Assessment of the Price-Volume Agreement Program in South Korea

Pricing and Reimbursement Pathways of New Orphan Drugs in South Korea: A Longitudinal Comparison

This study aimed to analyze four current pathways affecting the listing and post-listing prices of new orphan drugs (ODs) in South Korea. These mechanisms were: (1) essential OD, (2) pharmacoeconomic evaluation (PE) waiver OD, (3) weighted average price OD, and (4) PE OD. We analyzed the ratio of the listing price of 48 new ODs to the average adjusted price (AAP) of seven advanced countries and examined the change in the post-listing price. Descriptive statistics were used to analyze the listing and post-listing price changes. The mean and median ratios of the listing price of total new OD to AAP were calculated to be 69.4% and 65.4%, respectively. Essential OD showed the highest mean (93.8%) and median (80.8%) ratios. The mean cumulative price discount rate of the new OD was 7.2% in the third year and 5.7% in the fifth year. The rarity of diseases impacts the listing price of OD, but the political effects of the benefits of OD on the post-listing price of these drugs could not be verified. Further research should be conducted to develop measures that facilitate the practical sharing of budget risks and increase patient access to new ODs.

How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and Unintended Consequences of Six Common Risk Sharing Agreements

Background. Pharmaceutical risk sharing agreements (RSAs) are commonly used to manage uncertainties in costs and/or clinical benefits when new drugs are added to a formulary. However, existing mathematical models of RSAs ignore the impact of RSAs on clinical and financial risk. Methods. We develop a model in which the number of patients, total drug consumption per patient, and incremental health benefits per patient are uncertain at the time of the introduction of a new drug. We use the model to evaluate the impact of six common RSAs on total drug costs and total net monetary benefit (NMB). Results. We show that, relative to not having an RSA in place, each RSA reduces expected total drug costs and increases expected total NMB. Each RSA also improves two measures of risk by reducing the probability that total drug costs exceed any threshold and reducing the probability of obtaining negative NMB. However, the effects on variance in both NMB and total drug costs are mixed. In some cases, relative to not having an RSA in place, implementing an RSA can increase variability in total drug costs or total NMB. We also show that, for some RSAs, when their parameters are adjusted so that they have the same impact on expected total drug cost, they can be rank-ordered in terms of their impact on variance in drug costs. Conclusions. Although all RSAs reduce expected total drug costs and increase expected total NMB, some RSAs may actually have the undesirable effect of increasing risk. Payers and formulary managers should be aware of these mean-variance tradeoffs and the potentially unintended results of RSAs when designing and negotiating RSAs.

Price-Cutting Trends in New Drugs after Listing in South Korea: The Effect of the Reimbursement Review Pathway on Price Reduction

This study aims to analyze the trends of post-listing price changes for new drugs listed from 2007, when the health technology assessment (HTA) was introduced in South Korea, until 2017. We analyzed 135 products that have undergone price cuts. These products were analyzed by their respective review pathways, namely, pharmaco-economic study (PE), weighted average price (WAP), and the without a cost-effectiveness (CE) pathway. Prices were discounted faster in PE than in WAP (p = 0.002 in a comparison between PE and WAP). In addition, the median discount rate of the first price cut was 5.0% (range: 0.1–20.0) for PE, 3.0% (range: <0.1–30.0) for WAP, and 5.0% (range: 0.6–10.9) without a CE pathway. The median cumulative discount rate of PE and WAP showed that the PE pathway products’ discount rates were higher: 10.4% for PE and 6.0% for WAP (p = 0.025 for comparison between PE and WAP). It is necessary to discuss the practical effects of the price-cutting system from a myriad of perspectives, including insurance finance, the value of new drugs, and the accessibility of new drugs to patients.

Factors Affecting Usage Levels and Trends of Innovative Oncology Drugs Upon and After Reimbursement Under Taiwan National Health Insurance: Interrupted Time Series Analysis

Healthcare expenditure on pharmaceuticals, especially innovative oncology drugs, is escalating. Current knowledge on this topic is largely limited to studies conducted upon reimbursement of new drugs. We investigated how endogenous factors (e.g., changed reimbursement criteria, such as an expanded indication) and exogenous factors (e.g., competing drugs) affect the level and trends of innovative oncology drug utilization in the Taiwan National Health Insurance (NHI) system, both upon reimbursement and afterward. This retrospective longitudinal study analyzed monthly data (January 2009 to December 2014) from the NHI Research Database on the consumption (prescribing volume) of 15 innovative oncology drugs reimbursed by the NHI between 2007 and 2013. Effects of endogenous and exogenous factors on drug utilization were evaluated using interrupted time series analyses. In segmented regression analyses, changed drug prescribing volume after the indication expanded (endogenous factor) was statistically significant; however, drug volume did not change significantly after prescription restrictions changed. First‐competitors and non‐first‐competitors (exogenous factors) were significantly associated with drug prescription levels or utilization rates. Taking sorafenib as an example, the post‐reimbursement drug prescribing volume did not change significantly after its therapy line changed (endogenous factor), whereas the reimbursement of first‐competitors (exogenous factor) was significantly associated with a lower level or usage rate of sorafenib. Utilization of innovative oncology drugs in Taiwan changed dramatically after NHI reimbursement, driven largely by expanded indications and new competitors. Drug utilization evaluations should investigate both endogenous and exogenous factors.

