Money back guarantee? A cost–benefit framework of performance-based agreements (PBAs) for the reimbursement of pharmaceuticals

  • A. Carletto
  • A. Cicchetti
  • S. Coretti
  • V. Moramarco
  • M. Ruggeri
Regular Article


The aim of this paper is to provide an empirical framework based on a discrete-time Markov chain to assess the costs and benefits of Performance Based Agreements (PBAs) for the reimbursement of pharmaceuticals. We provide an empirical testing using a case study referring to a treatment recently approved for reimbursement in Italy. The implementation of this framework is challenging for the agencies dealing with pricing and reimbursement decisions given the uncertainty associated with the treatment effectiveness and safety. On the other hand, empirical evidence shows that the awareness of the expected costs associated with different reimbursement schemes is necessary to inform decision-makers.


Performance Based Agreements Pricing and Reimbursement Pharmaceutical policy Cost-benefit Analysis Markov models 


  1. Adamski, J., Godman, B., Ofierska-Sujkowska, G., Osińska, B., Herholz, H., Wendykowska, K., et al. (2010). Risk sharing arrangements for pharmaceuticals: Potential considerations and recommendations for European payers. BMC Health Services Research, 10, 153. Scholar
  2. Antonanzas, F., Juarez-Castello, C., & Rodriguez-Ibeas, R. (2011). Should health authorities offer risk-sharing contracts to pharmaceutical firms? A theoretical approach. Health Economics, Policy, and Law, 6(3), 391–403. Scholar
  3. Associazione Italiana di Economia Sanitaria, gruppo di lavoro coordinato da Giovanni Fattore. (2009). Proposta di linee guida per la valutazione economica degli interventi sanitari. Politiche sanitarie, 10(2), 91–99.Google Scholar
  4. Atella, V. (1999). Drug cost containment policies in Italy: Are they really effective in the long-run?-The case of minimum reference price. Health Policy, 50(3), 197–218.CrossRefGoogle Scholar
  5. Barros, P. P. (2011). The simple economics of risk-sharing agreements between the NHS and the pharmaceutical industry. Health Economics, 20(4), 461–470. Scholar
  6. Caro, J. J., Briggs, A. H., Sieber, U., & Kuntz, K. M. (2012). Modeling good research practices—overview: A report of the ISPOR-SMDM modeling good research practices task force-1. Value in Health, 15, 796–803.CrossRefGoogle Scholar
  7. Claxton, K. (2007). OFT, VBP: QED? Health Economics, 558, 545–558. Scholar
  8. Claxton, K., Briggs, A., Buxton, M. J., Culyer, A. J., McCabe, C. J., Walker, S., et al. (2008). Value based pricing for NHS drugs: An opportunity not to be missed? BMJ British Medical Journal, 336, 251–254.CrossRefGoogle Scholar
  9. Claxton, K., Cohen, J. T., & Neumann, P. J. (2005). When is evidence sufficient? Health Affairs (Project Hope), 24(1), 93–101. Scholar
  10. de Bono, J. S., Logothetis, C. J., Molina, A., Fizazi, K., North, S., Chu, L., et al. (2011). Abiraterone and increased survival in metastatic prostate cancer. New England Journal of Medicine, 364(21), 1995–2005. Scholar
  11. Espín, J., Rovira, J., & García, L. (2011). Experiences and impact of European risk-sharing schemes focusing on oncology medicines. EmiNet, Andalusian School of Public Health.Google Scholar
  12. Galizzi, M. M., Ghislandi, S., & Miraldo, M. (2011). Effects of reference pricing in pharmaceutical markets: A review. PharmacoEconomics, 29(1), 17–33. Scholar
  13. Garattini, L., & Casadei, G. (2011). Risk sharing agreements: What lessons from Italy? International Journal of Technology Assessment in Health Care, 27(2), 169–172. Scholar
  14. Garattini, L., & van de Vooren, K. (2011). Budget impact analysis in economic evaluation: A proposal for a clearer definition. European Journal of Health Economics, 12, 499. Scholar
  15. Garrison, L. P., Towse, A., Briggs, A., de Pouvourville, G., Grueger, J., Mohr, P. E., et al. (2013). Performance-based risk-sharing arrangements-good practices for design, implementation, and evaluation: Report of the ISPOR good practices for performance-based risk-sharing arrangements task force. Value in Health, 16(5), 703–719. Scholar
  16. Gavious, A., Greenberg, D., Hammerman, A., & Segev, E. (2014). Impact of a financial risk-sharing scheme on budget-impact estimations: A game-theoretic approach. The European Journal of Health Economics, 15(5), 553–561. Scholar
  17. Ghislandi, S., Krulichova, I., & Garattini, L. (2005). Pharmaceutical policy in Italy: Towards a structural change? Health Policy, 72(1), 53–63.CrossRefGoogle Scholar
