Managed Entry Agreement

Managed Entry Agreement for New Medicines and Health Technologies

A managed entry agreement is a contract in which a payer agrees to fund a new medicine or other health technology only on terms that limit its exposure to a high price, an uncertain budget impact or uncertain clinical performance, and the manufacturer accepts those terms in return for coverage. The terms may be purely financial or may tie payment or continued coverage to outcomes observed in patients. Such agreements matter in health technology assessment because the price that enters a cost-effectiveness analysis, and the decision that follows, are often set by an agreement and not by the list price. An OECD review by Wenzl and Chapman found that by 2019 they were being used, or had been used, in at least 28 of the 41 countries that belong to the OECD or the European Union.

Why payers and manufacturers accept conditional entry

The OECD review traces the motive to a difference between firm and payer in their views of a technology's likely effect on health and budgets, or in their willingness to bear the uncertainty around it. An agreement lets the firm sell when the payer will not pay the full asking price or take on the risks of unconditional coverage. For the payer, the review describes the gain as a smaller penalty for a poor coverage decision, whether that means funding a treatment later shown to be ineffective or refusing one later shown to be cost effective.

Walker and colleagues distinguished two sources of health value, the technology itself and the reduction of decision uncertainty, and set both against the costs of reversing a decision. The ISPOR task force led by Garrison judged an agreement that collects evidence by whether the cost of the extra data is justified by the better resource allocation decisions it allows, a value of information test applied to the agreement itself.

Financial and performance-based designs

The HTAi Policy Forum report by Klemp and colleagues identified three forms of agreement, which manage budget impact, uncertainty about clinical or cost-effectiveness, or utilisation. The OECD taxonomy, built on earlier classifications including that of Carlson and colleagues, first separates financial agreements, which are not linked to treatment performance and need no analysis of health outcome data, from performance-based agreements, which make coverage, payments to firms or rebates from firms depend on collecting data or on the outcomes achieved. Each type is then split by whether its trigger is defined for an individual patient or for a population.

Carlson and colleagues, reviewing schemes introduced between July 1998 and October 2009, found 34 coverage with evidence development schemes, 10 conditional treatment continuation schemes and 14 performance-linked reimbursement schemes, mostly in Europe and Australia. The OECD review found that agreements are now predominantly financial. In 11 of 12 interviewed countries performance-based agreements aimed at cost-effectiveness and budget control, and patient-level payment by results was the most common performance-based design, used in eight countries. Ferrario and Kanavos found that England mainly used discounts and free doses, while the Netherlands and Sweden relied more on evidence development.

How an agreement changes the inputs to an economic evaluation

Most agreements change the effective price, and a performance-based one ties that price to the technology's performance. Where payment is due only for patients who respond, the expected incremental cost per patient treated is as follows.

$$\Delta C = p_R P + c_O + a$$

where $\Delta C$ is the expected incremental cost per patient treated, $p_R$ is the proportion of patients who meet the agreed response criterion, $P$ is the price of a full course, $c_O$ is other incremental cost such as administration and monitoring, and $a$ is the cost per patient of assessing response, recording data and processing refunds. Under a simple discount the drug term is $(1 - d) P$, where $d$ is the discount as a proportion of the list price, and there is no response-linked term.

$$\Delta E = p_R q_R + (1 - p_R) q_N$$

where $\Delta E$ is the expected QALY gain per patient treated, $q_R$ is the gain in responders and $q_N$ is the gain in non-responders. The ICER is $\Delta C / \Delta E$, so a response-linked price moves the numerator in the same direction as the denominator.

Worked example comparing a discount with payment by results

All numbers here are illustrative. A new medicine costs GBP 30,000 per course at list price, with GBP 2,000 of other incremental costs per patient. Trial data suggest that 60% of patients respond, gaining 0.9 QALYs each, while non-responders gain 0.1 QALYs. The manufacturer offers either a confidential discount of 40% or a full refund for every patient who does not respond, two offers with the same expected drug spend. Running the response scheme costs an assumed GBP 600 per patient.

