillion in lost output,”
underscoring the immense economic value that new
antibiotics could provide in preventing and treating
infections that are resistant to our current antibiotic
arsenal.
This paper builds on the economic model of
point-of-care resistance diagnosis (POCRD) and
antibiotic use introduced in the companion paper1
to explore how POCRD will affect antibiotic
demand and profitability. Two main observations
emerge.
On making a market for drugs that are unlikely
to benefit patients. Given a patient’s symptoms,
doctors face uncertainty about which (if any) antibi-
doi: 10.1111/nyas.13303
Ann. N.Y. Acad. Sci. xxxx (2017) 1–8 
C 2017 New York Academy of Sciences.
otic that only benefits a small fraction of patients will
not be prescribed, no matter what the price, unless
POCRD is available to identify those for whom it will
be effective. In this way, POCRD makes a market for
such drugs and allows them to earn a profit. This
point is especially relevant given that some of the
most promising opportunities for antibiotic discov-
ery and development are (i) antibiotic compounds
that were discovered decades ago but left unexplored
because of their limited therapeutic prospects2 and
(ii) adjuvants that act synergistically with existing
antibiotics to overcome established mechanisms of
antibiotic resistance.3–5
On increasing antibiotic profitability. The main
finding of this paper is that POCRD unambigu-
ously increases the profitability of antibiotics that
enjoy patent protection. This is not obvious since,
as shown in the companion paper,1 POCRD may in
some cases decrease the quantity of antibiotics sold.
Advances that reduce the cost and/or speed up the
development of POCRD can therefore be expected
to increase the financial incentive to discover and
develop new antibiotics.
Example: overcoming vancomycin resistance
Rising resistance to the antibiotic vancomycin is
a serious healthcare concern.6,7 Vancomycin never
enters the interior of the bacterial cell but instead
1
Economics of antibiotic discovery
binds to a particular peptide structure (d-Ala–d-
Ala) that appears on the cell wall exterior and
that plays a key role in cell wall production.
Vancomycin resistance arises when bacteria use dif-
ferent methods of cell wall production, presenting
different peptide structures (e.g., d-Ala–d-Lac in
the case of vanA-type resistance or d-Ala–d-Ser
in the case of vanC-type resistance) to which van-
comycin does not bind.8 Seven distinct vancomycin-
resistance phenotypes (vanA through vanG) have
been identified so far, each with its own genetic basis
and pathway by which the d-Ala–d-Ala structure is
not displayed.
A compound that disrupts one of these
pathways could serve as an effective adjuvant
to restore vancomycin effectiveness, but only
when used against vancomycin-resistant bacte-
ria that utilize that particular pathway. Fortu-
nately, rapid genetic diagnostics (e.g., the Xpert
vanA/vanB test) that can detect the genetic determi-
nants of the most common vancomycin-resistance
phenotypes are already available. Should an antibi-
otic adjuvant be developed that disables vanA-type
resistance or vanB-type resistance, the resulting
combination therapy (vancomycin plus the adju-
vant) would have a ready market waiting.
Related literature
In the large drug-pricing literature, the most closely
related paper is by Herrmann,9 who characterizes
how a monopolist will optimally vary an antibi-
otic’s price during a limited patent window. Her-
rmann’s main finding is that the monopolist will
lower the price over time until the end of the
patent window, when price drops discontinuously
as generic competitors enter the market. Such pric-
ing dynamics arise, in part, because the monopolist
has more incentive to slow the spread of antibiotic-
resistant bacteria earlier during the patent window.
Intuitively, selling more of the antibiotic creates an
opportunity cost for the monopolist by hastening
the rise of resistance, and hence induces the monop-
olist to limit sales through higher prices earlier in the
patent window. The analysis here can be extended
to a dynamic context (see the online Appendix),
but, to focus on how disease-diagnostic technology
affects antibiotic prices and profitability, I focus on
a simpler model that abstracts from dynamic issues.
Less closely related is the literature that character-
izes socially optimal pricing (also known as “Pigou-
2 Ann. N.Y. Acad. Sci. xxxx (2017) 1–8 
McAdams
vian taxes”) of natural resources.10 This literature is
highly relevant to antibiotic pricing when POCRD
is not available, but, as discussed in the compan-
ion paper,1 the conventional view that antibiotics
behave like exhaustible resources hinges on the
assumption that doctors have no way of identifying
which patients have antibiotic-resistant infections
before prescribing treatment, precisely the assump-
tion that my work here seeks to relax.
