Risk-sharing Agreements Research Articles

Pool size and the sustainability of optimal risk-sharing agreements

We study a risk-sharing agreement where members exert a loss-mitigating action which decreases the amount of reimbursements to be paid in the pool. The action is costly and members tend to free-ride on it. An optimal risk-sharing agreement maximizes the expected utility of a representative member with respect to both the coverage and the (collective) action such that efficiency is restored. We study the sustainability of the optimal agreement as equilibrium in a repeated game with indefinite number of repetitions. When the optimal agreement is not enforceable, the equilibrium with free-riding emerges. We identify an interesting trade-off: welfare generated by the optimal risk-sharing agreement increases with the size of the pool, but at the same time the pool size must not be too large for collective choices to be self-enforcing. This generates a discontinuous effect of pool size on welfare.

Sustainable Financing of Innovative Therapies: A Review of Approaches.

The process of innovation is inherently complex, and it occurs within an even more complex institutional environment characterized by incomplete information, market power, and externalities. There are therefore different competing approaches to supporting and financing innovation in medical technologies, which bring their own advantages and disadvantages. This article reviews value- and cost-based pricing, as well direct government funding, and cross-cutting institutional structures. It argues that performance-based risk-sharing agreements are likely to have little effect on the sustainability of financing; that there is a role for cost-based pricing models in some situations; and that the push towards longer exclusivity periods is likely contrary to the interests of industry.

A Comprehensive Algorithm for Approval of Health Technologies With, Without, or Only in Research: The Key Principles for Informing Coverage Decisions

BackgroundThe value of evidence about the performance of a technology and the value of access to a technology are central to policy decisions regarding coverage with, without, or only in research and managed entry (or risk-sharing) agreements. ObjectivesWe aim to outline the key principles of what assessments are needed to inform “only in research” (OIR) or “approval with research” (AWR) recommendations, in addition to approval or rejection. MethodsWe developed a comprehensive algorithm to inform the sequence of assessments and judgments that lead to different types of guidance: OIR, AWR, Approve, or Reject. This algorithm identifies the order in which assessments might be made, how similar guidance might be arrived at through different combinations of considerations, and when guidance might change. ResultsThe key principles are whether the technology is expected to be cost-effective; whether the technology has significant irrecoverable costs; whether additional research is needed; whether research is possible with approval and whether there are opportunity costs that once committed by approval cannot be recovered; and whether there are effective price reductions. Determining expected cost-effectiveness is only a first step. In addition to AWR for technologies expected to be cost-effective and OIR for those not expected to be cost-effective, there are other important circumstances when OIR should be considered. ConclusionsThese principles demonstrate that cost-effectiveness is a necessary but not sufficient condition for approval. Even when research is possible with approval, OIR may be appropriate when a technology is expected to be cost-effective due to significant irrecoverable costs.

Drug Utilization Patterns and Costs of Erythropoiesis-Stimulating Agents in an Outpatient Setting in Greece

Anemia in the elderly is often related to a higher prevalence of chronic diseases such as chronic kidney failure, arthritis, and malignancy. Erythropoiesis-stimulating agents (ESAs) have been used for years to effectively treat anemia and when used appropriately can substantially improve the health status and quality of life of older adults. Following the 2008 recession in Greece, the government introduced ESA price control restrictions, but no prescribing restrictions, in an effort to reduce drug expenditure. ESA prescribing patterns and treatment costs were analyzed to determine inappropriate or appropriate use of these agents and related health care resources in Greece. A retrospective register-based drug utilization study was carried out using data from prescriptions dispensed at the public pharmacy of the largest social insurance fund (IKA-ETAM), for patients receiving ESAs over a six-month period. For each patient, demographic data, ESA dosage regimen, treatment indication and cost, prescriber specialty, and prescription origin were recorded. A total of 14,387 prescriptions from 6,074 patients (median age 74 years) were reviewed. A substantial number of patients (13.5%) were treated for off-label indications, for which the average cost per patient per indication was higher. ESA dosage/frequency of administration varied but was in accordance with recommendations. The percentage of patients who received innovator and biosimilar erythropoietin (EPO) was 88% and 12%, respectively. For the optimization of ESA utilization and the reduction of treatment costs, strict ESA prescription monitoring, development of registries, and criteria for off-label indications and biosimilar use in naive patients under the umbrella of risk-sharing agreements should be proposed.

