Risk Sharing Agreement

A risk sharing agreement entered between an insurer, the National Health Insurance Corporation (NHIC), and a pharmaceutical company under which the price and reimbursement of a new drug are linked to the cost effectiveness and clinical effectiveness after the new drug is listed on national health insurance.  The risk sharing agreement scheme, a performance based model, is generally used for new drugs that are likely to have therapeutic effects but do not have sufficient data to prove them.

Background

Conventionally the price and reimbursement of drugs have been determined based on the expected effectiveness of the drugs evaluated from the outcomes achieved in clinical trials.  Recently, however, the U.S. and European countries introduced risk sharing agreement schemes under which price and reimbursement are related to the clinical effectiveness of the drugs after they are listed on national health insurance.

Over the past years, an increasing number of countries have shown their interest in the risk sharing agreement scheme to diminish the risk of high expenditure of new drugs while maintaining access to innovative therapies for patients.  The Korean government introduced the risk sharing agreement scheme at the end of 2012.

Practice in Korea

No risk sharing agreement scheme case has yet to be enforced.  Recently, however, Evoltra® (Clofarabine) of Genzyme Korea (Sanofi-Aventis), a drug usually given to treat children with acute lymphoblastic leukemia, was selected as a candidate for the risk sharing agreement scheme, and Genzyme Korea will reportedly commence negotiations for a risk sharing agreement with the Ministry of Health and Welfare (MOHW), the NHIC, and the Health Insurance Review and Assessment Service (HIRA) in mid-April, 2013.

Evoltra® obtained marketing approval from the Ministry of Food and Drug Safety (formerly the Korea Food & Drug Administration) in April 2011, but has not been listed on the national health insurance for reimbursement because economic analysis could not be conducted due to insufficient clinical data.  However, in March 2013, the Assessment Committee at the HIRA approved Evoltra® as a candidate for the risk sharing agreement scheme.

MOHW reportedly plans to introduce the concept of a “semi-essential drug” which satisfies at least two of the four requirements for “essential drugs.1 A “semi-essential drug” will be eligible for the risk sharing agreement scheme.

Prospects and Concerns

While the risk sharing agreement scheme may be an alternative to the conventional scheme under which making decisions on the price and reimbursement was not easy, there are also concerns with the effectiveness of the risk sharing agreement scheme due to a number of interested parties involved in implementation of the scheme and the complicated process.

The Evoltra® case will be the first case for the implementation of the risk sharing agreement scheme in Korea as well as other countries.  The Evolta® case draws attention, as it may affect the future risk sharing agreement schemes and their directions.