Risk-Sharing: Not Easy, But Impossible To Ignore

So risk-sharing deals haven’t taken off with the gusto that their compelling logic suggests they should have. Even in Europe — the ripest territory for such contracts, given the alternative may be no reimbursement at all — there have been only a dozen or so deals. And several of those are mostly about sharing financial risk, rather than tying price or indeed payment to performance and outcomes.

The hurdles are better documented than most of the schemes themselves, and most come under the ‘boring but important’ category. Administration. IT systems. Coding complexity. Staff time.  This NEHI roundtable documented them most recently, relegating risk-shares to “exception rather than the rule”.

And yet we’re all still talking about risk-sharing. Like a toddler with a tantrum, they’re difficult, but impossible to ignore.

Why? Because noone really believes the practical stumbling blocks can stand in the way of what looks to be an increasingly important–if not the only–option for pharmas seeking reimbursement in Europe, especially for their pricey cancer drugs.

Think about the alternatives. One is straightforward discounts. They’re already an unofficial requirement for a passage past the health technology assessment body NICE in the UK (given that few companies can meet its requirements for compelling OS data). But as discounts proliferate, so too does the risk that information about ‘real’ prices leaks out to impact other European and global markets.

Efforts to keep these discounts confidential are considerable — only one procurement pharmacist per region is allowed to know it and is subject to multi-page confidentiality agreements. But such schemes likely aren’t  sustainable in the long run. Payers are already moaning about the hassles that come with secrecy and it’s hard to believe discounts won’t eventually leak. And the other option is no reimbursement at all. That’s bad for pharma, for patients, and for payers – neither government-owned or private payers want to be seen as blocking access to cancer drugs.

Which is why even the payers acknowledge that risk-sharing isn’t dead, it’s just that both sides need to figure out how to do it more effectively. “There will be a place for these kinds of risk-shares,” concedes one UK-based payer.  Executives within France’s reimbursement authority, whose health economics unit just stepped up a rank –  likewise expect more risk-sharing in the form of conditional reimbursement tied to the collection of real-world proof-of-benefit data. In Italy, risk-sharing for cancer drugs is the norm, not the exception.

So which kinds of deal work best, and why? What are their advantages — and drawbacks — both for payers and pharma?  The answers are highly relevant, not only to European players, but to payers and pharma in the US too.  Cost-pressures may not be high enough yet to compel extensive risk-sharing yet, but the trend is clear: payers can’t keep pushing up premiums forever.

Be on the look out for our future posts and insights on the topic.

image courtesy of flickrer tacitrequiem used under creative commons