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Challenges with risk sharing in Eastern Europe raised at ISPOR Europe meeting
While attending the ISPOR Europe 2019 meeting in Copenhagen, I came across an interesting discussion of the unique challenges that payers in Central and Eastern European (CEE) countries face when trying to devise risk sharing agreement (RSA) schemes. Speakers shared their experience with RSA implementation in Russia, Poland and the CEE region as a whole.
Russia's tender requirements threaten RSA design
In Russia, one of the main challenges with RSA implementation lies in regulatory requirements that treat medicines as a type of goods whose procurement by public institutions should take place only via electronic tender, according to Malwina Holownia-Voloskova from the State Budgetary Institution, Research Institute for Healthcare Organization and Medical Management for the Moscow Healthcare Department. This requirement means that public payers have to come up with creative solutions to apply risk sharing for drugs whose price and quantity have already been agreed in a tender. One of the ways to circumvent this difficulty being considered by payers in the Moscow region, according to her, is to include conditions in the tender win documents that allow the payer to evaluate the drug's cost-effectiveness at specific points in time. If the drug is found to be cost-effective, it will continue being supplied at the price agreed in the tender. However, if its cost-effectiveness assessment is negative, the payer would require the tender terms to be re-negotiated.
Meanwhile, Vitaly Omelyanovskiy, Director of the Centre for HTA, Russian Presidential Academy of National Economy & Public Administration, and President of the ISPOR Russia HTA Chapter discussed some of the challenges with implementation of the country's RSA pilot project. In particular, use of RSA has been limited to the private sector. Evidence of a successful RSA deal with a private hospital will be required before the public sector would start broad implementation of RSA. One obvious disadvantage with this approach, in my view, is that pharmaceutical companies may be unwilling to provide favorable terms for an RSA with an individual hospital compared to what they would be prepared to negotiate with a large public sector payer: thus, the lack of success in the private sector would not necessarily translate into similar outcomes in the public healthcare provision sector.
Another difficulty with RS implementation is that quality criteria currently apply only in the inpatient sector, making it more difficult to evaluate drug performance in an outpatient setting, according to Omelyanovskiy. Risk sharing implementation in Russia is seen as part of a paradigm change from traditional healthcare to value-based health care (VBHC). Currently, VBHC implementation is being tested in Russia in a cataract project, with 1,727 patients enrolled so far out of planned enrolment of 2,500 patients. In 2020, Russian authorities plan to run similar VBHC projects for inflammatory bowel disease, diabetes and coronary artery disease.
Poland's success story
In contrast to Russia, Poland has extensive experience with risk sharing schemes which it started implementing in 2011. In 2018, 100% of applications for financing within the country's Drug Programs (comprising the most expensive drugs on the market) had an RS proposal, according to data presented by Roman Topór-Mądry from Poland's Agency for Health Technology Assessment (AOTM). The corresponding share was 80% of applications for all drugs and 50% of applications for financing of outpatient care drugs. The data presented further indicated that manufacturers increasingly favor simple discounts or payback types of RS deals in Poland due to their ease of administration and management. Despite the success of RSA schemes in Poland, challenges remain with cooperation between the Ministry of Health, payers and the AoTM, as well as access to real world data, according to Topór-Mądry.
The broad CEE picture
Zoltan Kalo, Professor of Health Economics at Hungary's Semmelweis University, considered the regional trends with RS implementation and the reasons why RS agreements are increasingly popular in CEE countries. In his view, Eastern European countries view RS agreements as a solution to the problem of high drug prices in the region. "In Eastern Europe we do risk sharing as we can't accept that we pay drug prices as high as payers in Western Europe," he stated. As Western European countries now frequently reference drug prices in Eastern European countries under International Reference Pricing (IRP), CEE payers often find that drug price levels in their markets are not in fact lower than prices in the higher-income countries of Western Europe, according to Kalo.
Is IRP use encouraging RSA?
The view that Risk Sharing is somehow a response to IRP is an interesting one and is, to a large extent, confirmed by our own analysis of pricing and reimbursement trends. We track IRP regulations across the world on a daily basis, while our IRP matrix currently contains 64 referrer and 81 reference countries. Meanwhile, our risk sharing database currently includes 864 RSA deals from around the world. While IRP works very well in reducing prices, its unintended consequences include potential launch delays in low-price countries, price convergence, a decline in price transparency, and drug shortages in low-price countries due to parallel exports to higher-price markets. A look at our IRP analyses and data from our risk sharing database suggests that as IRP has become more widely used around the world, the number of risk sharing agreements (particularly those with confidential price discounts) has surged. Unlike performance-based RSAs, which were more popular in the infancy of RSA, payers and pharma companies increasingly opt for discount-based RSAs, which have the advantage of easier administration and ability to keep the agreed discount confidential (whereas performance-based or price-volume RSAs allow the level of discount to be calculated in some cases). Maintaining RSA discounts confidentiality is essential if lower-income countries as to secure de facto drug price levels which more accurately reflect their ability to pay.
My colleagues and I are at the ISPOR Europe meeting until Wednesday evening. Please come visit us at booth C3-065.
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