A quantitative analysis of risk-sharing agreements with patient support programs for improving medication adherence

Medication adherence is a challenge for patients, drugmakers, and payers. To promote adherence, some payers adopt a form of pay-for-success value-based risk-sharing agreements. Drugmakers reduce prices for meaningful improvement in adherence and share patient information and resources with payers; as a return, payers run patient support programs and put drugs on a tier with lower copays. We use a game-theoretic approach to investigate the optimal program effect and the optimal prices with and without improvement in adherence, measured by Proportion of Days Covered, under such an agreement. Since negotiation power impacts how prices are determined, we consider several pricing settings: the payer or the drugmaker sets both prices or sets one price simultaneously or sequentially. Although a discount for improved adherence tends to promote adherence, it may not always be achievable nor guarantees better adherence. The drugmaker with strong negotiation power can align its interest with social welfare but the payer may not. The payer with strong negotiation power can improve more adherence than the drugmaker. Balanced negotiation power contributes either the most or the least to adherence depending on contract form and decision sequence. Although cost-sharing by the drugmaker expects to increase program efforts, it may not be true. We find that the policymaker prefers different levels of cost-sharing under different pricing settings. The payer may have a first-mover advantage when setting the price without improved adherence; the drugmaker, however, does not have such an advantage.