Since 2000, pharmaceu-tical and biotech companies have engaged in agreements with government and private payers across the world to gain market access for their innovative drugs despite struggles to qualify for formal reimbursement criteria, such as the cost effectiveness threshold from NICE in the UK. These agreements, usually referred to as “risk sharing” agreements, have had a wide variety of structures but usually do not involve any sharing of risk, as the name misleadingly suggests. A detailed overview of risk sharing deals is found in The Price of Global Health (Schoonveld, 2011).
In today’s pharmaceutical market new, often simpler agreements known as Managed Entry Agreements (MEAs) are being sought. The goal of an MEA is to find an easily implementable way to overcome payer objections while not affecting other markets – as is the case through a list-price reduction for example.
The original risk sharing deals were created to share risk. One of the earliest true risk sharing deals was the multiple sclerosis deal in the UK. In this case the British government wanted to address high patient demand for multiple sclerosis treatments despite a negative NICE ruling. In exchange, pharmaceutical companies were willing to guarantee long-term outcomes of their new drugs so both parties stood to gain and mutually bear risk.
The National Health Service (NHS) is another example, when they accepted Biogen Idec’s proposed price for Avonex of around $18,000 per year in exchange for efficacy performance guarantees to be monitored through a patient registry created solely for this purpose. Implementation of the registry was more complicated than anticipated however, and it took seven years to obtain data on two-year patient treatment results. Ultimately the deal was canceled and the NHS has since focused on much simpler, usually discount-based Patient Access Schemes.
In recent years, both payers and the pharmaceutical industry have realized that many risk sharing deals had been an administratively complex and expensive workaround to a very simple problem: overcoming local market access approval hurdles while maintaining a globally consistent strategy. Pharmaceutical industry thinking has evolved to devise creative managed entry solutions that speed up access to innovative medicines while complying with local approval requirements. The new approach of “Managed Entry Agreements” (MEA) moves beyond the idea of sharing risk on a specific compound, with uncertain outcomes for both parties, to finding more targeted solutions that address financial constraints or evidence gaps.
An ongoing example of a MEA is the “Vale Mais Saude” program created by the Brazilian government and Novartis. This program is a comprehensive health management platform for chronic diseases, such as chronic obstructive pulmonary disease (COPD), that aims to reduce hospital and medical visit resources by tracking patients and providing nutritional, wellness, sports, exercise and counseling services. Discounts are provided on a portfolio of brands. The program has enrolled more than two million patients online, has improved compliance by 70% and allowed faster access to Novartis’ portfolio. In another example, AstraZeneca collaborates with a research subsidiary of the managed health care company WellPoint to collect real world evidence of value of care while managing total healthcare cost.
The key to successful MEAs include:
1.Understanding of local payer needs and concerns which may vary from gaps in the evidence package to budgetary considerations
2.Isolating the key payer concern that can be addressed through a MEA, establishing clear objectives and rationale for the agreement and tailoring the solution to addresses those needs through a formal agreement
3.Ensuring that the solution is simple enough and avoids complex administration, constant monitoring of outcomes and high levels of uncertainty, and having clear criteria to end the agreement.
As payer pressures are rising and the global environment continues to increase in complexity, MEAs are likely to play a substantial role in market access negotiations. It will be interesting to see how the structure of these deals further evolves.
Ed Schoonveld, Principal and Juan Roman, Associate Principal,
are at ZS Associates in New York, New York.