Risk Sharing Models – Three Perspectives
In our customer event in April, we examined risk-sharing models from three different perspectives. Director Lauri Pelkonen from the Pharmaceuticals Pricing Board (HILA) discussed the issue as a new element in the national pricing and reimbursement process, Chief Assessment Physician Miia Turpeinen addressed the matter from the perspectives of a catchment area for highly specialised medical care (ERVA area) and university clinic, particularly in terms of expensive hospital-only medicine, and Director Asmo Pasanen from the European HQ of Celgene contributed with the approach of an international pharmaceutical company.
An issue that could – and should – be stated first, is how rare it is that all these three actors are so unanimous on a new element of pharmaceutical pricing being an extremely welcome novelty. In this case, this holds true, because different risk-sharing models provide all parties the possibility to assess the relation between the paid price and the received benefit of new interventions in a novel manner. At best, money and intervention change owners so that the benefit or harm is not only covered by one party.
At the national level, risk-sharing models are still in their early stages. As of 1 Jan 2017, the possibility to start negotiating “conditional reimbursement” (as HILA calls the risk-sharing models) during the pricing and reimbursement process has become fairly popular, even so popular that HILA’s resources unfortunately do not suffice to process all applications in the new model. This is probably some sort of initial enthusiasm from the companies, but according to what has been observed elsewhere in the Western world, we can state that even though the enthusiasm would calm down, it is unlikely to disappear.
Lauri Pelkonen highlighted in his address that HILA will assess the necessity for a risk-sharing model very critically, and if an application seems to constitute purely a model aiming at “price concealing”, it will not be processed. In addition to the clinical necessity, companies should thus demonstrate why and how the specific treatment should be subordinated to a different pricing basis. Finland’s Medicines Policy 2020 statement directs the national actors to operate so that innovative medicinal treatments can be accessed by the patients as quickly as possible, but it remains to be seen how large a share out of the 500–700 applications processed annually by HILA is suitable for risk-sharing.
At the end of his speech, Pelkonen also openly stated that we are entering a world we do not know very well, which makes it, to some extent, a leap in the dark. All parties should understand that the negotiation process differs from the traditional application process and that common rules of the game will be formulated along with the coming years based on practical lessons.
Chief Assessment Physician Miia Turpeinen brought up in her address the experiences and views of ERVA areas and university clinics concerning the use of risk-sharing models. Although the different models are not part of the everyday lives even in ERVA areas, they have gained some experience. In the beginning of her address, Turpeinen referred to Leah Binder, writing for Forbes, about how healthcare “loses patients” due to wrong incentives, when billions are spent for activities and interventions that are either useless or ineffective.
In order to evade such a world, different risk-sharing models may provide a solution, mainly because the models should be justified, based on high-quality information and acceptable by both parties. These objectives have been clearly entered into the Health Care Act (2010), and the said Act may well function as some sort of a framework when constructing risk-sharing models.
The impacts of social and healthcare reform on the use of risk-sharing models is yet difficult to assess, but it is presumed that if single-channel funding is implemented, assessment of the impact and effectiveness of different models will become easier and the amount of different “wrong” incentives in treatment choices decrease. The coming months will tell at which level (national, ERVA or regional) the assessments and decisions are made and who will be the final funder of medicinal products. All ERVA areas have already at some level prepared to make assessments and construct models, although each university centre has their own system. We will certainly see consolidation in this, while lessons and experience are gained.
Turpeinen also went through different risk-sharing models and presented a study which compared the desirability and functionality of different models. It clearly seems (what has also been observed in other studies) that different outcome-based models are more desirable than those based on quantity or traditional percentage discount, even though they might be more difficult to construct and manage.
At the end of her address, Turpeinen hoped that these planning and implementation processes would be made in an open and close cooperation and that pharmaceutical wholesalers could serve as sort of bridge-builders in the matter.
International business perspective
The third speaker of the panel, Asmo Pasanen from Celgene’s European headquarters in Switzerland, brought up his experiences and views on what should be taken into account when these models are designed.
Pasanen shared an example of an agreement negotiated on the treatment of colon cancer. As is often the case in these projects, both parties had good will and enthusiasm to reach a reasonable agreement, but still, several snags came up along the way.
Examples of such snags included the administrative burden of the model and the question of who should bear it. In addition, the responsibilities of monitoring patients and subsequent reporting are important but not always easy to determine. Often, the motives of different budgets (local and regional) may be controversial and the resulting different ambitions have to be settled while the model is being constructed and implemented.
Once the model has been in use for a sufficient period of time, it is important to analyse whether the model has impacted treatment access of patients, i.e. whether the ultimate purpose of the model has been realised. Furthermore, one should also remember to critically analyse whether other measures would have resulted in similar or better outcomes. It is thus important to understand that a model is not complete when it is implemented and adopted but it is crucial to continue monitoring the functionality while the model is in use. Lessons learned help improving subsequent models and further developing mutual benefits.
At the end of his address, Pasanen brought up that even though the models are often complicated and heavy to construct and implement, it is important to note and understand that the interests of the pharmaceutical companies and healthcare units/funders are almost completely identical. This provides a good basis for negotiations and improves the likelihood of a positive outcome.
Risk sharing models – Conclusion
One can thus conclude on the risk-sharing models that their use is expanding with quite a pace, because both parties, companies and funders, have a clear interest to share the risk and simultaneously accelerate market access and patient use of new, innovative and more effective interventions.
The construction of models and monitoring of the activities is, however, often a complex process that requires time, knowledge and effort.
If the future in Finland resembles what has taken place in a large part of the Western world, different risk-sharing models have come to stay and provide the companies with a new possibility to cooperate with healthcare actors and funders.
External Affairs Director
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Read more about risk sharing models and other Market Access topics:
Market Access, pricing and reimbursement of medicines in Finland – an overview of the Finnish Market Access landscape and more useful links