1. Expected health gain. At the expected response rate, $\Delta E$ = 0.6 × 0.9 + 0.4 × 0.1 = 0.58 QALYs per patient.

2. Discount offer. The net drug cost is 30,000 × 0.6 = GBP 18,000, so $\Delta C$ = 18,000 + 2,000 = GBP 20,000 and the ICER is 20,000 / 0.58 = GBP 34,483 per QALY.

3. Payment by results offer. The expected drug cost is 0.6 × 30,000 = GBP 18,000, so $\Delta C$ = 18,000 + 2,000 + 600 = GBP 20,600 and the ICER is 20,600 / 0.58 = GBP 35,517 per QALY.

4. Response turns out lower. If 45% respond in practice, $\Delta E$ = 0.45 × 0.9 + 0.55 × 0.1 = 0.46 QALYs. The discount leaves $\Delta C$ at GBP 20,000, so the ICER rises to 20,000 / 0.46 = GBP 43,478. Under payment by results $\Delta C$ = 0.45 × 30,000 + 2,600 = GBP 16,100 and the ICER is 16,100 / 0.46 = GBP 35,000.

5. Response turns out higher. If 75% respond, $\Delta E$ = 0.75 × 0.9 + 0.25 × 0.1 = 0.70 QALYs. The discount gives 20,000 / 0.70 = GBP 28,571 per QALY, while payment by results gives $\Delta C$ = 0.75 × 30,000 + 2,600 = GBP 25,100 and an ICER of 25,100 / 0.70 = GBP 35,857.

6. Interpretation. Under payment by results the ICER stays between GBP 35,000 and GBP 35,857 across the three response rates, against GBP 28,571 to GBP 43,478 under the discount. Payment by results transfers the performance risk to the manufacturer, and the payer pays for the transfer through the running cost and through a budget that grows when the medicine works well, since drug spend for 1,000 patients would be 1,000 × 22,500 = GBP 22.5 million at 75% response against a fixed GBP 18 million under the discount. Neither offer produces evidence unless the response data are pooled and analysed. The example assumes error-free measurement of response and unchanged patient selection.

Managed entry in England through NICE

Under the NICE technology appraisal manual (PMG36) a patient access scheme, either a confidential simple discount or a non-confidential complex scheme, is the default route, and a confidential commercial access agreement can be considered only once that scheme has been fully explored. Evidence generation runs through recommendation with managed access, which PMG36 (section 6.4.6) allows only when, among other conditions, the new data could feasibly be collected within a reasonable timeframe of up to 5 years, as described under managed access agreement.

What evaluations of performance-based agreements have found

Formal evaluations are scarce and mostly disappointing on evidence. Among the 12 countries interviewed by the OECD, independent third-party evaluations had been carried out only in Belgium and Sweden. The Belgian evaluation concluded that performance-based agreements did not reduce uncertainty about comparative effectiveness or cost-effectiveness, and a 2007 Swedish evaluation found that studies run under coverage with evidence development were mainly of poor quality and unable to answer their research questions.

The Dutch conditional financing scheme admitted 25 medicines between 2006 and 2012. By the end of 2017 only 12 had been fully reassessed, one within the intended four years, and an analysis of three of its agreements found that only 40% of the uncertainties identified at the initial assessment were included in the research plans. In Australia, coverage of ipilimumab for metastatic melanoma depended on two-year survival among 910 patients in routine use, estimated at 34.2% against 23.5% in the key registration trial, yet 17.5% of patients had an unconfirmed outcome and 6.3% were lost to follow-up.

The UK multiple sclerosis risk-sharing scheme followed NICE's 2002 conclusion on interferon beta and glatiramer acetate and tested whether disability progression was consistent with a cost-effectiveness target of GBP 36,000 per QALY projected over 20 years. It enrolled 5,610 patients at 72 sites between 2002 and 2005. The 6-year analysis found utility ratios consistent with cost-effectiveness, and the final 10-year analysis supported a long-term benefit but noted an apparent waning of the treatment effect with time.

Boundaries with related arrangements

Several neighbouring terms name national forms of the agreement or single mechanisms within it. A managed access agreement is the English form tied to NICE recommendation with managed access, and confidential pricing, which a simple discount agreement creates, keeps the net price secret without any link to performance. Value-based pricing sets the price itself to reflect expected benefit, while an agreement can change the effective price after launch. The OECD review notes that some countries now prefer restricted coverage without an agreement, broadened only when more evidence appears. In each case the agreement sets the conditions attached to a coverage decision.

