Category Archives: Healthcare

Risk Sharing Agreements: Friends or Foes?

In risk sharing agreements, particularly health outcomes-based agreements, the price and reimbursement of a new drug is associated with the achievement of certain health outcomes in real-world practice. Health outcomes can be measured in terms of clinical results (through intermediate or final indicators) or of cost-effectiveness (through estimation of the incremental cost-effectiveness ratio).

According to the nature of reimbursement, health outcomes-based agreements can be classified into: conditional coverage and performance-linked reimbursement (or pay for performance). Conditional coverage agreements may provide patients access to new drugs while data to provide definitive evidence for the clinical or cost effectiveness impact are collected. On the other hand, performance-linked reimbursement (pay for performance) agreements are usually negotiated when the manufacturer is very confident in its product and the value it creates so it is willing to accept a lower reimbursement if the drug fails to achieve the expected health outcomes in real-life.

Health outcomes based agreements are not recommended for drugs whose health outcomes can only be evaluated after a long period of time and for drugs for which no specific and reliable outcome measurements can be defined. Their introduction can be complicated due to the variety of arrangements possible, they may require the transfer of patient data (with implications for confidentiality). Additionally, outcomes- based agreements may have high implementation, administrative, and monitoring costs and negotiations involved can be very time-consuming.

In the Spanish National Health System (NHS, SNS in Spanish), the implementation of these agreements may result in additional issues, in particular related to the decentralization in the decision-making process at the regional and hospital level (taking into consideration the 17 Autonomous Regions in Spain). This could raise questions regarding who (central government, regional health services or hospitals) should negotiate, manage and fund these agreements.

Another issue that must be taken into consideration is the fact that, in general, knowledge in these type of arrangements is extremely limited and both hospital and regional health services lack the appropriate personnel. Moreover, challenges linked to the absence of legal regulation of this form of agreements at European and national level must be addressed.

According to Dr Miguel Ángel Calleja, Head of Pharmacy at Virgen de las Nieves Hospital and President of the Spanish Society of Hospital Pharmacy (SEFH), “One of the problems related to the implementation of risk-sharing agreements in Spain is the lack of awareness among professionals and the inadequate monitoring of treatments”.

Nevertheless, the severe financial downturn Spain is facing is sparking interest in health outcomes based agreements, particularly at the regional and hospital level although with varying degrees of implementation across the different Autonomous Regions, with Catalonia leading the way in number of agreements and drugs involved.

For example, at the national level, within the Strategic Plan of the Spanish Government to address hepatitis C, the Ministry of Health has signed a combination of risk-sharing agreements with different pharmaceuticals companies to provide access to the new drugs for the treatment of hepatitis C. The Ministry has signed with MSD for the purchase of Victriles® (boceprevir) an agreement based on the concept of “cured patient”, so the SNS will pay only for these patients, while MSD will finance the cost of patients who do not reach the agreed viral load.

At the hospital level the first Performance Based Agreement entered in Spain was another outcomes-guarantees done between the Hospital Virgen de las Nieves in Granada and GlaxoSmithKline in 2012 for the purchase of Volibris® (ambrisentan) for the treatment of idiopathic pulmonary hypertension (PAH). In this case a technical committee (composed of a doctor, a GlaxoSmithKline representative, the hospital manager, a representative from the hospital pharmacy department, and a representative from the Andalusian School of Public Health) was responsible for monitoring the functioning of the agreement.

A linear model of payment was agreed so that the amount the Hospital pays depends on the performance of the drug with respect to previously established outcomes. Even though the treatment does not work as expected, under this arrangement the manufacturer receives a part of the payment. The annual cost of implementing this agreement was approximately 1% of the annual cost of the drug, being data collection the most costly aspect of the implementation.

Furthermore, at the regional level, the implementation of performance-based risk-sharing agreements is included in the 2011-2015 Health Plan for Catalonia. One of the goals of this Plan is to enter into ten risk-sharing agreements with pharmaceuticals companies by 2015. CatSalut, the Catalonia Health Service, intends to continue working on this type of agreements and to move toward an innovation and performance-based model of funding.

However, it is yet to be seen if the rest of Autonomous Regions will follow Catalonia’s example, potentially allowing further patients living in other regions gaining access to important treatments in the future (as a result of the implementation of risk sharing agreements).

When asked about the implementation of risk sharing agreements in Spain, during a breakfast organized by ilS, experts agreed that although the implementation of these agreements can be difficult, they are highly necessary nowadays. For Dr. Antoni Gilabert, Managing Director of Pharmacy and Medicines at Servei Català de la Salut (CatSalut), these agreements must be adopted to minimize uncertainty and to establish a win-win situation for both pharma companies and payers. Additionally, Dr. Gilabert believes that for successful implementation of risk sharing agreements, stakeholders must have a well-defined set of outcome indicators and a well-established monitoring methodology.

For Ms. Mercedes Prior, Head of Global Market Access at Almirall, risk sharing agreements allow and accelerate access to new drugs that otherwise would not make it to the market. Nevertheless, Ms. Prior acknowledges the hurdles related to the implementation of these agreements, given that many of the different departments within a pharmaceutical company (like; market access, medical affairs, legal, finance …) must be aligned.