PSS36 - A Costs And Clinical Outcomes Predicting Model For A Wound Care Outcomes-Based Risk-Sharing Agreement Proposal In Colombia

PSS36 - A Costs And Clinical Outcomes Predicting Model For A Wound Care Outcomes-Based Risk-Sharing Agreement Proposal In Colombia

Modeling of the clinical and economic impact of a risk-sharing agreement supporting a treat-to-target strategy in the management of patients with rheumatoid arthritis in France

Objectives: To evaluate the cost-effectiveness of a Treat-to-Target strategy with certolizumab pegol in patients with rheumatoid arthritis in the context of a pay-for-performance agreement in which medication costs are refunded in case of discontinuation during the first 3 months of treatment.Methods: The Treat-to-Target strategy consisted of a systematic switch to second-line tumor necrosis factor (TNF)α inhibitor in case of an unmet ACR50 response at 3 months compared to current routine clinical practice. A reference cohort treated first-line with certolizumab pegol according to current practice without systematic switching was considered as the comparator. A decision-tree model was constructed to estimate clinical outcome (health assessment questionnaire-disability index or HAQ-DI score), time spent in ACR50 response (ACR 50), and direct costs of treatment over a 2-year period. HAQ scores were derived from American College of Rheumatology 50 (ACR50) responses. All TNFα inhibitors were assumed to have equivalent efficacy and tolerability. Costs were estimated at 2013 French retail prices (date of the pay-for-performance agreement).Results: The mean duration of an ACR50 response was 1.23 years in the Treat-to-Target strategy certolizumab pegol cohort vs 0.98 years in the reference cohort, resulting in a mean gain in HAQ at 24 months of 0.117. The Treat-to-Target strategy with a mix of TNFα inhibitors as second-line therapy was more expensive than the reference strategy in absolute terms, but this difference was entirely offset by the pay-for-performance agreement. The Treat-to-Target strategy was, thus, cost-neutral over a 2-year period after the payback of CZP cost for patients not achieving the target at 3 months.Conclusions: In the context of a pay-for-performance agreement, the management of patients with rheumatoid arthritis using a Treat-to-Target strategy with certolizumab pegol in first line is dominant compared to standard use of this drug in the French setting in 2013.

Financial risk-sharing agreements: Using options to make marginal benefits cost effective.

41 Background: New cancer treatments have become increasingly costly. Although new drugs may be sufficiently cost-efficiency for a primary indication (i1) to receive funding, subsequent indications (ia) may not prove cost-effective. A financial risk-sharing agreement to increase access is proposed. A potential 2012 real-world implementation in Canada for pazopanib use in metastatic renal cell carcinoma (mRCC) as i1, and soft-tissue sarcoma (STS) as ia is presented. Methods: The market value of an indication can be approximated by its net-present-value (NPV) of expected cash flows. If the incremental cost-effectiveness ratio (ICER) for ia is expected to be greater than willingness-to-pay (WTP), the payer then has an incentive to enter into a risk-sharing agreement. A binomial option pricing model is employed to compute the price of the call option to contract such an agreement. The probability of being eligible for ia is extracted from the pan-Canadian Oncology Drug Review (pCODR), a national drug funding advisory body. Correspondence with industry was performed to identify additional ia. Cost, effectiveness, the ICER, discount rates, and drug revenues are calculated using inputs from pCODR, the Bank of Canada, Statistics Canada, and pazopanib’s relevant clinical data at the time of its submission for i1. Results: Of the 47 drugs eligible for i1, 46% are eligible for an ia(Wilson interval 33%-60%). For pazopanib in mRCC, at a mean price of $164/day and an ICER of $0-$57,309, the expected NPV was computed to be $338M. In STS, based on its clinical data at the time, at the same price, the ICER was expected to be > $100,000, with an NPV of $37M. The price of the call option is $17M. Alternatively, the price of pazopanib could be adjusted to $172/day in mRCC, keeping its ICER below WTP, with an agreement that if efficacious, the drug would be provided by the company gratis for STS patients. Conclusions: In a reality where high drug costs are limiting access for vulnerable patients, risk sharing agreements using financial instruments offer an opportunity to re-deploy health technology assessment to expand drug access. For a price increase of $8 per day in i1, Canadian STS patients could have had access to an effective treatment instead of nothing.