Economic model of antibiotic demand
This section builds on the economic model of
antibiotic use in the companion paper1 to charac-
terize antibiotic demand. In particular, how does the
amount of antibiotic use change depending on the
price of treatment?
Economic-epidemiological model
One antibiotic (drug 1) is available to treat a
bacterial disease that circulates among a unit-mass
population of hosts. Transmission and recovery
follow a standard susceptible-infected epidemio-
logical model, with transmission rate β, recov-
ery rate γ 1 for those who have sensitive infection
and receive drug 1 treatment, and recovery rate
γ 0 < γ 1 for all others. To simplify equations, let
L 1 = γ11 and L 0 = γ10 be the expected length of infec-
tion with and without effective antibiotic treatment,
respectively.
Flow of new patients. For analytical simplicity,
the analysis abstracts from epidemiological dynam-
ics and focuses on antibiotic demand at time t = 0
only. Let S, I0 , and I1 denote the mass of hosts who
are susceptible to infection (S), infected by drug
1–sensitive bacteria (I0 ), and infected by drug 1–
resistant bacteria (I1 ), respectively, at time t = 0.
As discussed in Ref. 1, the flow of newly infected
patients is βS(I0 + I1 ), fraction ρ = I0 +I
I1
of which
1
have antibiotic-resistant infection. ρ is referred to as
the “prevalence of resistance.”
Willingness to pay for treatment. Patients suf-
fer while they remain infected, incurring sickness
cost c S until their infection clears, where sick-
ness cost varies across patients and can be viewed
as a random variable. In addition, drug 1 treat-
ment has harmful effects that impose side effect
cost c 1 until the treatment ends when the infec-
tion clears. Now, suppose for a moment that drug
1 treatment was available for free. The patients who
C 2017 New York Academy of Sciences.
McAdams
would choose to be treated are those for whom the
benefit of faster recovery (B) exceeds the harm due
to side effects (H). In fact, any such patient would be
willing to pay up to B − H for treatment; this max-
imal amount that patients would pay for treatment
is referred to as their willingness to pay (WTP).
Point-of-care resistance diagnosis. Following
Ref. 1, I focus on two extreme diagnostic scenar-
ios in which (i) doctors have access to an error-free
point-of-care test that perfectly reveals the
antibiotic-sensitivity of a patient’s infection
(“POCRD is available”) or (ii) there is no way for
doctors to learn anything about an infection’s antibi-
otic sensitivity, other than what can be inferred
from the population-wide prevalence of resistance
(“POCRD is not available”).
WTP and demand when POCRD is
not available
Given the prevalence of resistance ρ, each patient’s
expected length of infection is L 0 if untreated
or ρL 0 + (1 − ρ)L 1 if treated. Consequently, a
patient’s WTP for treatment given sickness cost c S
is
WTPNO (c S ) = c S (1 − ρ)(L 0 − L 1 )
− c 1 (ρL 0 + (1 − ρ)L 1 ) (1)
when POCRD is not available, where (1 − ρ)(L 0 −
L 1 ) is the average amount of time by which treat-
ment reduces the length of infections. (As in Ref. 1,
superscripts “YES” and “NO” are used to indicate
whether POCRD is available)
Given price P for a full course, the patients
who benefit from treatment are those with
WTP NO (c S ) > P . The fraction D NO (P ) of patients
who will receive treatment (antibiotic demand) at
any given price P ≥ 0 is therefore
 
D NO (P ) = Pr c S > c ∗NO +
P
, (2)
S
(1 − ρ)(L 0 − L 1 )
where c ∗NO (ρL 0 +(1−ρ)L 1 )
= c 1(1−ρ)(L is the threshold
S 0 −L 1 )
sickness-cost level given which patients have zero
WTP.a
a
To verify (2), note that WTP NO (c ∗NO S ) = 0 (by defini-
tion of c ∗NO
S ) and that dWTP NO
(c S )/dc S = (1 − ρ)(L 0 −
L 1 ). Thus, WTP NO (c ∗NO
S + (1−ρ)(LP 0 −L 1 ) ) = P , and any-
one with sickness cost c S > c ∗NO
S + (1−ρ)(LP 0 −L 1 ) is willing
to pay more than P to be treated.
