In 2024, the US Centers for Disease Control and Prevention reported that the proportion of gonorrhea isolates resistant to ceftriaxone—the last reliable antibiotic for this infection—had doubled since 2018, reaching roughly 2.5%. That statistic, buried in a surveillance brief, signals a slow-moving crisis. Behind it lies an unlikely accomplice: Medicare's payment system, which reimburses clinics and hospitals so little for treating gonorrhea that many struggle to cover the cost of the most effective drugs.

This crisis is not sudden. It has been building for years, masked by the fact that gonorrhea remains treatable in most cases. But the trajectory is clear. The doubling of resistant isolates is a canary in the coal mine, and the payment system is the coal mine itself. To understand why, one must examine the economics of antibiotic provision in the United States, where the price of a drug often bears no relation to its public health value.

Medicare’s Payment Formula Drives Down Reimbursement for Key Antibiotics

Gonorrhea treatment in the US typically involves a single intramuscular injection of ceftriaxone (500 mg) plus a single oral dose of azithromycin (1 g). The wholesale cost of these drugs is low—roughly $20 to $30 for the combination—but that still exceeds the Medicare bundled payment for an uncomplicated gonorrhea diagnosis. Under the outpatient prospective payment system, clinics receive a flat fee for each encounter, often around $50 for a level 3 visit. When the antibiotic alone costs half that, and the clinic must also cover nursing time, supplies, and overhead, the margin disappears.

In rural and safety-net clinics, where patient volume is low and overhead is fixed, the financial disincentive is acute. Some clinics have reported limiting their stock of ceftriaxone to avoid carrying a product that loses money on every dose. Instead, they may default to oral regimens—such as cefixime or doxycycline—which are cheaper but less effective and contribute to resistance. Infectious disease specialists have flagged this as a systemic problem. A 2023 survey by the Infectious Diseases Society of America found that nearly 40% of hospital pharmacists said Medicare reimbursement influenced their choice of antibiotic for gonorrhea.

The impact shows up in national surveillance data. The CDC’s Gonococcal Isolate Surveillance Project (GISP) documents a steady rise in the minimum inhibitory concentration (MIC) of ceftriaxone needed to kill Neisseria gonorrhoeae. Strains with elevated MICs are now found in every US region. While the absolute number of ceftriaxone-resistant cases remains small—roughly 200 isolates in 2023—the doubling of that number since 2018 suggests a trajectory that could soon overwhelm the public health system.

Consider a typical community health center in rural Mississippi. The clinic sees perhaps 2 to 3 gonorrhea cases per week. Each case loses the clinic around $20 after accounting for drug cost and staff time. Over a year, that loss amounts to roughly $2,000 to $3,000—a significant hit for a clinic operating on thin margins. The medical director must decide whether to stock ceftriaxone or switch to an oral regimen that costs less but fails more often. The rational financial choice is the cheaper drug, even if it undermines patient care. This is the perverse incentive baked into the current system.

Gonorrhea’s Stealth Surge: Why Case Counts Mask a Resistance Crisis

The CDC estimates roughly 1.6 million new gonorrhea infections occur annually in the United States, though fewer than half are reported. Asymptomatic carriage is common, especially in women, who may harbor the infection for weeks without symptoms and transmit it unknowingly. This hidden reservoir fuels onward transmission and makes case-based surveillance an incomplete picture.

Young adults aged 15 to 24 account for nearly half of all diagnosed infections, and rates are highest in the Southern states, where access to sexual health services is limited. The combination of high prevalence, low detection, and constrained treatment options creates ideal conditions for resistance to emerge and spread. The World Health Organization has warned that without urgent action, untreatable gonorrhea could become a reality by 2030.

The doubling of ceftriaxone-resistant isolates is not evenly distributed. In some urban centers, such as San Francisco and New York, local health departments have reported clusters of resistant cases linked to specific sexual networks. Whole-genome sequencing of these isolates reveals multiple resistance mechanisms—mutations in the penA gene, efflux pump overexpression, and porin alterations—indicating that the pathogen is evolving faster than new drugs are coming to market.

One example illustrates the challenge. In 2023, a cluster of ceftriaxone-resistant cases was identified among a network of men who have sex with men in the San Francisco Bay Area. The isolates shared a common genetic fingerprint, suggesting a single strain had spread rapidly. Contact tracing revealed that several individuals had been treated with oral cefixime because the clinic had run out of ceftriaxone. The resistance had likely been selected by suboptimal therapy. This is not an isolated event; similar clusters have been reported in other cities, including Chicago and Atlanta.