Editorial: Health Care Financing and Affordability in the Emerging Global Markets

Editorial: Health Care Financing and Affordability in the Emerging Global Markets

PMS138 - Assessment of Risk Sharing Agreements (Rsas) in Select Global Markets with Specific Focus on Activities Surrounding Immunomodulators

To understand current Risk Sharing Agreements (RSAs) for immunomodulators for rheumatoid arthritis, psoriasis, and psoriatic arthritis in 11 markets aimed to optimize specific RSA strategies/ payer partnerships. Review of publicly available health authority websites and peer-reviewed journals. Interviews with payers and stakeholders who influence RSA decisions and ex-pharma executives for validation and gap filling. USA manufacturers negotiate RSAs with private health insurers and states. Payers in USA integrate financial risks with manufacturers using outcome based agreements (OBAs). Canada established RSAs with Provinces and use financial based agreements (FBAs) but some are OBAs. France requires volume based FBAs for new high-priced therapies to limit budget impact. Germany uses FBAs at the sickness fund level rather than the Gemeinsamer Bundesausschuss (G-BA) level because sickness funds manage their own budgets. Some OBAs exist with clearly defined outcomes. Italy negotiates RSAs at the national level for new therapies entering the market ranging from FBAs to OBAs depending on the specific therapy and target patient population. Italy may also require manufacturers to incorporate drug monitoring registries in the RSA. In Spain performance based OBAs are used for new therapies with nominal additional benefit at the regional level with clearly established outcomes. Netherlands and Sweden use evidence development (CED) agreements for high priced products to generate cost effectiveness data. In Switzerland, RSAs are new and mostly FBAs and mainly for orphan disease therapies and off-label indications with price capping. In the UK,FBAs with few OBAs are used affecting product price but are not rebate based. Australian RSAs are mostly FBAs and are referred to as “Deeds of Agreement.” With high-cost immunomodulators, authorities are shifting towards integrating RSAs in price negotiations to optimize budget expectations prior to launch. Europe prefers FBAs to OBAs which often require clearly defined outcomes.

Insurance-based risk-sharing agreements

Stretched healthcare budgets have been tensing up patient access negotiations between healthcare payers and manufacturers. Data and the associated evidence available at registration are often deemed insufficient to accurately estimate the real-life clinical outcomes and budget impact. Payers want to reduce budget uncertainty and manufacturers need to evolve in a competing healthcare environment. Risk-sharing agreements (RSAs) are on the rising trend. Conceptually, RSAs have the remarkable advantage of reducing payer exposure to the financial risks associated with the introduction of a new healthcare intervention. However, engaging in a RSA should be cautiously thought through and planned as those contracts entail important financial implications, notably for the manufacturer. Monitoring costs are elevated and might jeopardize the implementation[1]. Nowadays, most of the current RSAs tend to shift the uncertainty around an expected outcome from the healthcare payer to the manufacturers. Although one cannot refer to risk-sharing per se, manufacturers use it during negotiations as an alternative to price reduction[2]. We will define the insurance approach in the staggered financial evaluation of a potential RSA. The risk will be quantified from the point of view of three professional risk-takers (i.e. an investment bank, a reinsurer and a pension fund) willing to insure the transaction (Figure ​(Figure1).1). Various formulas to split this risk-equivalent cost (i.e. insurance premium) between a manufacturer and a payer will be proposed (Figure ​(Figure2).2). Budget gains for switching from the actual situation to the three risk-equivalent costs methodologies will be illustrated using a fictive oncology product. Figure 1 The risk embedded in healthcare contract did not simply shift from the payer to the manufacturer. An insurer stands behind the manufacturer. It reimburses the payer if the risk realizes Figure 2 When packaged with an insurance contract, treatment B is preferred to treatment A.

Impact of Postapproval Evidence Generation on the Biopharmaceutical Industry

PurposeMeeting marketplace demands for proving the value of new products requires more data than the industry has routinely produced. These data include evidence from comparative effectiveness research (CER), including randomized, controlled trials; pragmatic clinical trials; observational studies; and meta-analyses. MethodsWe designed and conducted a survey to examine the industry’s perceptions on new data requirements regarding CER evidence, the acceptability of postapproval study types, payer-specific issues related to CER, communication of data being generated postapproval, and methods used for facilitating postapproval evidence generation. FindingsCER is being used by payers for most types of postapproval decisions. Randomized, controlled trials were indicated as the most acceptable form of evidence. At the same time, there was support for the utility of other types of studies, such as pragmatic clinical trials and observational studies. Respondents indicated the use of multiple formats for communicating postapproval data with many different stakeholders including regulators, payers, providers, and patients. Risk-sharing agreements with payers were unanimously supported by respondents with regard to certain products with unclear clinical and economic outcomes at launch. In these instances, conditional reimbursement through coverage with evidence development was considered a constructive option. The Food and Drug Administration’s initiative called Regulatory Science was considered by the respondents as having the most impact on streamlining the generation of postapproval research-related evidence. ImplicationsThe biopharmaceutical industry is faced with a broad and complex set of challenges related to evidence generation for postapproval decisions by a variety of health care system stakeholders. Uncertainty remains as to how the industry and payers use postapproval studies to guide decision making with regard to pricing and reimbursement status. Correspondingly, there is uncertainty regarding whether the industry’s investment in CER will have a positive return on investment in terms of reimbursement and market access.

