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How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and Unintended Consequences of Six Common Risk Sharing Agreements
Background. Pharmaceutical risk sharing agreements (RSAs) are commonly used to manage uncertainties in costs and/or clinical benefits when new drugs are added to a formulary. However, existing mathematical models of RSAs ignore the impact of RSAs on clinical and financial risk. Methods. We develop a...
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Formato: | Online Artículo Texto |
Lenguaje: | English |
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SAGE Publications
2021
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Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7876771/ https://www.ncbi.nlm.nih.gov/pubmed/33623819 http://dx.doi.org/10.1177/2381468321990404 |
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author | Zaric, Gregory S. |
author_facet | Zaric, Gregory S. |
author_sort | Zaric, Gregory S. |
collection | PubMed |
description | Background. Pharmaceutical risk sharing agreements (RSAs) are commonly used to manage uncertainties in costs and/or clinical benefits when new drugs are added to a formulary. However, existing mathematical models of RSAs ignore the impact of RSAs on clinical and financial risk. Methods. We develop a model in which the number of patients, total drug consumption per patient, and incremental health benefits per patient are uncertain at the time of the introduction of a new drug. We use the model to evaluate the impact of six common RSAs on total drug costs and total net monetary benefit (NMB). Results. We show that, relative to not having an RSA in place, each RSA reduces expected total drug costs and increases expected total NMB. Each RSA also improves two measures of risk by reducing the probability that total drug costs exceed any threshold and reducing the probability of obtaining negative NMB. However, the effects on variance in both NMB and total drug costs are mixed. In some cases, relative to not having an RSA in place, implementing an RSA can increase variability in total drug costs or total NMB. We also show that, for some RSAs, when their parameters are adjusted so that they have the same impact on expected total drug cost, they can be rank-ordered in terms of their impact on variance in drug costs. Conclusions. Although all RSAs reduce expected total drug costs and increase expected total NMB, some RSAs may actually have the undesirable effect of increasing risk. Payers and formulary managers should be aware of these mean-variance tradeoffs and the potentially unintended results of RSAs when designing and negotiating RSAs. |
format | Online Article Text |
id | pubmed-7876771 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2021 |
publisher | SAGE Publications |
record_format | MEDLINE/PubMed |
spelling | pubmed-78767712021-02-22 How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and Unintended Consequences of Six Common Risk Sharing Agreements Zaric, Gregory S. MDM Policy Pract Original Article Background. Pharmaceutical risk sharing agreements (RSAs) are commonly used to manage uncertainties in costs and/or clinical benefits when new drugs are added to a formulary. However, existing mathematical models of RSAs ignore the impact of RSAs on clinical and financial risk. Methods. We develop a model in which the number of patients, total drug consumption per patient, and incremental health benefits per patient are uncertain at the time of the introduction of a new drug. We use the model to evaluate the impact of six common RSAs on total drug costs and total net monetary benefit (NMB). Results. We show that, relative to not having an RSA in place, each RSA reduces expected total drug costs and increases expected total NMB. Each RSA also improves two measures of risk by reducing the probability that total drug costs exceed any threshold and reducing the probability of obtaining negative NMB. However, the effects on variance in both NMB and total drug costs are mixed. In some cases, relative to not having an RSA in place, implementing an RSA can increase variability in total drug costs or total NMB. We also show that, for some RSAs, when their parameters are adjusted so that they have the same impact on expected total drug cost, they can be rank-ordered in terms of their impact on variance in drug costs. Conclusions. Although all RSAs reduce expected total drug costs and increase expected total NMB, some RSAs may actually have the undesirable effect of increasing risk. Payers and formulary managers should be aware of these mean-variance tradeoffs and the potentially unintended results of RSAs when designing and negotiating RSAs. SAGE Publications 2021-02-09 /pmc/articles/PMC7876771/ /pubmed/33623819 http://dx.doi.org/10.1177/2381468321990404 Text en © The Author(s) 2021 https://creativecommons.org/licenses/by-nc/4.0/ This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License (https://creativecommons.org/licenses/by-nc/4.0/) which permits non-commercial use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/open-access-at-sage). |
spellingShingle | Original Article Zaric, Gregory S. How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and Unintended Consequences of Six Common Risk Sharing Agreements |
title | How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and
Unintended Consequences of Six Common Risk Sharing Agreements |
title_full | How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and
Unintended Consequences of Six Common Risk Sharing Agreements |
title_fullStr | How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and
Unintended Consequences of Six Common Risk Sharing Agreements |
title_full_unstemmed | How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and
Unintended Consequences of Six Common Risk Sharing Agreements |
title_short | How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and
Unintended Consequences of Six Common Risk Sharing Agreements |
title_sort | how risky is that risk sharing agreement? mean-variance tradeoffs and
unintended consequences of six common risk sharing agreements |
topic | Original Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7876771/ https://www.ncbi.nlm.nih.gov/pubmed/33623819 http://dx.doi.org/10.1177/2381468321990404 |
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