  18. Hutton, J., Trueman, P., & Henshall, C. (2007). Coverage with evidence development: an examination of conceptual and policy issues. International Journal of Technology Assessment in Health Care, 23(4), 425–432. Scholar
  19. Jommi, C., Costa, E., Michelon, A., Pisacane, M., & Scroccaro, G. (2013). Multi-tier drugs assessment in a decentralised health care system. The Italian case-study. Health Policy, 112(3), 241–247.Google Scholar
  20. Jommi, C., & Minghetti, P. (2015). Pharmaceutical pricing policies in Italy. In Z.-U.-D. Babar (Ed.), Pharmaceutical prices in the 21st century (pp. 131–150). New York: Springer.Google Scholar
  21. Levaggi, R. (2014). Pricing schemes for new drugs: A welfare analysis. Social Science and Medicine, 102, 69–73. Scholar
  22. Lilico, A. (2003). Risk-sharing pricing models in the distribution of pharmaceuticals. Europe Economics Staff Working Paper (No. 1).Google Scholar
  23. Mahjoub, R., Odegaard, F., & Zaric, G. S. (2014). Health-based pharmaceutical pay-for-performance risk-sharing agreements. Journal of the Operational Research Society, 65(4), 588–604. Scholar
  24. McCabe, C. J., Stafinski, T., Edlin, R., & Menon, D. (2010). Access with evidence development schemes: A framework for description and evaluation. PharmacoEconomics, 28(2), 143–152. Scholar
  25. Menon, D., McCabe, C. J., Stafinski, T., & Edlin, R. (2010). Principles of design of access with evidence development approaches: A consensus statement from the Banff Summit. PharmacoEconomics, 28(2), 109–111. Scholar
  26. Mohr, P. E., & Tunis, S. R. (2010). Access with evidence development: The US experience. PharmacoEconomics, 28(2), 153–162. Scholar
  27. Neumann, P. J., Kamae, M. S., & Palmer, J. A. (2008). Medicare’s national coverage decisions for technologies, 1999-2007. Health Affairs, 27(6), 1620–1631. Scholar
  28. Paris, V., & Belloni, A. (2013). Value in pharmaceutical pricing. OECD Health Working Paper No. 63. Paris, France.
  29. Peiró, R. P., Ferrandiz, J. M., Sussex, J., Towse, A., & Economics, H. (2011). Literature review on patient access schemes, flexible pricing schemes and risk sharing agreements for medicines. In PPRI Conference, 2930 September 2011. Vienna, Austria.Google Scholar
  30. Russo, P., Mennini, F. S., Siviero, P. D., & Rasi, G. (2010). Time to market and patient access to new oncology products in Italy: A multistep pathway from European context to regional health care providers. Annals of Oncology, 21(10), 2081–2087. Scholar
  31. Stafinski, T., Mccabe, C. J., & Menon, D. (2010). Funding the unfundable. PharmacoEconomics, 28(2), 113–142.CrossRefGoogle Scholar
  32. Trueman, P., Grainger, D. L., & Downs, K. E. (2010). Coverage with evidence development: Applications and issues. International Journal of Technology Assessment in Health Care, 26(1), 79–85. Scholar
  33. UK Department of Health. Patient access schemes and flexible pricing: statement of outcomes from the review of the pricing flexibility measures under Chapter 6 of the 2009 PPRS. Available from: Accessed August 28, 2014.
  34. Walker, S., Sculpher, M. J., Claxton, K., & Palmer, S. (2012). Coverage with evidence development, only in research, risk sharing, or patient access scheme? A framework for coverage decisions. Value in Health, 15(3), 570–579. Scholar
  35. Williamson, S. (2010). Patient access schemes for high-cost cancer medicines. The lancet Oncology, 11(2), 111–112. Scholar
  36. Wonder, M., Backhouse, M. E., & Sullivan, S. D. (2012). Australian managed entry scheme: a new manageable process for the reimbursement of new medicines? Value in Health: The Journal of the International Society for Pharmacoeconomics and Outcomes Research, 15(3), 586–590. Scholar
  37. Zaric, G. S., & O’brien, B. J. (2005). Analysis of a pharmaceutical risk sharing agreement based on the purchaser’s total budget. Health Economics, 14(8), 793–803. Scholar
  38. Zhang, H., Zaric, G. S., & Huang, T. (2011). Optimal design of a pharmaceutical price-volume agreement under asymmetric information about expected market size. Production and Operations Management, 20(3), 334–346. Scholar

Copyright information

© Eurasia Business and Economics Society 2018

Authors and Affiliations

  • A. Carletto
    • 1
  • A. Cicchetti
    • 2
  • S. Coretti
    • 2
  • V. Moramarco
    • 3
  • M. Ruggeri
    • 3
  1. 1.AIFA, Agenzia Italiana del FarmacoRomeItaly
  2. 2.ALTEMS – Post Graduate School of Health Economics and ManagementCatholic University of the Sacred HeartRomeItaly
  3. 3.Institute of Economic PolicyCatholic University of the Sacred HeartMilanItaly

Personalised recommendations