The Transferable Permit Market: A Solution to Antibiotic Resistance?

In a previous paper the authors argued that antibiotic resistance will be best controlled by a system of tradeable permits. It was argued that use of charges or regulation to achieve a reduction, or control, of resistance would not be efficient. Regulation will not account for different marginal costs of reducing antibiotic prescription among GPs, but charges, although based on sound economic concepts, are based on an unrealistic amount of required information. The regulatory problem is to constrain prescription to achieve a desired reduction in antibiotic resistance. However, given informational uncertainties and variance in resistance, as well as other areas important in this system, such regulation or charges will not be efficient. It was argued, therefore, that permits, by combining the targets of regulation and the market flexibility of charges, would achieve the government's objectives more efficiently than simple regulation and be more practical than simple charges. The attraction of permits is to put an effective limit on the use of antibiotics but in a flexible manner. In this paper the authors progress this proposed policy by considering various important issues which arise in attempting to design such a tradeable permit system for antibiotics. Peculiarities of such a permit system, coupled with the peculiarities of healthcare, make this a tricky market to develop. The paper is therefore not an exhaustive plan enabling a blueprint for such a market to be designed, but a proposal from which certain issues are raised, and which can be used as platform for further development of such an initiative to deal with resistance. Given the degree of uncertainty surrounding resistance patterns, however, achieving a global limit will necessarily be pretty arbitrary, but it is better than no global limit at all!