In the last couple of years, the idea of 'risk sharing' has been edging further into the ongoing debate in the United States
about the pricing and reimbursement of medicines, occasionally generating a buzz that might suggest it is pharma's "next big
thing." But the practicalities of risk sharing to alleviate the cost burden of paying for new innovations raise some difficult
questions. How can innovative contracting models, well established—if not wholly successful—in Europe and Australia, be adapted
and implemented in the context of the murky US managed care environment? Could US payers actually sustain their side of a
risk-sharing bargain? And can we even define the concept?
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We can outline risk sharing simply as an agreement between a pharmaceutical company and a payer, whereby the former guarantees
a product's efficacy in return for reimbursement from the latter. But participants at a recent CBI conference came up with
at least 15 ways to interpret risk sharing. Indeed, the closer one looks at existing deals, the trickier it seems to be to
identify examples where risk is truly shared.
"That is what a risk-sharing deal should be— a put-your-money-where-your-mouth-is deal." — Ed Schoonveld, Principal, ZS Associates
"If one takes the definition of share taught in kindergarten," says Ed Schoonveld, principal of ZS Associates, in his book "The Price of Global Health," then "most
deals share no risk at all." Schoonveld prefers the term "alternative pricing schemes" to cover the broad range of initiatives
that attempt to overcome a particular nation's pricing and reimbursement hurdles. Under this heading, he identifies seven
basic types of deals that account for all of pharma's current so-called risk-sharing activity.
Among these are the agreements between Onyx and Pfizer and the Italian government regarding Nexavar and Sutent, respectively.
Sutent and Nexavar have been approved in Italy for partial reimbursement for the first three months of use; after that, the
Italian government only pays for patients showing an agreed-upon level of response to the treatment. Then there is Janssen
Cilag's Velcade in the UK. Velcade was rejected by the National Institute of Health and Clinical Excellence (NICE) in 2006
after being deemed not cost-effective. Janssen had NICE reverse that ruling by offering to pay for treatment in patients who
had less than a 50 percent reduction in serum M-protein. These are examples, Schoonveld says, of the 'surrogate endpoint-based
reimbursement deal.' But the problem with this type of deal, he told Pharm Exec, is its focus on short-term outcomes. "There's no risk there," he says. "You know after the trial program what the tumor response
A deal that in Schoonveld's view is a truer example of risk sharing is the agreement between Novartis and a number of German
sickness funds, where the company refunds the cost of its osteoporosis treatment, Aclasta, for patients who suffer a fracture
despite taking the drug. There is also the deal, established in the UK in 2002, between NICE and four manufacturers of MS
drugs, which follows 9,000 MS patients for 10 years to see if the drugs' long-term targets in slowing the progression of the
disease are being met.
Labeling the MS deal an example of 'the population-based performance guarantee deal,' Schoonveld champions this as, in many
ways, the "ideal" agreement. "But no one seems to like it anymore," he says. "I don't like all elements of it. It was horribly
executed and, unfortunately, the results weren't good either. But just because the clinical results were not good doesn't
mean that the deal was bad."
The problems with the UK's MS risk sharing agreement controversially came to light in 2009 when it was revealed that the patient
outcomes were much worse than predicted. The disease had progressed faster in patients who were taking the drugs than in those
who were not. The British Medical Journal called the scheme "a costly failure," and estimated that if an assessment had been completed after the first two years of
the deal, the NHS could have saved around£250 million ($412 million) for use on other patients. "It did take seven years to
gather two years' data," concedes Schoonveld. "But the point is, there was uncertainty over a product with a very high need.
This scheme was a way of bridging that uncertainty and bringing the drug to patients when there was no other way of doing
Benefit from industry updates and case studies related to this article
CBI's 3rd Annual Risk-Sharing and Innovative Contracting Models for Bio/Pharmaceuticals
Pay-for-Performance | Outcomes-Based Agreements Pricing | Reimbursement Approaches
March 22-23, 2012