How DRG Bundles Penalize the Most Effective Regimens

Medicare’s diagnosis-related group (DRG) payment system for inpatient care compounds the problem. For a patient hospitalized with complicated gonorrhea—say, pelvic inflammatory disease or disseminated infection—the hospital receives a fixed payment based on the DRG, typically around $5,000 to $7,000. The cost of treating a resistant infection can exceed $20,000 when factoring in extended intravenous antibiotics, specialist consultations, and prolonged length of stay. Hospitals lose money on each such case.

In the outpatient setting, the issue is more subtle but equally damaging. Medicare Part B pays for drugs administered in a doctor’s office at 106% of the average sales price (ASP), which covers acquisition cost plus a small margin. However, this add-on payment applies only to drugs that are separately billable—and ceftriaxone, being cheap and generic, is often bundled into the evaluation and management (E/M) visit code. The clinic receives no additional reimbursement for the drug itself. A practice that sees 10 gonorrhea cases per week at a $20 loss per case loses roughly $10,000 annually—enough to discourage stockpiling.

The DRG system also creates perverse incentives for hospitals. When a patient is admitted with a resistant infection, the hospital may lose money, but it has no alternative: the patient must be treated. However, the financial loss may influence decisions about which antibiotics to stock in the pharmacy. A hospital that sees few resistant cases may choose not to stock expensive second-line agents like ertapenem or gentamicin, which are used as salvage therapy. When a resistant case does appear, the hospital must scramble to obtain the drug, delaying treatment and increasing costs.

Alternative oral regimens, such as cefixime 400 mg plus azithromycin, are cheaper but have higher failure rates. A 2022 meta-analysis found that oral cefixime had a microbiologic cure rate of 91%, compared with 98% for injectable ceftriaxone. The small difference matters when resistance is rising: each treatment failure generates a new resistant strain that can be transmitted. The CDC continues to recommend ceftriaxone as first-line therapy, but the reimbursement system works against that guidance.

Some critics argue that the problem is overstated. They point out that the absolute number of resistant cases is still low, and that the US healthcare system has managed resistance before—for example, with penicillin-resistant gonorrhea in the 1970s and 1980s. But that comparison is flawed. When penicillin resistance emerged, there were multiple alternative drugs available. Today, the pipeline is nearly empty. The few drugs that remain effective, such as ceftriaxone, are being eroded by resistance. The margin for error is shrinking.

Market Failure: No Profit in Curing a Stigmatized Infection

Drug development for gonorrhea faces a fundamental economic problem. A novel antibiotic that is narrow-spectrum, administered as a single dose, and used for a stigmatized infection has limited commercial appeal. Analysts estimate the net present value of a new gonorrhea drug at less than $50 million—far below the $1 billion typically required to recoup research and development costs. As a result, the pipeline is thin. As of 2024, only three new antibiotics with activity against Neisseria gonorrhoeae are in late-stage clinical trials, and none are expected to launch before 2027.

The Generating Antibiotic Incentives Now (GAIN) Act, passed in 2012, offers extended market exclusivity and priority review for antibiotics targeting priority pathogens. However, the incentives have been insufficient to shift investment. A 2023 report from the Pew Charitable Trusts found that of the 42 antibiotics in clinical development, only six target a pathogen on the WHO priority list, and none are specifically for gonorrhea. The gap between public health need and market return remains wide.

Stigma adds another layer. Gonorrhea is associated with sexual activity, and patients may avoid seeking care due to embarrassment or privacy concerns. This reduces the pool of diagnosed cases and further shrinks the market for new drugs. Pharmaceutical companies, sensitive to reputational risk, may prefer to invest in drugs for conditions with less social baggage.

There is also a coordination problem. No single company can capture the full social benefit of a new antibiotic. If a drug prevents the spread of resistant strains, the benefits are shared across society, but the developer bears all the costs. This is a classic public good problem, and it requires government intervention to correct. Some economists have proposed a subscription model, where the government pays a fixed annual fee for access to a drug, regardless of how much is used. The UK has piloted such a model for antibiotics, and early results are promising.

International Comparisons: How Other High-Income Countries Manage

Other high-income countries have avoided some of these problems through different payment models. In the United Kingdom, the National Health Service provides free, confidential sexual health services through dedicated clinics. Antibiotics are centrally procured, and clinicians are not exposed to individual drug costs. The UK Health Security Agency coordinates enhanced surveillance and issues treatment guidelines that are updated promptly when resistance patterns shift.

Australia funds sexual health services through Medicare, its universal health insurance scheme, and reimburses antibiotics at a rate that covers acquisition cost plus a dispensing fee. Publicly funded sexual health clinics operate in every state, offering free testing and treatment. Australia’s Gonococcal Surveillance Programme reports resistance rates below 1% for ceftriaxone, partly due to consistent use of the recommended regimen.

