Recession and consequent cuts in public pharmaceutical expenditure in Europe have slowed down the access to market of pharmaceutical innovations in the last few years. As a solution, public health authorities and pharmaceutical companies have searched for alternative funding formulas, in order to share the risks and uncertainties arising from public coverage of new medicinal products, whose clinical effectiveness and budgetary impact are still unknown.

Within this context, "risk-sharing agreements""performance-based health outcomes reimbursement schemes" , "market-share agreements"  or, more recently and in a more comprehensive way, so-called "Managed Entry Agreements" ("MEAs") , are increasingly used. This latter concept comprises not only "cost-sharing agreements" but also "risk-sharing agreements".

Cost-sharing agreements are those in which the payer and pharmaceutical company share the financial costs of introducing the innovative medicinal product, including Price Volume Agreements (PVAs), budget caps, and so on. Under risk-sharing agreements, the public payer and the pharmaceutical company share the risks derived from the clinical outcomes in patients treated with the innovative medicinal product, including "outcome guarantees", "money-back guarantees" or "payment by results", and "conditional treatment continuation"where treatment financing only continues for patients in which, for example, certain levels of treatment effectiveness are achieved.

Regulation of MEAs

Currently, no unified regulation on MEAs exists nor is such a regulation anticipated at the European level. On the contrary, Article 1.2 (a) of the European Parliament Legislative Resolution of 6 February 2013 on the proposal for a directive of the European Parliament and of the Council relating to the transparency of measures regulating the prices of medicinal products for human use and their inclusion in the scope of public health insurance systems (COM(2012)0084 - C7-0056/2012 - 2012/0035(COD))  (the "New Transparency Directive") expressly excludes MEAs from its scope. This exclusion is based on the difficulty for parties to negotiate the different elements of this type of agreement and to adapt them to fit Members States' rigid legal frameworks in this area. Such circumstances often cause delays in defining the terms and conditions of MEAs, causing mismatches with respect to the temporal requirements set forth by the stiff price and finance procedures.

The European pharmaceutical industry, headed by the European Federation of Pharmaceutical Industries and Associations (EFPIA), also seems to encourage such flexibility given its reluctance to harmonise MEA regulation through the New Transparency Directive.

MEAs therefore require a more flexible legal framework that can be adjusted to the particularities of each national legal system, which

  • is governed by the parties' voluntary participation,
  • allows the parties to negotiate such agreements within the time they need in order to achieve a successful agreement and
  • authorises them to monitor the progress of achieving the MEAs' objectives.

European experiences

Since 1961, in the UK the financing of medicinal products has been associated with cost-sharing schemes, not through individual agreements between payer and pharmaceutical companies, but through the agreements between the British government and the Association of the British Pharmaceutical Industry (ABPI) within the given regulation program of the Pharmaceutical Price Regulation Scheme or PPRS.

Through these agreements, certain profit rates for pharmaceutical companies were established and, once these rates were exceeded, the companies had to reimburse or provide price reductions to the British National Health Service (NHS). These agreements were only applicable to pharmaceutical companies that voluntarily adhere to the PPRS.

In 1990, also within the framework of the PPRS, Patient Access Schemes (PASs) were introduced. These types of agreements were entered into with each company separately to provide access to the financing system for those medicinal products not financially supported by NICE (the advisory body of the NHS) due to insufficient clinical evidence of their cost-effectiveness. Initially, PASs took the form of risk-sharing agreements (linked to clinical results), but the difficulty in managing these agreements led the parties to agree on PASs based on cost-sharing models and later on hybrid models (used for the first time in 2009 to introduce the medicinal product pazopanib (Votrient®) for the treatment of renal cell carcinoma).

Risk-sharing agreements were first used in UK in 2003 to introduce four medicinal products for the long-term treatment of multiple sclerosis, marketed by the pharmaceutical companies, Biogen, Schering, Teva/Aventis and Serono. However, from an economic point of view, this first experience was a failure.

Nonetheless in 2007 the NHS returned to risk-sharing models and agreed with Johnson&Johnson to introduce Velcade® (bortezomib) to treat multiple myeloma. This time around, the result was positive and such agreements were used again in 2008 for the introduction of ten medicinal products (including, among others, Merck's product Erbitux® (cetuximab) for metastatic colon cancer).

Italy is one of the most active countries in the use of cost-sharing and risk-sharing agreements. By 2013 the Italian Medicines Agency (Agenzia Italiana del Fármaco, or AIFA) had already adopted nearly 100 cost-sharing agreements. With regard to risk-sharing agreements, in 2007 Italy adopted such financial schemes in order to introduce various drugs for the treatment of Alzheimer's disease and to introduce Pfizer's product Sutent® (sunitinib) for the treatment of kidney cancer. By early 2013 AIFA was already managing 26 agreements based on risk-sharing schemes.

Legal challenges

In addition to specific problems in managing MEAs and monitoring compliance (such as problems arising from the uncertainty about the clinical efficacy of the medicinal product to be financed, the excessive administrative management costs and litigation ), from a legal standpoint, these agreements also raise issues regarding their confidentiality treatment and certain issues from a Competition law perspective.

As already stated, MEAs are excluded from the scope of the New Transparency Directive. However, Article 1.2 (b) of the proposed Directive states that "In accordance with Union and national law regarding business confidentiality, basic information regarding medicinal products included in contractual agreements or public procurement procedures, such as the name of the product and the name of the marketing authorisation holder, shall be made publicly available once agreements or procedures are concluded". Among the information to be made public, the price is not included. Therefore, this issue is subject to national rules on confidentiality.

From the perspective of Competition law, problems may arise if payers are tempted to enter into global agreements with several pharmaceutical companies in order to allow certain innovative medicinal products concerning the same disorder to have access to the market. Clearly, these global agreements may be considered agreements falling within the scope of Article 101 TFEU on collusion.

In any event, although we have highlighted that some regulation of MEAs may be needed to clarify the existing legal uncertainties (regulation that, in any case, should respect the flexibility needed to successfully execute MEAs), the reality is that such agreements have allowed innovative medicines for the treatment of certain illnesses to reach patients when regular market access systems did not foresee any channel for their access (as it has been the case for the treatment of Hepatitis C in Spain).