Ann. N.Y. Acad. Sci. xxxx (2017) 1–8 
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Economics of antibiotic discovery
WTP and demand when POCRD is available
Once POCRD is available, each patient no longer
faces uncertainty about drug 1’s effectiveness against
their own infection. Patients’ WTP will therefore
depend both on their sickness cost and whether their
infection is resistant (R) or sensitive (NR for not
resistant):
WTPYES (c S ; NR) = c S (L 0 − L 1 ) − c 1 L 1 (3)
WTPYES (c S ; R) = −c 1 L 0 . (4)
At price P ≥ 0, the patients who will choose
to be treated are those with (i) sensitive infec-
tion and (ii) sufficiently high sickness cost that
WTPYES (c S ; NR) > P . The fraction D YES (P ) of
patients who will receive treatment at any given price
P ≥ 0 is therefore
 
P
D YES (P ) = (1 − ρ) Pr c S > c ∗YES + , (5)
S
L0 − L1
where c ∗YES = Lc01−L
L1
is the sickness-cost level given
S 1
which patients with sensitive infection have zero
WTP for treatment.
Overall, the effect of POCRD on the number of
patients who will be treated at any fixed price is
ambiguous (e.g., see example 1 in Ref. 1, in which the
price is fixed at zero). Consequently, if the monop-
olist selling a patent-protected antibiotic were con-
strained to charge a fixed price (or less than some
regulated maximum price), widespread adoption of
POCRD could in some cases reduce antibiotic prof-
itability. As I show in the next section, however,
a monopolist free to charge the profit-maximizing
price will always enjoy greater profits when POCRD
becomes available.
Worked-out example
Suppose that untreated infections recover at rate
λ0 = 1 and that effective drug 1 treatment speeds
recovery to rate λ1 = 2, so that the expected length
of infection falls from L 0 = λ10 = 1 to L 1 = λ11 = 12 ;
the prevalence of resistance ρ = 50%; the side-effect
cost of treatment c 1 = 1; and patients’ sickness cost
is uniformly distributed over the interval [3, 11],
denoted by shorthand c S ∼ U [3, 11].
When POCRD is not available, patients’ expected
length of infection when treated is ρL 0 + (1 −
ρ)L 1 = 34 . A patient with sickness cost c S will
therefore be willing to pay WTPNO (c S ) = c4S − 34 ∼
U [0, 2] for treatment (given that c S is uniformly
3
Economics of antibiotic discovery McAdams

Figure 1. Willingness to pay, with and without point-of-care resistance diagnosis.

distributed over the interval [3, 11], Eq. (1) implies
that patients’ WTP is distributed uniformly over the
interval [0, 2].) At any price 0 ≤ P ≤ 2, then, frac-
tion 2−P
2
of patients benefit from treatment at that
price:
 
D NO (P ) = Pr WTP NO (c S ) > P
2− P
= for 0 ≤ P ≤ 2
2 This section considers how POCRD affects the pric-
= 0 for P ≥ 2.
When POCRD is available, patients found to have
resistant infection are unwilling to pay anything for
treatment, regardless of their sickness cost, while
those found to have sensitive infection are will-
ing to pay WTP YES (c S ; NR) = c2S − 12 ∼ U [1, 5] by
Eq. (3). In particular, at any price 1 ≤ P ≤ 5, frac-
tion 5−P4
of patients with sensitive infection benefit
from treatment at that price. Since half of all patients
have sensitive infection, antibiotic demand in this
case is
1 Above, I characterized antibiotic demand D(P ),
D YES (P ) = for 0 ≤ P ≤ 1
2
1   and “NO” denoting whether POCRD is available
= Pr WTP YES (c S ; NR) > P
2 are suppressed for the moment but will be reintro-
5− P
= for 1 ≤ P ≤ 5 (7)
8
= 0 for P ≥ 5.
See Figure 1, which illustrates patients’ WTP for
treatment with and without POCRD. Note that,
although half of all patients (those with resistant
infection) are no longer willing to pay anything for
treatment once POCRD is available, the other half
(those with sensitive infection) are willing to pay
more than twice as much as they otherwise would
absent POCRD. For instance, patients with sickness
cost c S = 7 are willing to pay WTP NO (7) = 1 when
POCRD is not available but WTP YES (7; NR) = 3
when POCRD is available.
