Pharmaceutical policy makers are increasingly negotiating reimbursement contracts that include confidential price terms that may be affected by drug utilization volumes, patterns, or outcomes. Though such contracts may offer a variety of benefits, including the ability to tie payment to the actual performance of a product, they may also create potential policy challenges. Through telephone interviews about this type of contract, we studied the views of officials in nine of ten Canadian provinces. Use of reimbursement contracts involving confidential discounts is new in Canada and ideas about power and equity emerged as cross-cutting themes in our interviews. Though confidential rebates can lower prices and thereby increase coverage of new medicines, several policy makers felt they had little power in the decision to negotiate rebates. Study participants explained that the recent rise in the use of rebates had been driven by manufacturers' pricing tactics and precedent set by other jurisdictions. Several policy makers expressed concerns that confidential rebates could result in inter-jurisdictional inequities in drug pricing and coverage. Policy makers also noted un-insured and under-insured patients must pay inflated "list prices" even if rebates are negotiated by drug plans. The establishment of policies for disciplined negotiations, inter-jurisdictional cooperation, and provision of drug coverage for all citizens are potential solutions to the challenges created by this new pharmaceutical pricing paradigm.

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Reimbursement contracts, in which health insurers receive rebates from drug manufacturers instead of paying the transparent list price, are becoming increasingly common worldwide. Through interviews with policy makers in nine high-income countries, we describe the use of these contracts around the globe and identify related policy challenges and best practices. Of the nine countries surveyed, the majority routinely use confidential reimbursement contracts. This alternative to drug coverage at list prices offers benefits but is not without challenges. Payers face increased administrative costs, difficulties enforcing contracts, and reduced information about prices paid by others. Among the best practices identified, policy makers recommend establishing clear and consistent processes for negotiating contracts with relatively simple rebate structures and transparency to the public about the existence, purpose, and type of reimbursement contracts in place. Policy makers should also work to address undesirable price disparities within their countries and internationally, which may occur as a result of this new pricing paradigm.

Background: Product listing agreements (PLAs) between drug manufacturers and drug plans are increasingly common worldwide. Use of PLAs by Canadian provinces has not previously been documented. Methods: We collected data from all provinces on funding and PLA use for 25 drugs that were reviewed by the Common Drug Review (CDR) in 2010 or 2011 and funded by at least one province as of May 2012. We measured correlations between coverage and PLA use, and CDR recommendations and PLA use. Results: The number of drugs from our sample funded by provinces ranged from three in Prince Edward Island to 21 in Ontario. PLA use ranged from zero in Quebec, Prince Edward Island, and Newfoundland and Labrador to 20 in Ontario. The correlation between drugs funded and PLAs used by each province was statistically significant (r=0.57, p=0.04); excluding Ontario, however, the correlation was not significant (r=0.10, p=0.40). There was a stronger correlation between the number of provinces funding a drug and the number using PLAs among the subset of drugs with negative CDR recommendations (r=0.87, p<0.01) versus those with positive recommendations (r=0.52, p=0.03). Of the 12 drugs sampled with a negative CDR recommendation, 10 were funded with a PLA in at least one province. Interpretation: There is wide interprovincial variation in PLA use and evidence that PLAs may be used to fund drugs that are not otherwise cost-effective. If global pricing strategies are making PLAs necessary, Canadian governments should collaborate to improve the equity, transparency and effectiveness of PLAs across provinces.

BackgroundConfidential product listing agreements (PLAs) negotiated between pharmaceutical manufacturers and individual health care payers may contribute to unwanted price disparities, high administrative costs, and unequal bargaining power within and across jurisdictions. In the context of Canada’s decentralized health system, we aimed to document provincial policy makers’ perceptions about collaborative PLA negotiations.MethodsWe conducted semi-structured telephone interviews with a senior policy maker from nine of the ten Canadian provinces. We conducted a thematic analysis of interview transcripts to identify benefits, drawbacks, and barriers to routine collaboration on PLA negotiations.ResultsCanadian policy makers expressed support for joint negotiations of PLAs in principle, citing benefits of increased bargaining power and reduced inter-jurisdictional inequities in drug prices and formulary listings. However, established policy institutions and the politics of individual jurisdictional authority are formidable barriers to routine PLA collaboration. Achieving commitment to a joint process may be difficult to sustain among heterogeneous and autonomous partners.ConclusionsThough collaboration on PLA negotiation is an extension of collaboration on health technology assessment, it is a very significant next step that requires harmonization of the outcomes of decision-making processes. Views of policy makers in Canada suggest that sustaining routine collaborations on PLA negotiations may be difficult unless participating jurisdictions have similar policy institutions, capacities to implement coverage decisions, and local political priorities.