Trends for Performance-based Risk-sharing Arrangements

Author: Shuxian Chen

Chen_Shuxian
CHOICE Student Shuxian Chen

When considering the approval of new drugs, devices and diagnostic products, there’s always a tension between making the product’s benefits available to more people and collecting more information in trials. The restrictive design of randomized-controlled trials (RCTs) mean that their indications of effectiveness don’t always hold in the real world. They’re also unlikely to detect long-term adverse events. This uncertainty and risk make it hard for payers to make coverage decisions for new interventions.

Performance-based risk-sharing arrangements (PBRSAs), also known as patient access schemes (PAS), managed entry arrangements, and coverage with evidence development (CED), help to reduce such risk. These are arrangements between a payer and a pharmaceutical, device, or diagnostic manufacturer where the price level and/or nature of reimbursement is related to the actual future performance of the product in either the research or ‘real world’ environment rather than the expected future performance [1].

I recently developed a review paper with CHOICE faculty Josh Carlson and Lou Garrison that gave an update of the trends in PBRSAs both in the US and globally. Using the University of Washington Performance-Based Risk-Sharing Database, we have identified 437 eligible cases between 1993 and 2016 from that contains information obtained by searching Google, PubMed, and government websites. Eighteen cases have been added to the database in 2017 and 2018. Seventy-two cases are from the US.

Figure 1. Eligible cases between 1993-2016 by country

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Australia, Italy, the US, Sweden and the UK are the five countries that have the largest number of PBRSAs. (Distribution of cases from different countries can be seen in Graph 1.) Except for the US, cases from the other four countries are identified from their government programs: the Pharmaceutical Benefits Scheme (PBS) in Australia, the Italian Medicines Agency (AIFA) in Italy, the Swedish Dental and Pharmaceutical Benefits Agency (TLV) in Sweden, and the National Institute for Health and Care Excellence (NICE) in the UK. These single-payer systems have more power in negotiating drug price with the manufacturer than we do in the US.

Cases in the US are more heterogeneous, with both public (federal/state-level) and private payers involved. The US Centers for Medicare and Medicaid Services (CMS) contributes to 25 (37%) of the 72 US cases. Among these, most arrangements involve medical devices and diagnostic products and originate in the CED program at CMS [2]. This program is used to generate additional data to support national coverage decisions for potentially innovative medical technologies and procedures, as coverage for patients is provided only in the context of approved clinical studies [3]. For pharmaceuticals, there have been few PBRSAs between CMS and manufacturers – no cases established between 2006 and 2016. However, in August 2017, Novartis announced that a first-of-its-kind collaboration with the CMS has been made: a PBRSA for Kymriah™ (tisagenlecleucel), their novel cancer treatment for B-cell acute lymphoblastic leukemia that uses the body’s own T cells to fight cancer [4]. The arrangement allows for payment only when participants respond to Kymriah™ by the end of the first month. It can be categorized as performance-linked reimbursement (PLR), as reimbursement is only provided to the manufacturer if the patient meets the pre-specified measure of clinical outcomes. This recent collaboration may lead to a larger number and more variety of PBRSAs between pharmaceutic manufacturers and the CMS.

Please refer to our article for more detailed analyses regarding the trends in PBRSAs.

References:

[1] Carlson JJ, Sullivan SD, Garrison LP, Neumann PJ, Veenstra DL. Linking payment to health outcomes: a taxonomy and examination of performance-based reimbursement schemes between healthcare payers and manufacturers. Health Policy. 2010;96(3): 179–90. doi:10.1016/j.healthpol.2010.02.005.

[2] CMS. Coverage with Evidence Development. Available at: https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development/

[3] Neumann PJ, Chambers J. Medicare’s reset on ‘coverage with evidence development’. Health Affairs Blog. 2013 Apr 1. http://healthaffairs.org/blog/2013/04/01/medicares-reset-on-coverage- with-evidence-development/

[4] Novatis. Novartis receives first ever FDA approval for a CAR-T cell therapy, Kymriah(TM) (CTL019), for children and young adults with B-cell ALL that is refractory or has relapsed at least twice. 2017. Available at: https://www.novartis.com/news/media-releases/novartis-receives-first-ever-fda-approval-car-t-cell-therapy-kymriahtm-ctl019

ISPOR’s Special Task Force on US Value Assessment Frameworks: A summary of dissenting opinions from four stakeholder groups

By Elizabeth Brouwer


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The International Society for Pharmacoeconomics and Outcomes Research (ISPOR) recently published an issue of their Value in Health (VIH) journal featuring reports on Value Assessment Frameworks. This marks the culmination of a Spring 2016 initiative “to inform the shift toward a value-driven health care system by promoting the development and dissemination of high-quality, unbiased value assessment frameworks, by considering key methodological issues in defining and applying value frameworks to health care resource allocation decisions.” (VIH Editor’s note) The task force summarized and published their findings in a 7-part series, touching on the most important facets of value assessment. Several faculty of the CHOICE Institute at the University of Washington authored portions of the report, including Louis Garrison, Anirban Basu and Scott Ramsey.

