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Evaluation of a pharmaceutical risk-sharing agreement when patients are screened for the probability of success.
- Source :
- Health Economics; Jan2018, Vol. 27 Issue 1, pe15-e25, 11p
- Publication Year :
- 2018
-
Abstract
- We analyze a game-theoretic model of a risk-sharing agreement between a payer and a pharmaceutical firm. The drug manufacturer chooses the price while the payer sets the rebate rate and decides which patients are eligible for treatment. The manufacturer provides the payer with a rebate for nonresponding patients. We generalize on the existing literature, by making both price and rebate rate decision variables, allowing the rebate rate to be different from 100%, and incorporating 2 types of administrative costs. We identify a threshold for the expected probability of response for classifying the drug as a mass-market or niche type and investigate the optimal solutions for both types. We also identify a threshold for the rebate rate at which the net benefits become equal for responding and nonresponding patients. Through numerical examples, we examine how various parameters impact the drug manufacturer's and the payer's optimal solution. [ABSTRACT FROM AUTHOR]
- Subjects :
- CONTRACTS & economics
INDUSTRIES & economics
BUSINESS & economics
COMPARATIVE studies
DECISION making
LABOR incentives
RESEARCH methodology
MEDICAL cooperation
PAY for performance
PROBABILITY theory
PUBLIC welfare
RESEARCH
RESEARCH funding
RISK management in business
EVALUATION research
STATISTICAL models
ECONOMICS
Subjects
Details
- Language :
- English
- ISSN :
- 10579230
- Volume :
- 27
- Issue :
- 1
- Database :
- Complementary Index
- Journal :
- Health Economics
- Publication Type :
- Academic Journal
- Accession number :
- 127876435
- Full Text :
- https://doi.org/10.1002/hec.3522