Value of Information Theory and Risk Sharing: Local and Global Perspectives

1. Value of
Information and Risk Sharing: Local and
Global Perspectives
Adrian Towse
Office of Health Economics
13th July 2009

2. Agenda
• What is risk sharing in this context?
• Challenges to using local evidence to support risk
sharing
• The case for a global approach to evidence collection
using triangulation
• What does risk sharing add in this context? – an
example
• Conclusions

3. What is risk sharing in this context?
• We re-enter the AN, AT, DT world
– Adopt with No trial (AN)
– Adopt and Trial (AT)
– Delay adoption and Trial (DT)
• Risk sharing is a variant of AT whereby evidence is
linked by a pre-agreed contract to adjust payments
prospectively
– It depends on continuing collection of information on Incremental
Net Benefits (INB) from routine practice and / or trial settings

4. Value of Information
• AN based on an estimate of positive INB brings:
– Benefits of patient access to treatment (and company revenues
– return on R&D)
– Benefits of not incurring costs of evidence collection
– Risk of error, use of an inefficient technology (underlying INB is
really –ve)
• DT is the opposite – delays to access, costs of evidence
collection but reduced risk of error
• AT avoids delays of DT, but may lead to costs associated
with reversing decisions
• If ENG from further research reducing uncertainty is +ve
then AT or DT preferred to AN

5. Challenges to using local evidence to support risk
sharing
• If use AT then:
– Can collect information on INB from practice but face problem
of recognising / adjusting for selection bias
– Local Trials with adoption is infeasible/ unethical in a universal
coverage environment where patients prefer new treatment
and have access outside trial
• Risk sharing has the same challenges – it is a variant
of AT.
• However, risk sharing offers benefits in a local setting
over and above AT for any given quality of evidence

6. What is risk sharing in this context? Part 2
• From a payer perspective:
– Full insurance: prospective price adjustment to maintain
constant INB with available evidence, and for costs of reversal
insurance where INB cannot be maintained by price cuts and
payer stops using the technology
– Prospective pricing alone
– Risk sharing with payer getting part recompense for losses but
manufacturer getting only partial gain from any upside
• Benefits of risk sharing over and above AT in a local
setting
– Can provide full insurance or variants of it
• However, there is a (local) quality of evidence problem

7. The case for a global approach to evidence
collection using triangulation
• Evidence of treatment effect can be obtained from
global RCTs – issue of translatability of evidence:
choice of comparator, patient population
• Local epidemiological evidence of baseline risk, patient
mix, and observational data from adoption of outcomes
for the treatment arm – issue of type of study used
• Need for information on longer term outcomes –
beyond a short term RCT – issue of the time period
covered in evidence collection
• Potential attractions of combining global RCT with local
observational data on events, effects, and resource use
in practice

8. What does risk sharing add in this context?
• Typical candidates for risk sharing
– Case A: Positive INB but weak efficacy evidence, AT
is preferred within jurisdiction
• Global trial can overcome local infeasibility issues
– Case B: Positive INB with good efficacy evidence but
high uncertainty about longer term outcomes, AT is
preferred within jurisdiction
• Global trial for a longer period plus local observational data
offers superior outcome
• From a payer (societal) perspective, global trials offer
feasible AT and robust risk sharing and therefore have
clear advantages from reducing opportunity costs of
delay in comparison with DT whilst also enabling higher
ENG from trials across jurisdictions

9. What does risk sharing add in this context? – the
CADET-Hp example in Canada
• AT infeasible locally, from payer perspective AN in
equipoise with DT at threshold price of $105 per patient
– INB of $38 per patient, prior evidence from trial of 288 patients
• Manufacturer opts for DT, trials with 286 patients which it
expects to lead to a post trial price of $140 per patient
– Gain in revenues of $6m
• AT option at $105 during trial has advantages to
– Payer, gets use at an INB of $38 per patient
– Manufacturer, gets revenue of $105 per patient while trialling
• Risk share additionally enables:
– Costs of reversing to be insured against
– Prospective price to reflect cumulative evidence – mean
estimate and uncertainty of INB

10. The example – local advantages of a global trial
• “Equipoise” for payer of global AT and local AN and DT
at $105 per patient
– Locally opportunity costs of delayed access to treatment ($5.6
million) are equal to EVSI ($5.6million)
– AT is not feasible locally but is globally – need to match local
threshold price to prevent an incentive to stay outside global trial
• Global approach – advantages of AT to local jurisdiction:
– Allows trial to take place outside of local jurisdiction,
– For manufacturer and payer avoids opportunity costs of delay
that would occur if trial undertaken with DT locally
– Prospectively price will reflect the additional trial evidence

11. The example – local advantages of global trial
• Locally, a global trial with AT at $105 will be preferred to
global DT provided EVSI positive
– From a manufacturer perspective an optimal trial needs to have
appropriate coverage of jurisdictions with translatable evidence
and mitigate against costs of reversal, reducing uncertainty with
risk sharing
– From a payer perspective translatable evidence is also required
and confidence from mitigating against costs of reversal with risk
sharing
• Hence with translatable evidence and risk sharing the
incentives of manufacturers and payers generally align
for optimal global trial over locally optimal solution

12. Global advantages of global trial
• As with optimal global decision maker instigated trials
(Eckermann and Willan 2009), to ensure:
– all jurisdictions gain relative to locally optimal solution and
– feasibility of optimal global trial design
requires compensation for DT and confidence in AT
– Minimum level of insurance across jurisdictions with AT against
cost of reversal to ensure confidence and
– Potentially higher levels of insurance for equitable gains across
jurisdictions as necessary
– Similarly price or other forms of direct compensation may be
required to ensure DT in jurisdictions where appropriate for
translation coverage

13. Conclusions
• Risk sharing is often not feasible within jurisdiction
– It is a variant of AT, and AT is usually not feasible, let alone an optimal
strategy locally
• But risk sharing with a global trial and AT is feasible and robust
– preferred to DT where costs of reversal are low and translatability of
evidence high
– Both manufacturers and payers gain from avoiding opportunity costs of
delay while further evidence is collected
• Eckermann and Willan (2009) have shown that a payer (decision
maker) global approach to trial design has higher ENG than any
collection of local ones
• Here the same finding occurs for manufacturer trials, with alignment
of incentives for coverage in translation across jurisdictions and
confidence in AT with risk sharing