Should the US Gamble with Risk Sharing? - Pharmaceutical Executive


Should the US Gamble with Risk Sharing?

Pharmaceutical Executive

A Strong Hand in the US?

Whether a robust form of risk sharing takes hold in the US, or just fizzles out as it did in the late ’90s, is open to question.
But if this is the best example, in principal, of an existing risk-sharing deal, what hope is there for the concept taking off in the US? Although there is a growing amount of attention on the idea, it is clouded not only by the same inconsistencies and confusions that are dogging Europe, but also by a strong wave of resistance that holds that risk sharing just won't work in the US's fragmented—and highly price-sensitive—market.

Current US examples of risk sharing are thin on the ground. Why is it, asks Jamie Sidore, principal at The Amundsen Group, that there are only two such agreements that anyone can point to? One is the Merck/Cigna deal, where the drugmaker promised the insurance company bigger discounts on its diabetes treatments Januvia and Janumet in return for a better placement on Cigna's formulary (assuring lower copayments for its patients). The other is Proctor & Gamble's commitment to reimbursing Health Alliance Medical Plans with discounts for the medical costs of osteoporosis-related fractures in postmenopausal women taking P&G's osteoporosis drug Actonel. Genentech's Avastin Patient Assistance Program, which allows patients who reach an annual dosage of 10,000 milligrams to receive Avastin free of charge for the remainder of the period, effectively capping the drug cost at $55,000 per calendar year, falls outside consensus definitions of risk sharing.

These deals have hardly been welcomed as ringing endorsements of risk sharing. "Our take is that the Health Alliance deal is a pure publicity play," says Sidore. "The pharmacy director of Health Alliance was on the lecture tour circuit for three years after that deal was done. And P&G got more impressions in the press for that deal than they got from all the money they spent on Actonel the previous year." As for Merck/Cigna, Sidore fails to see how it can set a worthwhile commercial precedent: "If you are Takeda with Actos or Novo Nordisk with Victoza and you're looking at the Merck Januvia deal, nothing about that disadvantages your access in any way; there's no incentive to compete, to outfox them in a different payer. I've seen nothing to suggest that Cigna is working harder to maintain adherence for Januvia patients than they are for Actos or Amylin's Byetta patients."

Schoonveld offers a more sympathetic assessment. "The Merck deal was really a deal around compliance, and that's a good thing," he says. "The payer and the company both have an interest in improving compliance, because in diabetes that's a major health issue. In that context, the fundamental idea of closing a deal is good." The problem was that the outcomes as they were measured improved after a year, and Merck gave additional discounts. "Merck should have gotten money back if it was a true risk-sharing deal, so a lot of people are saying that it was really just a pay-for-play kind of deal, a way of getting it on formulary. But I think the concept was great." The P&G/Health Alliance agreement, however, Schoonveld says, has "a true risk-sharing element, a very strong health benefit, and will also save you money." There could end up being more fractures than claims, but, he adds, "that is what a risk-sharing deal should be—a put-your-money-where-your-mouth-is deal."

Folding So Soon?

Even so, Sidore does not see there being any broad opportunity for risk sharing in the US, even in the same products that are driving the concept in Europe. "The European examples tend to be very high-cost products that would not get any access at all unless they were willing to say, 'Pay us only if it works.' In the US we don't have to do that, because the pharmaceutical companies are going to get paid in 95 percent of situations whether the drug works or not." He adds that the European models are driven by the single-payer environment. Even in nations that are not pure single payers, the role of government in pricing and price negotiations creates a much higher de facto level of control than in the US. "The fragmented system here negates the power of the central purchasing authority," Sidore says. "Under a fragmented system, the need is reduced and the incentives to participate are reduced."

It is worth remembering that the US has dallied with risk sharing before, only for it to quickly lose momentum. Speaking to Biotechnology Healthcare in October 2009, Bruce Pyenson, consulting actuary with Milliman Inc., reminded us that "in the 1990s, we saw physicians and hospitals taking risk in the form of capitation and other kinds of arrangements. Some of those survived, many of them did not." Ultimately, political concerns that capitation was an overt tool to ration healthcare helped abort the trend before it took root.

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
Philadelphia, Pennsylvania


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