PHP176 - Evaluation Of A Pharmaceutical Risk-Sharing Agreement When Patients Are Screened For The Probability Of Success

We analyze a game-theoretic model of a risk-sharing agreement between a payer and a pharmaceutical firm. The drug manufacturer chooses the price while the payer sets the rebate rate and decides which patients are eligible for treatment. The manufacturer provides the payer with a rebate for nonresponding patients. We generalize on the existing literature, by making both price and rebate rate decision variables, allowing the rebate rate to be different from 100%, and incorporating 2 types of administrative costs. We identify a threshold for the expected probability of response for classifying the drug as a mass-market or niche type and investigate the optimal solutions for both types. We also identify a threshold for the rebate rate at which the net benefits become equal for responding and nonresponding patients. Through numerical examples, we examine how various parameters impact the drug manufacturer's and the payer's optimal solution.

Prospects of risk-sharing agreements for innovative therapies in a context of deficit spending in bulgaria.

Innovative therapies are usually defined as newly introduced or modified health technologies with unproven effect or side effect undertaken in the best interest of the patient. These therapies could be situated at any point of the continuum: from genuine innovation with no precedent, to relative innovation representing a small variation from standard therapy, or using a conventional treatment in a different context (1). While the conception of innovative health technologies is not limited by therapeutic form (drugs, devices, procedures) or disease indication, innovative therapies are generally associated with expensive original drugs (2). Inclusion and provision of these therapies tend to be one of the most resource-consuming tasks for national health systems and payers. The above mentioned perceptions are well illustrated by the National Health Insurance Fund (NHIF) in Bulgaria and its funding activities. NHIF is an independent public entity that was established to carry out the mandatory health insurance in the country. Progress in medical science and introduction of innovative therapies, together with aging population and increased prevalence of chronic non-communicable diseases have put NIHF into a permanent situation of budget deficit. Overspending has led to concerns about the overall sustainability of NHIF and the present health insurance model in Bulgaria. Moreover, NHIF is currently lacking effective mechanisms to address this growing financial risk. National Health Insurance Fund budget is annually set and approved through a legal act by the National Assembly of Bulgaria. Its funds that are intended to cover drug therapies are distributed between two cost items as defined by the relevant legislation – costs for outpatient drugs and costs for inpatient cancer drugs. The first category mainly includes outpatient medicinal therapies, although a limited part of these funds are earmarked to medical devices and medical foods. NHIF total drug expenditure steadily rose between 2011 and 2014 (Figure 1). These total costs were 268 million EUR in 2011 and were expected to reach up to 488 million EUR in 2014 (3–7). At first sight, the expansion of NHIF coverage during that period explains the significant increase of drug spending. The provision of several categories of innovative medicinal therapies (such as rare disease and some cancer drugs) was transferred from the Ministry of Health to NHIF in 2011 and 2012, respectively. Those were all included in the outpatient drug budget category, thus increasing its spending share in absolute and relative terms. Inpatient cancer drugs were also established as a separate cost item to be funded by NHIF in 2012. This budget category alone was expected to stand at up to 100 million EUR in 2014. While nominally not all outpatient drugs paid by NHIF are innovative, Bulgarian stakeholders have generally attributed deficit spending to outpatient medicinal therapies for rare disease

Learning to Disagree in a Game of Experimentation

We analyse strategic experimentation in which information arrives through fully revealing, publicly observable “breakdowns.” With hidden actions, there exists a unique equilibrium that involves randomization over stopping times. This randomization induces belief disagreement on the equilibrium path. When actions are observable, the equilibrium is pure, and welfare improves. We analyse the role of policy interventions such as subsidies for experimentation and risk-sharing agreements. We show that the optimal risk-sharing agreement restores the first-best outcome, independent of the monitoring structure.