The Use of Risk-Sharing Contracts in Healthcare: Theoretical and Empirical Assessments

OBJECTIVE

The aim of this review is to provide a summary of the literature on risk-sharing agreements, including conceptual, theoretical and empirical (number of agreements and their achievements) perspectives, and stakeholders'  perceptions.

METHODS

We conducted a systematic literature search in MEDLINE from 2000 to April 2019, following PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) methodology, and completed it with a manual search of other publications (mainly grey literature). The search was restricted to publications with English abstracts; the initial identification of articles was restricted to the title, abstract and key words fields. The geographical scope was not restricted.

RESULTS

Over 20 studies proposed different taxonomies of risk-sharing contracts, which can be summarised as financial and paying-for-performance agreements. Theoretical studies modelling the incentives to implement risk-sharing agreements are scarce; they addressed different types of contracts and regulatory contexts, characterizing the drug prices and the optimal strategies of the involved agents. Empirical studies describing specific agreements are abundant and referred to different geographical contexts; however, few articles showed the economic results and assessed the value of such contracts. Stakeholders' perceptions of risk-sharing contracting were favourable, but little is known about the economic and clinical advantages of specific agreements. Whether risk-sharing contracts have yielded the desired results for healthcare systems remains uncertain.

CONCLUSION

Risk-sharing contracts are increasingly used, although the lack of transparency and aggregated registries makes it difficult to learn from these experiences and assess their impact on healthcare systems.

Analyzing Upward Deviation of Actual vs Predicted Drug Sales in Japan for a Reasonable Drug-Pricing Policy

BACKGROUND

Predictions of drug sales play an important role in setting drug prices in Japan, where drug prices are highly regulated. One of 2 primary Japanese drug-pricing methodologies-the cost calculation method- refers extensively to the prediction of drug sales in establishing drug prices. Deviations from predicted sales can induce disproportionate drug prices and unexpected pharmaceutical expenditures. This study aimed to estimate the upward deviation of actual sales from predicted sales and to explore the predictors of such upward deviation.

METHODS

Estimates of upward deviation in 2015 were produced for new molecular entities (NMEs) approved in 2006-2015. To identify the predictors associated with upward deviation through binary logistic regression analyses, sales within 3 years of launch and in the predicted year in which peak sales would be reached were used.

RESULTS

Estimated upward deviation was more than 1220 billion yen in 2015 for the targeted drugs. Drugs priced by the cost calculation method or by obtaining additional indications were significantly more likely to show an upward deviation from predicted peak sales.

CONCLUSION

There is substantial upward deviation between actual and predicted drug sales in Japan. So long as drug sales predictions are used in drug price calculations, a flexible repricing system is needed to buffer unexpected pharmaceutical expenditures.

Government pharmaceutical pricing strategies in the Asia-Pacific region: an overview

Background and objectives: Governments in Asia Pacific (APAC) are increasingly using pharmaceutical pricing strategies to contain rising healthcare costs. The objective of this narrative review is to discuss formal pricing strategies for reimbursed prescription medication in APAC, supported by relevant examples of implementation differences across countries. In the discussion section, we examine key advantages and disadvantages of each strategy. Methods: A narrative review of the peer-reviewed and grey literature was undertaken to retrieve information, including strategy definitions, practising countries, country-specific implementation considerations, and merits and demerits of each strategy. Results: Seven strategies (Internal Reference Pricing, External Reference Pricing, Special Pricing Agreements, Pharmacoeconomic Evaluation, Cost plus pricing, Price Maintenance Premium, and Tendering and negotiations) were identified as most commonly practised in APAC through the review process. Most countries use multiple strategies that differ in how they are implemented. Conclusion: APAC countries use multiple strategies simultaneously with varying implementation methods, including different formulae and sub-types of medication that a strategy applies to, whether the strategy is a mandate or guideline, and the extent of negotiations and transparency. Strategies are instituted partly with the aim of cost containment, and may also promote price stability, innovation, and increased access in the short and longer term. Abbreviations: APAC - Asia Pacific; WHO - World Health Organisation; IRP - Internal Reference Pricing; ERP - External Reference Pricing; SPA - Special Pricing Agreement; MES - Managed Entry Scheme; PVA - Price-Volume Agreement; RSA - Risk Sharing Agreement; NHIS - National Health Insurance System; PE - Pharmacoeconomic Evaluation; CEA - Cost-Effectiveness Analysis; QALY - Quality-adjusted Life Year; BIA - Budget Impact Analysis; PMP - Price Maintenance Premium; R&D - Research & Development.