It Takes Two to Tango: When do Conditional Reimbursement Risk-Sharing Schemes Work for Both Parties?

Towse, A. and Fenwick, L.

December 2021

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There has been increasing emphasis by regulators on approving potentially important treatments rapidly, notably through accelerated access schemes. 

As a consequence, there is a challenge to payers. Products are launched with less evidence, creating greater uncertainty as to their relative effectiveness and value for money, the appropriate price to pay and the best use to be made of the drug.  If payers refuse to reimburse new treatments on the grounds of lack of good evidence of incremental effectiveness, there is likely to be political challenge from patient groups and from the innovating pharmaceutical companies. Faster regulatory approval processes are not necessarily achieving faster patient access.

This paper sets out a way forward using conditional reimbursement schemes with risk-sharing. These schemes have costs which, if allocated efficiently, will optimise incentives for uncertainty reduction. One important, but often overlooked, reason for introducing risk-sharing is to resolve differences of opinion between innovators and payers about the value of a technology to the health system. To date there has been no formal attempt to set out the circumstances in which risk sharing can increase the value of the options available to payers and innovators for mutual benefit when perceptions of value-for-money and of the value of undertaking additional research differ between the parties. In this paper the authors explore how a value of information (VOI) framework can help to understand what a performance-based risk-sharing arrangement (PBRSA) can, in principle, add to a reimbursement scheme. They set out the conditions in which both parties should seek such an arrangement.

Please cite this report as

Towse, A. and Fenwick, E., 2021.  It takes two to tango: when do conditional reimbursement risk-sharing schemes work for both parties? Setting out the conditions in which risk sharing schemes improve value for money. OHE Research Paper, London: Office of Health Economics. Available at: improve value formoney