Limitations and common misreadings

The commonest errors assume that an agreement does more than its design allows. The evidence above contradicts each of the following.

1. Payment by results produces evidence. The OECD review notes that in Estonia routine data trigger payments but are not aggregated and analysed, so the scheme manages spending without informing the next decision.
2. Coverage with evidence development resolves uncertainty. Data collection without a design matched to the stated uncertainty rarely answers it, and observational real-world evidence collected during coverage carries confounding and missing outcomes.
3. Running costs are small. The OECD review reports that Italy's purpose-built registries impose a significant administrative burden while their data cannot be accessed by third parties.
4. Confidentiality is harmless. The OECD review found that confidentiality of agreements is a barrier to independent evaluation and recommends limiting it to commercially sensitive parts, in particular prices.
5. Exit is easy. Prior studies summarised by the OECD found that payers struggle to cut prices, recoup payments or remove coverage when the data disappoint.

Sources

• Carlson JJ, Sullivan SD, Garrison LP, Neumann PJ, Veenstra DL. Linking payment to health outcomes: a taxonomy and examination of performance-based reimbursement schemes between healthcare payers and manufacturers. Health Policy. 2010;96(3):179-190. https://doi.org/10.1016/j.healthpol.2010.02.005
• Ferrario A, Kanavos P. Dealing with uncertainty and high prices of new medicines: a comparative analysis of the use of managed entry agreements in Belgium, England, the Netherlands and Sweden. Social Science and Medicine. 2015;124:39-47. https://doi.org/10.1016/j.socscimed.2014.11.003
• Garrison LP, Towse A, Briggs A, de Pouvourville G, Grueger J, Mohr PE, et al. Performance-based risk-sharing arrangements, good practices for design, implementation, and evaluation: report of the ISPOR Good Practices for Performance-Based Risk-Sharing Arrangements Task Force. Value in Health. 2013;16(5):703-719. https://doi.org/10.1016/j.jval.2013.04.011
• Klemp M, Frønsdal KB, Facey K; HTAi Policy Forum. What principles should govern the use of managed entry agreements? International Journal of Technology Assessment in Health Care. 2011;27(1):77-83. https://doi.org/10.1017/S0266462310001297
• National Institute for Health and Care Excellence. NICE technology appraisal and highly specialised technologies guidance: the manual (PMG36). London: NICE; published 31 January 2022, last updated 13 October 2026. Sections 5.9.8, 5.9.9, 5.9.15, 5.9.24 and 6.4.6. https://www.nice.org.uk/process/pmg36
• Palace J, Duddy M, Bregenzer T, Lawton M, Zhu F, Boggild M, et al. Effectiveness and cost-effectiveness of interferon beta and glatiramer acetate in the UK Multiple Sclerosis Risk Sharing Scheme at 6 years: a clinical cohort study with natural history comparator. Lancet Neurology. 2015;14(5):497-505. https://doi.org/10.1016/S1474-4422(15)00018-6
• Palace J, Duddy M, Lawton M, Bregenzer T, Zhu F, Boggild M, et al. Assessing the long-term effectiveness of interferon-beta and glatiramer acetate in multiple sclerosis: final 10-year results from the UK multiple sclerosis risk-sharing scheme. Journal of Neurology, Neurosurgery and Psychiatry. 2019;90(3):251-260. https://doi.org/10.1136/jnnp-2018-318360
• Walker S, Sculpher M, Claxton K, Palmer S. Coverage with evidence development, only in research, risk sharing, or patient access scheme? A framework for coverage decisions. Value in Health. 2012;15(3):570-579. https://doi.org/10.1016/j.jval.2011.12.013
• Wenzl M, Chapman S. Performance-based managed entry agreements for new medicines in OECD countries and EU member states: how they work and possible improvements going forward. OECD Health Working Papers No. 115. Paris: OECD Publishing; 2019. https://doi.org/10.1787/6e5e4c0f-en