Overall, risk sharing agreements provide a stable framework to finance innovation. Due to the fact that they are dependent on health outcomes, they encourage the effectiveness of products and enhance their post marketing research. However, the implementation of risk sharing agreements is complex, time-consuming, and an expensive process. Particularly the decentralized structure of the Spanish health system further elevates this complexity, increasing the stakeholders involved in the pricing and reimbursement process of a new drug.

ilS PublicationsSM latest report “Market Access and Innovative Agreements in Spain” speaks about the different types of innovative agreements that pharma companies can implement (including risk sharing agreements). Additionally, it describes in an easy-to-read manner the Spanish healthcare system, clarifies the process of introducing a new drug in Spain, and provides information about the roles different stakeholders play at a national, regional and local levels, as well as the different levels of influence they exert. All of that allow decision makers from biopharmaceutical companies to set-up the right new drug launch strategy that will guarantee an optimal access into the Spanish market.

Click here to download your copy of ilS PublicationsSM latest report “Market Access and Innovative Agreements in Spain”






How Can We Engage US Doctors in a New Healthcare System?

New-healthcare-system_ilSThe healthcare system in America has been in trouble for years, with many Americans struggling to receive the care they need and doctors and hospitals struggling to give it to them.

In the past, the healthcare system, at the hospital level, was organized around maintaining
the loyalty of individual physicians, who were seen by hospitals as their “real” customers since most of a hospital’s revenue came from doctors referring their own personal patients. This created a system where increasing volume was the main concern while working with doctors to improve quality of patient care and lower costs was of secondary importance. However, this old system is no longer effective, and the good intentions of individual doctors are not enough to ensure a high standard of care for patients. As a result, it has become clear that some big changes at the hospital level are needed in order to improve patient care and keep the healthcare system moving forward. However, these changes can be hard to make, especially when physicians are not on board. Most doctors and healthcare providers see such large changes as threatening and potentially harmful to their livelihoods. The need for better patient care makes it crucial for hospitals and healthcare organizations to find a way to get physicians to support and be active in helping with this transformation.

In the article “Engaging Doctors in the Health Care Revolution” Lee and Cosgrove (Chief Medical Officer at Press Ganey and CEO of the Cleveland Clinic respectively) recommend a way to modernize and revamp the healthcare system that many see as outdated, and even broken. They acknowledge the key role doctors have to play in this new system and suggest that while many healthcare organizations have recognized the need for change they have lacked a solid and united approach to make that change effective. In their article they propose a solution that reassures doctors while at the same time getting them to be proactive and involved in reforms. They present their plan to engage doctors in the following four steps:

First, organizations and leaders of healthcare centers, must offer their doctors a clear, shared purpose to engage in: better patient care. It’s important that this goal be the center of any changes, since in their hearts this is what true healthcare professionals strive for. It is also vital to engage doctors in this process by making them an active part of creating and implementing this goal. Creating statements of shared purpose can be a very effective way to center everyone’s focus on a common and concrete goal. Such statements also set the focus on patients, acknowledge that the current way of doing things is no longer efficient and assert that action, as a group, is what is needed to move forward.

Second, the leaders of healthcare organizations must appeal to physicians’ self-interest. Like everyone physicians are concerned with job security and financial incentives. This self-interest can be used as a way to further engage doctors in heightening patient care and working as team, by offering rewards for achieving objectives. If physicians feel that a new practice will improve patient care they don’t require large financial incentives. It is more important that incentives reward collaboration and are consistent with the goal of a shared purpose rather than offering a big reward for something physicians feel they cannot support.

Third, leaders must create a way for doctors to earn and maintain respect. Respect from their peers and the fear of losing that respect can create a very successful system of nonfinancial rewards and penalties that can get doctors on board with the new system. Organizations that have used a form of positive peer pressure, making physicians’ quality-performance data available to their peers and in some cases even the public, have seen an increased improvement in performance.

The fourth and final statement is related to the important of embracing tradition. Membership in an organization and adherence to the traditions that make that membership special can be a very powerful motivator. Maintaining and creating traditions allows organizations a way to implement standards and create consistency in how physicians are expected to interact with each other and work as a team. It is also effective because physicians know that they could be shunned or lose their job if they don’t comply with these standards.

Many organizations already use one or more of these motivations in some form or another, but the organizations that have seen the most success have implemented all four. Although these changes can be hard to make due to physicians, leaders must be positive and optimistic. They need to remind doctors that whatever they may have to give up will pale in comparison to what they will gain, personally and professionally, when patients’ needs come first. Leaders will also have to be ready to part ways with anyone who is not willing to make the necessary changes, and work as a team. Transforming healthcare at the hospital level is not an easy task, but in the long run organizations that want to be successful and lucrative while making a place for themselves in the evolving healthcare landscape, will be the ones that can productively engage their staff in making patient care better and more effective.

 Article written by Alexandria Kyle-Hammer, ilS Collaborator

Cosgrove, Toby, Lee, Thomas H. (2014, June). Engaging Doctors in the Health Care Revolution. Harvard Business Review,105-111



USA Pharma Market Overview: Valuable Impacts of Reform

by Emily Fielding

photopin_chicagoskyline_smallThere was a time that the pharma industry in the USA was touted to be “recession-proof”. However in 2010, with the country recovering from The Great Recession and the industry facing 2011’s patent cliff, there could be no denying the healthcare system was in need of major reform. When the Affordable Care Act passed that year, it became clear that the drug industry actually had potential to benefit from the increase in government involvement. Continue reading USA Pharma Market Overview: Valuable Impacts of Reform