Considerations for Risk Sharing Agreements

There are several important questions that should be asked before entering into RSAs.

In a recent move that garnered considerable attention, Express Scripts, one of the largest pharmacy benefit managers (PBMs) in the US, announced a plan that would link the price of some cancer drugs to their real-world performance1. Although this isn’t the first time that an alternative pricing model for drugs has been suggested, the timing of the announcement is telling.  After years of concern over mounting drug prices, payers and PBMs are becoming increasingly assertive regarding products whose costs aren’t perceived as in line with perceived performance – a trend that shows no signs of slowing down in the current healthcare environment.

The U.S. Healthcare Landscape

It’s no secret that the U.S. healthcare industry is in the midst of a significant transformation.  In response to over a decade of soaring insurance premiums and increased employee contributions, payers are actively exploring ways to curb rising costs from all across the system. This includes shifting payments to provider organizations, as well as limiting market access and reimbursement for drugs, treatments, and therapies where value can’t be adequately demonstrated.  At the same time, patients – who are assuming greater financial responsibility for their healthcare – are becoming more engaged in their own care, with higher expectations for the products and services they receive.

As a result of price pressure from payers, the enforcement of financial penalties related to clinical quality metrics, and the expansion of regulations, provider organizations are also becoming much more focused on cost and outcomes.This, in turn, is driving major change in the provider market through accelerated consolidation, the implementation of standardized, evidence-based medicine, and the shift of product decision-making from clinicians to hospital executives and administrators.

The Shift to Risk Sharing

Because of the intense focus across the healthcare industry on delivering “better outcomes at lower cost,” it’s not surprising that the pressure to use cost containment measures for drugs and therapies – including risk sharing agreements (RSAs) – continues to increase. In fact, RSAs and related schemes are already being used in a number of foreign markets – including the U.K. and Italy – as a way of controlling costs.  As an added benefit, RSAs can serve to “hedge” reimbursement decisions, allowing payers to respond to patient and physician pressure for new and more costly drugs while also attempting to mitigate the uncertainties around these products.

Traditionally, RSAs have taken on many forms and can be broadly divided into financial and performance-based agreements.  Financial-based agreements often involve setting limits on the price of a given drug or the quantity that can be purchased.  Performance-based agreements link payment to negotiated outcomes. 

Although uncommon in the U.S., there have been several notable RSAs in the past.  For example, in 2009, Merck and Cigna agreed to link the price of Merck’s Januvia and Janumet (two of its leading diabetes drugs) to how well these products controlled blood sugar levels in Type 2 diabetes patients.2

Considerations for Successful Risk Sharing Agreements

It’s important to understand that RSAs can serve as an effective approach in certain circumstances, but they’re not a “one size fits all” model that applies to all situations.  It should also be noted that structuring these agreements has historically been challenging, and there are inherent risks that are outside of the direct control of pharmaceutical companies, including inefficient healthcare delivery and poor patient compliance.  For companies considering RSAs, there are several important questions that should be asked before entering into these agreements:

  • Why are we interested in entering into an RSA and are the potential benefits worth it? Given the complex nature of RSAs, a company considering entry into such agreements  must carefully consider its ultimate goals for doing so. In some cases, RSAs can provide an alternative approach to achieving market access and premium pricing when more traditional routes prove unsuccessful.  RSAs can also be used to achieve a number of other goals, including moving into the market ahead of competitors or building partnerships with key payers and providers. Regardless of the actual reasons, pharmaceutical companies should always ensure that the potential benefits of entering into an RSA are significant enough to justify the effort and risks associated with these types of agreements.
  • How confident are we in our ability to deliver on the target outcomes? For pharmaceutical companies pursuing performance-based agreements, it’s critical to deeply understand how their products deliver value.  In negotiations with payers, companies must make sure that the particular measures being agreed upon align with the value story for the given product.  Careful consideration must also be given to ensure that measures are objective, clearly defined, reproducible, and difficult to manipulate.  Payers may also look more favorably on RSAs that don’t add extra costs for tracking outcomes and rely on monitoring procedures that are already performed on the target patient populations.
  • Do we have the right capabilities in place to successfully implement these types of agreements? Implementing RSAs requires not only lengthy negotiations and potentially costly administration, but also the ability to efficiently and effectively capture real-world evidence. As a result, pharmaceutical companies must develop the appropriate IT and data analytics capabilities to ensure that they aren’t hindered by issues related to the collection, monitoring, or assessment of data from multiple sources, including non-interventional observational studies, retrospective database studies, patient reported outcomes, and electronic health records (EHRs). 


Given the current healthcare environment, it’s clear that payers will continue to push for alternative, value-based payment models.  For pharmaceutical companies, this may mean a future in which they are asked – or even required – to enter into RSAs or similar arrangements. However, whether or not these agreements become a mainstay, the need to demonstrate compelling value to key stakeholders – including payers, providers, PBMs, and consumers – isn’t going away.  In fact, companies that aren’t adequately prepared for this “new normal” in healthcare face a very uncertain future.




Rita E. Numerof, Ph.D. is President of Numerof & Associates, a strategy development and implementation firm with more than 25 years’ experience helping major pharmaceutical, device, diagnostic, payer and delivery organizations define, create, and deliver value across healthcare. Experts in business model transformation, Numerof specializes in redesigning commercial models, developing economic and clinical value propositions, and crafting market access strategies for the pharmaceutical industry worldwide. For more information, visit our website at

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