Anyone looking at the healthcare system in the U.S. agrees that the dual goals of any reform have to be better outcomes at lower cost.  However these two factors, cost and quality, have not previously been linked — a situation that is almost unique to healthcare.  Imagine purchasing a new car or appliance only to learn that it doesn’t work as advertised and there’s nothing you can do about it.  In most realms of commerce, if a product fails to deliver what’s been promised, consumers are financially covered through refunds and warranties.  Yet consumers and other stakeholders have not been protected from ineffective medical care.

As pressure mounts from payers and consumers seeking value — better outcomes — for their healthcare spend, manufacturers also need to articulate a differentiated cost/benefit story.  The use of real world data as a way to establish a product’s value continues to gain traction as manufacturers explore alternatives to conventional pricing and reimbursement practices (e.g. rebates).  In this article, we’ll discuss strategies for developing effective risk sharing agreements (RSAs) with insurer networks (also known as risk-based contracting), the key considerations for manufacturers both prior to and throughout implementation, and the opportunities and risks associated with this particular pricing approach.