Monopoly pricing and profitability
(6)
ing and profitability of a patent-protected antibi-
otic. Pricing can be enormously complex, especially
in dynamic systems. For clarity here in the main
analysis, I will therefore impose some simplifying
assumptions, namely, that (i) the monopolist sets
the price of treatment myopically to maximize cur-
rent profitability (at time t = 0) rather than over
the antibiotic’s entire useful life and (ii) the antibi-
otic can be produced at zero cost. (Neither of these
assumptions is essential to the results; see the dis-
cussion in the online Appendix.)
Profit-maximizing pricing
the fraction of all patients who will seek out treat-
ment at any given price P ≥ 0. (Superscripts “YES”
duced when these cases are considered separately
later). Given the overall flow of βS(I0 + I1 ) newly
infected patients seeking medical care at time t = 0,
the flow of patients who are treated at price P is
D(P )βS(I0 + I1 ), generating a flow of monopoly
profit (P ) = P D(P )βS(I0 + I1 ).
Let P ∗ be the price that maximizes monopoly
profit. P ∗ must satisfy first-order condition
d(P ∗ )/dP = (D(P ∗ ) + P ∗ D  (P ∗ ))βS(I0 + I1 )

4 Ann. N.Y. Acad. Sci. xxxx (2017) 1–8 

C 2017 New York Academy of Sciences.
McAdams Economics of antibiotic discovery

 
= 0, since otherwise profit could be increased by P ∗NO
+ c1 L 1 + ρ
L
slightly changing the price. In particular, P ∗ must 1−ρ 1−ρ 0 P̂ + c 1 L 1
= . (9)
satisfyb L0 − L1 L0 − L1
∗NO
−D(P ∗ ) In particular, note that P̂ > P1−ρ . Consequently,
P∗ = , (8)
dD  (P ∗ )/dP even though only fraction (1 − ρ) as many patients
are willing to pay P̂ when POCRD is available as
where dD  (P ∗ )/dP < 0 since demand declines as are willing to pay P ∗NO when POCRD is not avail-
the price increases. Let P ∗YES and P ∗NO be the profit- able (because only fraction (1 − ρ) of patients have
maximizing prices when POCRD is or is not avail- sensitive infection), these patients are willing to
able, respectively. pay more than 1−ρ 1
times as much when POCRD
Key finding: patent-owner profit is higher when becomes available. Overall, then, monopoly profit is
POCRD is available, that is, YES (P∗YES ) > strictly higher at price P̂ when POCRD is available
NO (P∗NO ) than at the profit-maximizing price when POCRD
Intuition. A proof is provided below, but, to gain is not available, (i.e., YES ( P̂ ) > NO (P ∗NO )).
intuition, consider a simple setting in which all Next, since YES (P ∗YES ) is by definition the max-
patients have the same severity of illness (sickness imal profit possible at any price when POCRD
cost c S ) and the prevalence of resistance ρ = 50%. is available, YES (P ∗YES ) ≥ YES ( P̂ ) and hence
Absent POCRD, all patients are willing to pay YES (P ∗YES ) > NO (P ∗NO ). This completes the
WTP NO = c S L 0 −L 2
1
− c 1 L 0 +L
2
1
, where L 0 −L
2
1
is the proof.
average amount that treatment speeds recovery and
L 0 +L 1 Extension: insurance and copayments
2
is the average length of treated infection,
given that the treatment is only effective half of the This section extends the analysis to a context in
time. Once POCRD is introduced, those with sen- which antibiotic treatment may be covered by medi-
sitive infection are now willing to pay WTP YES = cal insurance, broadly in the spirit of Lakdawalla and
c S (L 0 − L 1 ) − c 1 L 1 , more than double what they Sood.12 There are many sorts of insurance-market
were willing to pay when there was no way to deter- arrangements, each demanding a different sort of
mine their antibiotic sensitivity. Thus, even though modeling approach, but for the sake of clarity I will
sales to half of the market (those with resistant infec- focus here on an especially simple setting in which
tion) are lost, profit goes up since the half of the (i) all patients are covered by a single insurance pol-
market that remains (those with sensitive infection) icy, (ii) the costs of insurance coverage are paid for
can be charged more than twice as much. through taxation, and (iii) the insurer has all of the
∗YES bargaining power in negotiations with the antibi-
S (P ) = c S + L 0 −L
P
Proof. Let c YES and c NO S (P )
1 otic producer. In particular, the strategic interac-
∗NO
= c S + (1−ρ)(L 0 −L 1 ) denote the sickness-cost lev-
P
tion between the insurer and producer proceeds as
els at which patients are willing to pay P ≥ 0 follows.
