Healthy Skepticism Library item: 15743

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Publication type: Journal Article

Zaric GS, Xie B.
The Impact of Two Pharmaceutical Risk-Sharing Agreements on Pricing, Promotion, and Net Health Benefits.
Value Health 2009 Mar 10;
http://www3.interscience.wiley.com/journal/122251642/abstract?CRETRY=1

Abstract:

ABSTRACT Objectives: Health insurers are increasingly making use of risk-sharing agreements with drug manufacturers to manage uncertainties regarding the costs and effectiveness of new drugs. Several risk-sharing models exist including those based on sales volume, achievement of clinical thresholds, and achievement of cost-effectiveness thresholds. The objective of this article is to compare two risk-sharing arrangements and to investigate conditions under which each is preferable from the perspective of the payer and the manufacturer. Methods: We develop two two-period models to compare two risk-sharing arrangements between a payer and a drug manufacturer in which there is uncertainty about the effectiveness of the new drug. In the first risk-sharing agreement, the drug is listed on a formulary in the first period but delisted in the second period if the net monetary benefit in the first period is negative. In the second risk-sharing agreement, the manufacturer pays a rebate in each period if the net monetary benefit in that period is negative. Results: We show that the relative performance of the two arrangements depends on several factors and that neither arrangement is always preferred. Additionally, we are able to identify situations in which a payer and a manufacturer would prefer the same plan and other situations in which the two parties would disagree on which plan was most desirable. Conclusions: Because neither risk-sharing arrangement is always preferred, payers and manufacturers must carefully consider the characteristics of their individual situation when entering into such contracts.