In 2010, Carlson et al. conducted a systematic review on performance-based or health-outcomes reimbursement schemes delineating non-outcomes-based as well as health outcome reimbursement schemes . The central focus of this review is to only focus on the health outcomes-based schemes because the fundamental point of this agreement between manufacturer and payer stem from those in which the price, level, or nature of reimbursement are tied to future performance measures of clinical or intermediate ends points ultimately related to patient quality/quantity of life .
Subcategories of health outcomes-based schemes are defined as follows: (1) conditional coverage: where coverage is granted conditional to the initiation of a program of data collection; (2) performance-linked reimbursement (PLR): where reimbursement level for covered product is based on the measure of clinical outcomes in the “real world”; (3) coverage with evidence development (CED): is a scheme where coverage is conditional on the initiation of a program of data collection that informs the use of the medical product in the payer population; (4) conditional treatment continuation (CTC): is a scheme where payer continues to cover only for individual patients that benefit from the treatment; (5) outcome guarantees: is a scheme where the manufacturer provides rebates, refunds, or price adjustment if their product fails to meet the outcome targets agreed upon .
Conditional coverage is a performance-based scheme where coverage is granted conditional to the initiation of a program of data collection that informs the use of the medical product in the payer population . According to Fig. 1, CED creates a middle ground for payer to deal with uncertainty in effectiveness of the drug or medical device . For example, risperidone is a drug classified as an atypical antipsychotic used for patients with schizophrenia. The manufacturer Johnson and Johnson (J&J) and French Ministry of Health entered into a CED agreement where the French Ministry of Health agreed to cover risperidone at J&J’s asking price conditional upon J&J’s follow-up study of whether the drug helps patients stay on their medication. J&J will reimburse France’s Ministry of Health a portion of the money spent on the drug if the studies show otherwise .
Conditional treatment continuation (CTC) is a performance-based scheme where payer continues to cover the cost of the drug or medical device based on short-term treatment goals to ensure that only patients that benefit from the treatment will remain on treatment coverage. Multiple manufacturers for Alzheimer’s disease drugs entered into a CTC agreement with Agencia Italiana del Farmaco (AIFA) or the Italian Drugs Agency to assess short-term effectiveness of Alzheimer’s disease drugs based on the premise that during the first 3 months, drugs will be covered for free by the manufacturers. If the treatment goals are met after 3 months, only those with treatment benefits will be continued on the treatment for 2 years where drug costs are reimbursed by the AIFA .
Performance-linked reimbursement (PLR) scheme is a commonly utilized method of arrangement when there are multiple competing choices of drugs for the same indication. The idea of value-proposition or bang for the buck story around their new products needs to be elucidated, not only in terms of clinical benefit and safety, but also on secondary elements such as convenience that leads to increased medication adherence (i.e. convenient oral route of administration rather than subcutaneous injection for anti-diabetic drugs, oral route of administration preferred over intraurethral for the treatment for erectile dysfunction).
PLR schemes are likely to arise when a manufacturer has sufficient confidence in their product claims and that they are willing to accept a lower reimbursement level if it under-performs . For instance, the Deutsche Angesteilten-Krankenkasse or German Sickness Fund entered into an arrangement with Novartis on an immunosuppressant cyclosporine, mycophenolic acid, and everolimus for patients with kidney transplant to prevent autoimmune response. The manufacturer agreed to refund the cost of the drug if a patient loses his/her donor kidney . Without confidence in their product, manufacturers would not enter into such an agreement.
PLR schemes are also used as a mechanism for manufacturers to increase market share of their product. The German Sickness Fund entered into an agreement with a manufacturer, Novartis, for osteoporosis drug—zoledronic acid. Novartis will cover the drug costs of any patient who experiences a fracture within 1 year of being treated with zoledronic acid. In return, the German Sickness Fund agrees to shift the treatment of its patients to zoledronic acid while Novartis increases their product share in the osteoporosis market . However, this contractual agreement with German Sickness Fund was withdrawn due to challenges in measuring patient health outcomes.