for treatment when POCRD is or is not avail-
able, respectively, as in Eqs. (2) and (5). Define r The insurer makes a take-it-or-leave-it offer to
∗NO
P̂ so that c NO
S (P ) = c YES
S ( P̂ ). After substitut- the producer, specifying the full price Pfull that
∗YES ∗NO (ρL 0 +(1−ρ)L 1 )
ing c S = L 0 −L 1 and c S = c 1(1−ρ)(L
c L
1 1
0 −L 1 )
and the producer will receive and the copayment
rearranging terms, this condition defining P̂ can be Pcopay that patients will pay for a full course of
rewritten as treatment.
r If the producer accepts the insurer’s offer,
patients will choose to receive treatment when-
ever their WTP exceeds Pcopay .
b
Equation (8) is known in economics as the “markup
r If the producer refuses the offer, the producer
formula.” For more on monopoly pricing, see chapter 17 will set an “uninsured price” equal to P ∗ to
of Ref. 11. Equation (8) here is equivalent to Eq. (4), with maximize profit, and patients will choose to
“marginal cost” MC assumed to be zero and “elasticity of receive treatment whenever their WTP exceeds
 (P )
demand” E d = DD(P )
. P ∗.

Ann. N.Y. Acad. Sci. xxxx (2017) 1–8 

C 2017 New York Academy of Sciences. 5
Economics of antibiotic discovery
Figure 2. Absent insurance, producer profit equals the area B
and (ex ante) patient welfare equals the area A. Under an insur-
ance program with copayment Pcopay that leaves the producer
with profit B and is paid for by patients through taxation, patient
welfare equals the combined area A + C.
Producer profit
Since the producer has the option to refuse the
insurer’s offer and earn profit P ∗ D(P ∗ ) when treat-
ment is not insured, any acceptable offer must leave
the producer with at least that much profit. We can
therefore view the insurer as being constrained to
make offers (Pcopay , Pfull ) such that
Pfull D(Pcopay ) ≥ P ∗ D(P ∗ ). (10)
Patient welfare–maximizing insurance terms
∗ ∗
What are the optimal insurance terms (Pcopay , Pfull )
to maximize overall patient welfare? Given that
insurance payouts Pfull − Pcopay must ultimately be
financed through taxation, patient-optimal insur-
ance will never leave the producer with more profit
than is necessary to satisfy the producer-profit con-
straint (Eq. (10)). In particular, the producer’s profit
under patient-optimal insurance must be equal to
what its profits would be absent insurance:
∗ ∗
Pfull D(Pcopay ) = P ∗ D(P ∗ ). (11)
Equation (11) pins down what the full price must
∗ ∗
be given any copayment (Pfull = PD(PD(P )
copay )
), but what
is the optimal copayment? Given that the producer
earns profit P ∗ D(P ∗ ) (area B in Fig. 2), patients’
expected welfare under copayment Pcopay is equal
to the sum of the areas A + C in Figure 2, which
is maximized by setting Pcopay = 0. So, the optimal
∗ ∗
insurance terms are Pcopay = 0 and Pfull = P ∗D(0)
D(P ∗ )
, diseases and providing richer diagnostic detail.
6 Ann. N.Y. Acad. Sci. xxxx (2017) 1–8 
McAdams
where P ∗ is the profit-maximizing uninsured price
derived in Eq. (8).
Introducing POCRD still increases producer
profit
Under patient-optimal insurance, the producer’s
profit is the same as it would be if insurance were not
available. Since POCRD increases producer profit
absent insurance (the main finding above), we con-
clude that POCRD also increases producer profit
under patient-optimal insurance.
Concluding remarks
The pipeline of new antibiotics has been nearly
empty for decades, and it is clear why. Developing a
new antibiotic compound and testing its safety and
effectiveness is risky and costly, and, until recently,
the vast majority of infections could be effectively
treated by antibiotics that are available in generic
form at low prices. Consequently, even if new antibi-
otic treatments could be easily discovered and devel-
oped, there has long been relatively little financial
incentive to do so.
