Applying the concept to health

Emma Walmsley writes:

[T]he world needs to be better prepared for global health threats. ... Antimicrobial resistance is just such a threat.... We risk returning to a time when a simple cut could have lethal consequences and common surgical procedures might be too risky to perform. ... The world needs commitment from pharmaceutical companies and new incentives to attract long-term R&D development. Antimicrobial resistance is the new battle for drug developers, Emma Walmsley, Financial Times (subscription), 14 July

Ms Walmsley goes on to talk about a UK pilot plan to test a subscription model for new antibiotics, and to say that 'exploration of other incentives, such as an intellectual property-based extension voucher, or changes to health technology assessment methods for valuing antibiotics ...are promising options.....'.

This is true, so far as it goes. The problem is that it appears that not enough resources are being allocated to dealing with anti microbial resistance (AMR). Ms Walmsley suggests ways of addressing this. But what's missing is the broader context, with which I believe that the Social Policy Bond concept applied to health could deal with more efficiently.

Whether we are looking at global or national health, we need to know whether putting funds into reducing AMR is the best use of society's scarce health resources. Perhaps funds would be better spent on preparing for epidemics or pandemics. The word better is the key: we need to know where our health pounds or dollars will generate the biggest improvements in health. More precisely, we need people to have incentives to find out this sort of information and, because circumstances, including our scientific knowledge, change rapidly, this has to be done on a continuous basis.

Governments have to make their resource allocation decisions on the basis of data that are necessarily incomplete. How can they know the effect that spending to oppose AMR will have on the overall health of the nation, as compared with allocating the same spending to preparing for epidemics? So, by default, health expenditure is influenced by groups of medical specialists with little incentive or capacity to see improvements in the general health of the nation as an objective. As a result, funding of health depends to a great and varying extent, on the strength of their lobby groups or on their public profile, rather than on what would best meet the needs of society.

The Social Policy Bond concept, applied to health, would change that. I have described how they would work in more detail here. Essentially, they would give a coalition of investors incentives to look for and exploit the most efficient approaches to dealing with society's long-term health problems - on a continuing basis. Health would be defined broadly, using some index of which one component could be Quality Adjusted Life Years. And the goal would be long term. The coalition of investors would be a new type of organisation; one whose structure and composition could change over time, but who could profit with the long (perhaps 50-year) lifetime of the bonds by buying bonds, doing whatever they can to advance toward the targeted goal, then selling their bonds at a higher price.


Especially with health, we need people and governments who can take a long-term view, and have incentives to do so.