Overconsumption of Antibiotics

BSB113   Assignment

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As a result of improvements to the medical area, the accessibility of medicines is gradually increasing. It is easy for individuals to acquire a variety of medicines from chemists. This causes some potentially harmful medicines, such as antibiotics, to be misused. The use of antibiotics is a controversial issue because the overconsumption of antibiotics may lead to negative impacts on humans. This essay will analyse the issue of overusing antibiotics. It will be divided into three sections: an overview of the issues associated with antibiotic usage, the application of economic theories and an analysis of substantially effective policies.

Significant negative effects occur as a result of the overconsumption of antibiotics. The inappropriate use of antibiotics results in the development of antimicrobial resistance (AMR) (Santa-Ana-Tellez, Mantel-Teeuwisse, Dreser, Leufkens, & Wirtz, 2013). Feeding food animals with antibiotics can promote the growth of food animals and prevent diseases, which can reduce production costs. Because antimicrobials can be sold without a veterinarian's prescription, it is easy for farmers to buy antimicrobials and feed their livestock antimicrobials (Alliance for the Prudent Use of Antibiotic, 2012). For this reason, many antibiotics are used in agriculture, which causes AMR. According to Alliance for the Prudent Use of Antibiotic (2012), increasing AMR leads to a limitation on treatment options, a rise of treatment costs and more serious infections. Recent research indicates that 700,000 people may die every year all over the world due to AMR (OECD, 2016). A study estimates that AMR will result in a world GDP loss of $100.2 trillion by 2050 (Figure 1).[pic 2]

The irrational use of antibiotics exists in many countries. Indeed, developing countries are encouraged to use antibiotics as using antibiotics is a relatively cheaper and effective treatment method for common illnesses. However, it does not mean that the overconsumption of antibiotics is socially acceptable. Brazilian pharmaceutical area has improved considerably in the past few years, and the Brazilian government raises the investment in the pharmaceutical manufactures. This causes many patients to self-medicate themselves by using antibiotics, which leads 40% of medicines to be misused (Santa-Ana-Tellez, et al.,2013).  According to Van Boeckel, Gandra, Ashok, Caudron, Grenfell, Levin, and Laxminarayan (2014),  units antibiotics are used in China and India, which are two developing countries with a large population size. There is a high possibility of resulting in the multi-resistant bacteria in these densely populated nations. Apart from developing countries, some developed countries, in fact, are also facing the problem of overusing antibiotics. A survey indicates that 50% of antibiotics are inappropriately used in Europe and the USA (Ghafur, 2015). In brief, the overuse of antibiotics is a global issue, and it has caused many serious consequences.[pic 3]

The overconsumption of antibiotics can be analysed from an economic perspective. The demand and supply curves model can be applied in this case. The model is given below in Figure 2. The world population has increased from 2,521 million in 1950 to 7052 million in 2012 (World population). According to the economic concept related to demand, the population increase can lead to an increase in the demand for most goods and services. Therefore, it is

likely that the demand for antibiotics in agriculture and healthcare has increased, which derives that Demand 1 shifts to Demand 2. Also, the improvement in the medical area could be considered as a positive technological change. This change allows pharmaceutical factories to produce more outputs with the same amounts of inputs, which derives that Supply 1 shifts to Supply 2. This would lead to a new equilibrium with a higher quantity of antibiotics and lower price. Therefore, the population increase and technological change could be reasons for the overconsumption of antibiotics.[pic 4][pic 5]

Figure 2. Demand and supply curves of antibiotics

Decline in price

Increase in quantity

As the consumption of antibiotics is increasing, it may lead to a socially inefficient outcome. This issue relates to the externality theory. The model is given below in Figure 3. Externalities are impacts of producing or consuming activities imposed on others who are not associated with those activities. Using antibiotics may raise AMR. This causes antimicrobials to become no longer effective when others use them. Therefore, antibiotics can be considered as the goods with a negative externality. According to Figure 3, the market equilibrium is above an efficient equilibrium. D1(Private benefit) is above D2(Social benefit), and the supply curve is fixed, which derives that the market quantity and price are greater than the efficient level. This means the cost of using antibiotics outweighs the benefit to society, and it leads to a loss of efficiency which is a deadweight loss. It is clear that the use of antibiotics causes an inefficient outcome.

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Price of antibiotics

Supply

Negative externality

Market equilibrium

Efficient equilibrium

Deadweight loss

PMARKET

PEFFICIENT

QEFFICIENT

QMARKET

D1 = Private benefit

D2 = Social benefit

Quantity of antibiotics

Figure 3. The effect of consuming antibiotics

To remedy this inefficient outcome, assuming tax is an effective policy for curbing the overconsumption of antibiotics. The model is given below in Figure 4. After imposing a tax, the S1 shifts up by the amount of tax, arriving the level of S2. This causes the antibiotic consumption to be reduced from QMARKET to QEFFICIENT, which is a reduction in the antibiotic consumption. At this time, the market equilibrium moves to a socially efficient point, which means the market equilibrium is equal to the efficient equilibrium. It is clear that a socially efficient level of consumption is achieved.

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Price of antibiotics

S1 = private cost before tax

Market equilibrium without tax

Efficient equilibrium = Market equilibrium

PMARKET

PEFFICIENT

QEFFICIENT

QMARKET

D1 = Private benefit

D2 = Social benefit

Quantity of antibiotics

Figure 4. Achieving the efficient level by imposing a tax

S2 = social cost and private after tax

Negative externality = the imposed tax

Many countries have implemented some policies to discourage the overconsumption of antibiotics. Effective policies contribute to a reduction in antibiotic usage so as to meet the socially optimal outcome. The first possible policy is to tax antibiotics. An antibiotic tax can be defined as a “user fee”, which reduces agricultural antibiotic usage and the risk of developing AMR (Smyth, 2016). Moreover, the tax revenue from antibiotics can be distributed to medical research on new antibiotics or other strategies to restrict the inappropriate use of antibiotics, such as public education. As a result of the tax burden, farmers have to reduce the antibiotic consumption. However, this may increase the food price because farmers’ costs are increased. The National Research Council states that imposing a tax may result in a $1.2 billion to $2.5 billion increase in annual production costs (Plumer, 2014). Nevertheless, these costs may be relatively less than the costs caused by increased AMR. Research shows that 1% reduction in the effectiveness of now available antibiotics leads to treatment costs of $600 billion to $3 trillion (Plumer, 2014).