This paper offers a hopeful message against that
gloomy backdrop, that the economics of antibiotics
is changing in ways that will more richly reward
those who develop new drugs. The most obvious
change is that, with the rise of antibiotic resistance,
the need for new antibiotics is greater than it has
been in decades. But need alone is not enough to
allow antibiotic makers to earn a profit, if doctors
have no way of knowing which patients need a new
antibiotic. With continuing advances in rapid resis-
tance diagnostics,c however, doctors can now deter-
mine at the point of care if a patient’s infection will
respond to established treatments that are available
at low cost and have mild side effects, or if a more
costly and toxic antibiotic is their best treatment
option.
In this way, rapid resistance diagnostics have
the effect of directing demand to antibiotics that
otherwise would never be able to find a mar-
ket. Pharmaceutical companies can therefore be
c
POCRD is already available for some infectious diseases
for tens of dollars per test. Given promising recent devel-
opments in microfluidics,13 nanoscale chemical probes,14
and whole-genome sequencing,15,16 such tests may soon
be available at much lower cost while also covering more
C 2017 New York Academy of Sciences.
McAdams
expected to revisit the libraries of antibiotic com-
pounds discovered in the 20th century but left
unpursued—whether because of their toxicity or
narrow spectrum of activity—and develop some of
these second-class compounds into new antibiotic
treatments. For instance, consider the case of dap-
tomycin (Cubicin R
, Merck). Eli Lilly and Company
abandoned the drug in the 1980s owing to toxicity,
but Cubist Pharmaceuticals overcame those con-
cerns in the late 1990s and received U.S. Food and
Drug Administration approval in 2003. Daptomycin
sales now exceed $1 billion per year, with the drug
being used to treat a number of serious infections
caused by Gram-positive bacteria that have become
widely resistant to mainstay treatments, such as
vancomycin.
Better still, rapid resistance diagnostics could
enable new antibiotic–adjuvant combination
therapies that restore the effectiveness of existing
antibiotics. The past several years have seen an
upsurge of exciting work on antibiotic adjuvants
(e.g., see Refs. 17–19). In a large systematic study,
Ejim et al.20 identified 69 nonantibiotic compounds
that synergize with the antibiotic minocycline
against Staphylococcus aureus, Escherichia coli,
and/or Pseudomonas aeruginosa. Taylor et al.21
looked more specifically for nonantibiotic com-
pounds that disrupt the efflux machinery in Gram-
negative bacteria (by which they expel otherwise
effective antibiotics into the external environment)
and found four promising compounds. Such
adjuvants, if successfully developed, would strip
Gram-negative bacteria of their intrinsic resistance
to a number of antibiotics that have previously only
been useful against Gram-positive bacteria.
In a bacterial world of unimaginable genetic
diversity, bacteria will naturally develop numerous
approaches to overcome each antibiotic in our arse-
nal. By allowing doctors to determine which genetic
tricks are up each bacterial infection’s metaphorical
sleeve, POCRD will enable doctors to target each
antibiotic–resistant infection with the antibiotic–
adjuvant combination that will most effectively
overcome its mechanism of resistance. This bene-
fits patients, obviously, but even more important is
the way in which it drives demand for new adjuvant
compounds, which can then be profitably priced to
reflect the therapeutic value of the antibiotic treat-
ments that they empower.
Ann. N.Y. Acad. Sci. xxxx (2017) 1–8 
C 2017 New York Academy of Sciences.
Economics of antibiotic discovery
Continuing advances in the science and tech-
nology of rapid genetic diagnostics therefore offer
reason to hope that the age of antibiotic discov-
ery is not entirely behind us. Moreover, as shown
in the companion paper,1 any antibiotics or antibi-
otic/adjuvant combination therapies that are devel-
oped can be used in conjunction with POCRD and
other antibiotic therapies to slow the rise of resis-
tance to these new drugs, extending their useful life-
time and hence making them even more profitable
to develop.
Acknowledgments
I especially thank Arjun Srinivasan, Gerry Wright,
Leslie Marx, Sam Brown, Marc Lipsitch, Doug
Braaten, and the staff of the AMR Review for encour-
aging this research. All errors are my own.
Supporting Information
Additional supporting information may be found
in the online version of this article.
Appendix: Dynamic Profit-Maximization
Conflicts of interest
The author declares no conflicts of interest.
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