In the spirit of open dialogue, the journal also published commentaries representing the perspectives of four stakeholder groups: payers (in this case, private insurance groups), patient advocates, academia, and the pharmaceutical industry. While supportive of value assessment in theory, each commentary critiqued aspects of the task force’s report, highlighting the contentious nature of value assessment in the US health care sector.

Three common themes emerged, however, among the dissenting opinions:

  1. Commenters saw CEA as a flawed tool, on which the task force placed too much emphasis

All commentaries except the academic perspective bemoaned the task force’s reliance on cost-effectiveness analysis. Payers, represented in an interview of two private insurance company CEOs, claimed that they do not have a choice on whether to cover most new drugs. If it’s useful at all, then, CEA informs the ways that payers distinguish between drugs of the same class. The insurers went on to claim that they are more interested in the way that CEA can highlight high-value uses for new drugs, as most are expected to be expensive regardless.

Patient advocates also saw CEA as a limited tool and were opposed to any value framework overly dependent on the cost per QALY paradigm.  The commentary equated CEAs to clinical trials—while informative, they imperfectly reflect how a drug will fare in the real world. Industry representatives, largely representing the PhRMA Foundation, agreed that the perspective provided by CEAs is too narrow and shouldn’t be the cornerstone for value assessment, at least in the context of coverage and reimbursement decisions.

  1. Commenters disagreed with how the task force measured benefits (the QALY)

All four commentaries noted the limitations the quality-adjusted life-year (QALY). The patient advocates and the insurance CEOs both claimed that the QALY did not reflect their definition of health benefits. The insurance representatives reminded us that their businesses don’t give weight to societal value because it is not in their business model. Similarly, the patient advocate said the QALY did not reflect patient preferences, where value is more broadly defined. The QALY, for example, does not adequately capture the influence of health care on functionality, ability to work, or family life. The patient advocate noted that while the task force identified these flaws and their methodological difficulties, it stopped short of recommending or taking any action to address them.

Industry advocates wrote that what makes the QALY useful—it’s ability to make comparisons across most health care conditions and settings—is also what makes it ill-suited for use in a complex health care system. Individual parts of the care continuum cannot be considered in isolation. They also noted that the QALY is discriminatory to vulnerable populations and was not reflective of their customers’ preferences.

Mark Sculpher, Professor at the University of York representing health economic theory and academia, defended the QALY to an extent, noting that the measure is the most suitable available unit for measuring health. He acknowledged the QALY’s limitations in capturing all the benefits of health care, however, and noted that decision makers and not economists should be the ones defining benefit.

 

  1. Commenters noticed a disconnect between the reports and social/political realities

Commenters seemed disappointed that the task force did not go further in directing the practical application of value assessment frameworks within the US health care sector. The academic representative wrote that, while economic underpinnings are important, ultimately value frameworks need to be useful to, and reflect the values of, the decision makers. He argued that decision-makers’ buy-in is invaluable, as they hold the power to implement and execute resource allocation. Economics can provide a foundation for this but should not be the source of judgement relating to value if the US is going to take-up value assessment frameworks to inform decisions.

Patient advocates and industry representatives went further in their criticism, saying the task force seemed disconnected from the existing health care climate. The patient advocate author felt the task force ignored the social and political realities in which health care decisions are made. Industry representatives pointed out that current policy, written in the Patient Protection and Affordable Care Act (PPACA), prohibited a QALY-based CEA because most decision makers in the US believe it inappropriate for use in health care decision making. Both groups wondered why the task force continued to rely on CEA methodology when it had been prohibited by the public sector.

 

The United States will continue to grapple with value assessment as it seeks to balance innovation with budgetary constraints. The ISPOR task force ultimately succeeded in its mission, which was never to specify a definitive and consensual value assessment framework, but instead to consider “key methodological issues in defining and applying value frameworks to health care resource allocation decisions.”

The commentaries also succeeded in their purpose: highlighting the ongoing tensions in creating value assessment frameworks that stakeholders can use. There is a need to improve tools that value health care to assure broader uptake, along with a need to accept flawed tools until we have better alternatives. The commentaries also underscore a chicken-and-egg phenomenon within health care policy. Value assessment frameworks need to align with the goals of decision-makers, but decision-makers also need value frameworks to help set goals.

Ultimately, Mark Sculpher may have summarized it best in his commentary. Value assessment frameworks ultimately seek to model the value of health care technology and services. But as Box’s adage reminds us: although all models are wrong, some are useful. How to make value assessment frameworks most useful moving forward remains a lively, complex conversation.