Reimbursement of licensed cell and gene therapies across the major European healthcare markets

ObjectiveThe aim of this research is to identify the pricing, reimbursement, and market access (P&R&MA) considerations most relevant to advanced therapy medicinal products (ATMPs) in the Big5EU, and to inform their manufacturers about the key drivers for securing adoption at a commercially viable reimbursed price.MethodologyThe research was structured following three main steps: 1) Identifying the market access pathways relevant to ATMPs through secondary research; 2) Validating the secondary research findings and addressing any data gaps in primary research, by qualitative interviews with national, regional, and local-level payers and their clinical and economic advisors; 3) Collating of primary and secondary findings to compare results across countries.ResultsThe incremental clinical benefit forms the basis for all P&R&MA processes. Budget impact is a key consideration, regardless of geography. Cost-effectiveness analyses are increasingly applied; however, only the United Kingdom has a defined threshold that links the cost per quality-adjusted life year (QALY) specifically and methodologically to the reimbursed price. Funding mechanisms to enable adoption of new and more expensive therapies exist in all countries, albeit to varying extents. Willingness to pay is typically higher in smaller patient populations, especially in populations with high disease burden. Outcomes modelling and risk-sharing agreements (RSAs) provide strategies to address the data gap and uncertainties often associated with trials in niche populations.ConclusionsThe high cost of ATMPs, coupled with the uncertainty at launch around their long-term claims, present challenges for their adoption at a commercially viable reimbursed price. Targeting populations of high disease burden and unmet needs may be advantageous, as the potential for improvement in clinical benefit is greater, as well as the potential for capitalising on healthcare cost offsets. Also, targeting small populations can also help reduce both payers’ budget impact concerns and the risk of reimbursement restrictions being imposed.

The Potential Impact of Current and Future Pharmaceutical Policy Changes on Cash Flows for Innovative Medicines

Licensing used to be the main requirement for marketing a new pharmaceutical. Now, decisions by reimbursement authorities and other pharmaceutical policy changes are increasingly determining future profitability. We explore the financial consequences for the pharmaceutical industry of complying with requirements of reimbursement authorities and pharmaceutical policy reforms and find that the financial value of a pharmaceutical company is a function of its current and potential future revenues and expenditures. These are heavily influenced by regulatory decisions, often taken at, or near, product launch. The scenarios discussed are: central evaluation of cost-effectiveness, conditional reimbursement, risk-sharing schemes, pay-for-performance models, value-based assessment, and decentralization. Requirements to submit economic data to inform the pricing and reimbursement process, and new business models, such as value-based pricing and risk-sharing agreements, have financial consequences for the pharmaceutical industry, altering their net present value of future cash flows from new drugs. We conclude that reimbursement, rather than licensing, is essential to generate sales. Hence, the initial market valuation of positive clinical trial results or a new registration must be adjusted for the expected outcome of reimbursement, actual market access, and the corresponding cash flows resulting from sales and costs.

Do the Current Performance-Based Schemes in Italy Really Work? “Success Fee”: A Novel Measure for Cost-Containment of Drug Expenditure

BackgroundDrug costs have risen rapidly in the last decade, driving third-party payers to adopt performance-based agreements that provide either a discount before payment or an ex post reimbursement on the basis of treatments’ effectiveness and/or safety issues. ObjectivesThis article analyses the strategies currently approved in Italy and proposes a novel model called “success fee” to improve payment-by-result schemes and to guarantee patients rapid access to novel therapies. MethodsA review of the existing risk-sharing schemes in Italy has been performed, and data provided by the Italian National report (2012) on drug use have been analyzed to assess the impact on drug expenditure deriving from the application of “traditional” performance-based strategies since their introduction in 2006. ResultsSuch schemes have poorly contributed to the fulfillment of the purpose in Italy, producing a trifling refund, compared with relevant drugs costs for the National Health System : €121 million out of a total of €3696 million paid. The novel risk-sharing agreement called “success fee” has been adopted for a new high-cost therapy approved for idiopathic pulmonary fibrosis, pirfenidone, and consists of an ex post payment made by the National Health System to the manufacturer for those patients who received a real benefit from treatment. Conclusions“Success fee” represents an effective strategy to promote value-based pricing, making available to patients a rapid access to innovative and expensive therapies, with an affordable impact on drug expenditure and, simultaneously, ensuring third-party payers to share with manufacturers the risk deriving from uncertain safety and effectiveness.

Risk Sharing Agreement Considerations for Pharmaceuticals in China Makret

Risk Sharing Agreement Considerations for Pharmaceuticals in China Makret

Risk-Sharing Agreements In Australia: Attitude Towards Risk-Sharing Arrangements With The Department Of Health For The Pbs-Listing Of Pharmaceuticals.

Risk-Sharing Agreements In Australia: Attitude Towards Risk-Sharing Arrangements With The Department Of Health For The Pbs-Listing Of Pharmaceuticals.

The Possibility of Initiating True Risk-Sharing Agreements in the Current Economic Situation.

The Possibility of Initiating True Risk-Sharing Agreements in the Current Economic Situation.