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February 15, 2019

Risk-Sharing Contracts Can Potentially Decrease Drug Prices

Kaitlynn Ely
Risk-sharing contracts between pharmaceutical manufacturers and health insurance providers could be the answer to reducing the rising drug prices in the United States.
Risk-sharing contracts between pharmaceutical manufacturers and health insurance providers could be the answer to reducing the rising drug prices in the United States, according to researchers at the University of Florida (UF) College of Pharmacy.

Robert Navarro, PharmD, a clinical professor of pharmaceutical outcomes and policy at the UF College of Pharmacy, part of UF Health, along with other researchers, published 2 studies regarding the impact of risk-sharing and outcome-based contracts in the Journal of Managed Care & Specialty Pharmacy.

“The impact of these risk-sharing arrangements is that drug companies share financial risks with plans and patients, and the contracts help plans make value-based drug coverage decisions,” Navarro stated in a press release. “While drug prices may increase, these shared-risk contracts help reduce the net cost of providing expensive new drugs to patients.”

Pharmaceutical manufacturers would share the financial risks of marketing newly FDA-approved drugs through risk-sharing contracts. While manufacturers would benefit from gaining sales and collecting outcome data available for newly approved pharmaceuticals, health insurers benefit from paying only successful drug outcomes. As a result, patients would gain early access to new drugs with lower copays.

Navarro and his co-authors found that the most successful contracts occur when manufacturers and insurers agree on common performance metrics for measuring drug outcomes associated with expensive medical conditions. Diseases that do not have a proven treatment are often not candidates for risk-sharing contracts.

While risk-sharing contracts have gained popularity in Europe, researchers found that the agreements have not been as successful in the United States. After conducting interviews with 27 manufacturer and health plan executives and experts that work with outcomes-based contracting, it was concluded that the complex US healthcare system makes it difficult to make such agreements between manufacturers and insurers.

An increase in economic and governmental pressure to link medicine to patient outcomes, however, has the potential to increase the popularity of risk-sharing contracts in the United States.

“Drug manufacturers, health insurance providers and patients share a mutual interest in the success of performance-based, risk-sharing arrangements,” Navarro concluded. “Developing trust among these groups and standardizing contracts are critical for the continued growth of these arrangements and outcomes-based contracting in the United States.”

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