In an ideal world, medicine prices would reflect the value provided to patients and society. In reality, linking price to value is often difficult, since the real value of a medicine is seldom known when price is set. When a drug is first used in a care setting, there often remains substantial uncertainty about its performance outside the strict controls of a clinical trial.
Risk-sharing arrangements enable medicines that help patients at a "reasonable" price while agreeing that additional evidence will be gathered over time to further clarify value. These arrangements include price-volume agreements, patient access schemes where drugs are provided for free or at a discount for a period of time, or reimbursement payments back to a pharmaceutical company based on outcomes achieved in a typical care setting.
In all of these arrangements, prices can go up or down, or other dimensions like volume can be adjusted. Risk-sharing arrangements can align the shared interest of payers and pharmaceutical developers. They can also enable faster patient access to drugs that might otherwise be held up in protracted reimbursement negotiations.
One key challenge is to determine when risk shares should be pursued. Risk shares remain complex, with significant implementation challenges and uncertain rewards for all parties at the time of inception. Both industry and governments bear financial risk related to price. There also remains significant uncertainty around the future of a risk share product on the market.
Three risk sharing arrangements are presented as further examples
The challenge of determining value: case study
A case study on Avodart™, a drug manufactured by GlaxoSmithKline that is currently licensed for the treatment of benign prostatic hyperplasia, serves as a practical example of the issues surrounding the introduction of a new medicine. This case represents the challenges of determining the value of a new medicine as more evidence is accumulated over time.
Risk sharing as an example of value-based pricing
European healthcare leaders examine risk-sharing arrangements as an example of value-based pricing. The benefits, risks, and conditions under which risk-sharing arrangements might be appropriate are discussed, as well as the opportunity for risk sharing agreements to change the focus of negotiation from price to value.