Aim: To share the costs and benefits of trying a new healthcare product between the manufacturer and the user
Application: The user, e.g. the payer or hospital, only pays for the product if it provides a pre-defined benefit
Helps: To open up new markets and increase market penetration
No matter how beneficial, new products always need to gain sales momentum. This can result in delays in both patients and healthcare systems realizing the positive benefits of adopting new healthcare practices. One reason for this delay, is the uncertainty over potential cost increases or loss of efficiencies. To overcome this, risk sharing agreements have been developed. They are a relatively new and innovative payment or reimbursement model that spreads the risk and opportunity between the two key stakeholders: payers and manufacturers. Under a risk-sharing agreement, the manufacturer and payer agree to link reimbursement to the products effectiveness or benefit. The appeal of such “pay-for-performance” agreements is understandable, as the payer only reimburses the manufacturer for the beneficial health outcomes achieved, rather than for provision of products that may or may not be effective and/or used.
In general, a risk-sharing agreement incorporates a planned assessment period, during which the performance of product is tracked. This includes use of a defined set of patient outcomes and a defined patient population. The level of reimbursement is then linked to the number of positive outcomes achieved. In some cases, it may be that the manufacture offers a tiered rebate on its product if the outcomes pledged are not met.
Clearly, a risk-sharing agreement is about the acceptable splitting of risk. Manufacturers thus need to calculate how much they can offer a payer in order to access the payers’ market without taking on too much risk. Coreva Scientific are here to help with the scoping of risk-sharing agreements and to build models to quantify the balance in risk between manufacturers and payers.
Further Reading: Performance-based risk-sharing arrangements—good practices for design, implementation, and evaluation: ISPOR Good Practices (Task Force Report). See also the performance-based risk-sharing arrangements slides and video presentation by Dr. Lou Garrison.