James Love, director of Knowledge Ecology International, argues on Sci Dev that prizes could be used to encourage work on new antibiotics:

Many of the challenges associated with the development of new antibiotics and vaccines are familiar, and common to other medicines. Research and development (R&D) is expensive, particularly for clinical trials involving people, and product development can be a lengthy process — two unattractive features for most investors, who tend to be risk-averse.

Investors might also be deterred by patent thickets. Many of the scientific benefits of R&D, including those generated by failures, are difficult or impossible to appropriate under patent laws....

For an incentive system that efficiently rewards products that improve healthcare outcomes, and does not lead to rationing and ethical dilemmas over access, it is better to use prizes rather than prices.

In theory, prizes can dominate prices in every important policy area when implemented as part of a scheme that separates the market for innovation from the market for products....

For antibiotics, a reward system of cash prizes could value new products using economic models similar to those used to value stock options, inventories and other financial instruments. A new antibiotic would be valued not only for its use during the patent term, but as part of an ongoing portfolio of products needed for new diseases, conditions or resistance problems that are expected to emerge over time.

Prizes can be paid even in cases where current consumption is zero, or close to zero, as long as the new product enhances the security and sustainability of the treatment programme....

Finally, some smaller firms have expressed interest in the development of a system of prizes that rewards early stages of drug development.

Specifically, they propose a system of prizes to reward success in meeting benchmarks in product development, including the relatively early phase I or II clinical trials.