Investing in ‘uncertainty’?

Every innovative medical product on the market is subject to uncertainty. Uncertainty can be situated at the level of the volume (units / patients / events / ..) as well as at the level of medical and societal value and expectations (efficacy / safety / … ).

Imagine  you are the payor with a limited budget  that is currently being used for (over) 100 %. Would you invest in uncertainty? Even more so, would you  cautiously decide to relocate your budget from the current ‘golden standard’ to a quite often more expensive innovation, for which the company claims  it will bring clinical benefit for a specific target patient population?

Sharing the risk of uncertainty

We are pretty sure  you (as a virtual payor) will recognise a certain risk you will take. A ‘YES’ leads to market access for the innovation but in parallel ‘uncertainty’. The main question is whether the claimed benefit is in balance with the budget impact once the product is made available to prescribers and patients. If it isn’t, your budget will not be optimally spent and other more valuable innovations will stay in the queue to enter the market. Risk sharing is a possible instrument to keep the budget under control over a predefined period. After this period and after a careful evaluation the payor can decide to allow a final listing.

Managed Entry Agreements

Several years ago, the first ‘managed entry agreements’ were signed to allow medical innovations to the market on a temporary basis. In general, a contract is established after a dialogue between the payor and the company. In other words, the company is involved in drafting of such a contract and can participate in the clinical and budgetary debate. The outcome is confidential with the exact content not being publicly available.

In Belgium, most  contracts are volume based (the more sales, the higher the proportion of refund). But in some cases a performance-based contract may be a better choice. For performance-based contract, the company will measure whether in real life the efficacy is as good as claimed during the request for reimbursement. Registries will be set up, measuring clinical outcomes over time (e.g., mortality, number of events, …).

This allows the years after launch to be used to analyse whether the sales volume is within forecasted budget (financial contracts) and/or in balance with the claimed clinical benefit (performance-based contracts).

Challenges

After years of building expertise with contracts, several challenges arose. What if (comparable) competitors enter the market? And as a consequence of the confidential nature of a contract: is the competitor subjected to an equal refund-arrangement if an equal benefit is claimed? And what if an out-of-stock situation of a competitor leads to a company to sell more than was agreed in the contract (leading to a higher refund)? Should the contract of all competitors end  on the same end-date? Can the product be withdrawn from the market if the outcome is below the minimum expectation(s)? How to estimate a competitive (list-) price if the competitor has a contract? …

Purpose of MEAs: covering uncertainty, or budget-saving system?

As a consultant, we are frequently asked similar questions by our clients and  there is sometimes a gap between legislation and the opportunity offered. We believe that the benefit of such contracts (which should be installed to cover uncertainty) is relegated to a budget-saving system on quite a few occasions. The real target (provide clinical efficacy in balance with the budget needed) has gotten out of sight.

Increased complexity

And it has become more complex due the international price referencing systems. Due to the confidential nature of each individual contract, a virtual high price is listed and used towards (and from) other countries.

Anno 2021: towards our clients, we advise to think about well-balanced contract conditions and to anticipate upcoming challenges (new competitors, the life-cycle aspect of the concerned innovation, market dynamics, …).

As a consultant, we believe in the elegant solution a contract can offer, but only for the purpose of covering uncertainty, not for strictly budget-saving purposes.. Feel free to start a debate with us!.

Looking forward to optimise the value of contracts …

Would you like to have a talk with us about, feel free to contact us.

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