Japan’s national health insurance system covers all approved antibiotics, and physicians are reimbursed for both the consultation and the drug separately. This removes the financial disincentive to prescribe the best available treatment. Japan has maintained low resistance rates despite high antibiotic use, a paradox that researchers attribute to strict adherence to guidelines and a robust public health infrastructure.

Among OECD nations, the United States ranks last in access to sexual health services, according to a 2023 analysis by the Kaiser Family Foundation. The fragmented payment system, with its mix of public and private insurers, creates inconsistent incentives. While some commercial plans cover antibiotics generously, Medicare’s bundled payments penalize the use of expensive drugs, and Medicaid varies by state.

One might ask: if other countries can manage, why can't the US? The answer lies in the structure of the US healthcare system. The US relies on a patchwork of private insurers, each with its own formularies and reimbursement rates. Medicare, as the largest single payer, sets the tone. When Medicare underpays for antibiotics, private insurers often follow suit. The result is a race to the bottom, where the cheapest drug wins, regardless of its effectiveness.

Practical Fixes: Policy Levers That Could Realign Incentives

Several policy changes could address the reimbursement gap. The Centers for Medicare and Medicaid Services could create a separate add-on payment for novel antibiotics that target priority pathogens, similar to the New Technology Add-On Payment (NTAP) used for inpatient devices. This would allow hospitals to receive extra funding for using drugs like ceftriaxone when resistance is documented.

Medicare Part B could be amended to reimburse at acquisition cost plus a fixed margin for all antibiotics administered in outpatient settings, rather than bundling them into the E/M visit code. This would cost the program relatively little—gonorrhea treatment accounts for a tiny fraction of Medicare spending—but could significantly improve clinic margins.

Public health emergency powers, such as those used during the COVID-19 pandemic, could be invoked to temporarily adjust reimbursement rates for antibiotics facing resistance crises. The CDC has the authority to issue standing orders for test-of-cure in patients with resistant infections, but lacks the ability to influence payment. Coordination between CMS and the CDC would be needed.

State Medicaid programs can act independently. Some states, such as California and New York, have mandated coverage of first-line regimens without prior authorization. Others could follow suit. A 2024 report from the National Academy of Medicine recommends that all payers adopt a “value-based” antibiotic reimbursement model, where the payment reflects the drug’s public health benefit rather than its acquisition cost.

Another approach is to strengthen the supply chain for antibiotics. Currently, many generic antibiotics are produced in a handful of countries, and shortages are common. The US could incentivize domestic production of key antibiotics, ensuring that clinics have access to ceftriaxone and other essential drugs. The Defense Production Act could be used to prioritize antibiotic manufacturing, as it was used for ventilators during the pandemic.

Some experts argue that the problem is not just about reimbursement, but about the entire antibiotic ecosystem. They call for a comprehensive national strategy that includes surveillance, stewardship, and research. The US has made progress on surveillance through GISP, but stewardship programs are unevenly implemented. A national antibiotic stewardship program, modeled on the UK's, could help ensure that antibiotics are used appropriately, preserving their effectiveness.

What a Primary Care Doctor Should Watch For Tomorrow

For primary care clinicians, the immediate takeaway is vigilance. Any sexually active patient presenting with urethritis, cervicitis, or pelvic pain should be tested for gonorrhea using a nucleic acid amplification test (NAAT) before treatment. Empiric oral therapy should be avoided unless local susceptibility data support it. The CDC maintains a real-time resistance map through GISP, accessible online, that can guide empiric choices.

When a patient is diagnosed with gonorrhea, the recommended regimen remains ceftriaxone 500 mg intramuscularly plus azithromycin 1 g orally. If the patient has a history of treatment failure or known exposure to a resistant strain, a test-of-cure should be performed 7 to 14 days after treatment. This involves repeating the NAAT; if positive, the isolate should be sent for culture and susceptibility testing.

Partner notification and expedited partner therapy are essential to prevent reinfection and onward transmission. Condom counseling should be provided, and patients should be screened for other sexually transmitted infections, including chlamydia, syphilis, and HIV. The CDC recommends annual screening for all sexually active women under 25, and more frequent screening for men who have sex with men.

Finally, clinicians should report any suspected treatment failure to their local health department immediately. These reports trigger public health investigations that can identify clusters of resistant cases and inform treatment guidelines. In an era of rising resistance, the front-line clinician is the first line of surveillance.

The broader lesson is that antibiotic resistance is not just a biological problem; it is an economic one. The incentives embedded in our payment system shape how antibiotics are used, and when those incentives are misaligned, resistance flourishes. Fixing the reimbursement system will not solve the problem overnight, but it is a necessary step. Without it, we risk losing the last effective treatments for gonorrhea, and the consequences will be felt by patients, clinicians, and the public health system alike.

This article is for informational purposes only and does not constitute medical advice. Readers should consult their healthcare provider for guidance specific to their clinical situation.