One of the few upsides of the Medical Services Advisory Committee's public conniption against Johnson & Johnson and its CAR-T therapy CARVYKTI is that it confirmed a long-held belief but never acknowledged fact.
Risk-share arrangements with special pricing arrangements have emerged in the past decade to dominate the PBS and new listings.
These arrangements started in the late 1990s as informal price-volume agreements and are one of the government's most essential levers in managing PBS costs.
Companies rebated over $4.6 billion in paid pharmaceutical benefits in 2022-23, accounting for around 25 per cent of topline PBS spending, up from just $25 million 15 years ago.
Risk share and special pricing arrangements are a standard requirement for new PBS listings. They generally require companies to rebate 100 per cent of spending above specified caps.
This reality has led many in the industry to view their characterisation as 'risk share' arrangements as inaccurate, primarily because the company carries all the risk.
In its CARVYKTI outcome, MSAC explicitly acknowledged this fact.
It said, “MSAC noted Janssen-Cilag presented the proposal as a Risk Sharing Arrangement (RSA) however MSAC rejected this characterisation, noting that RSAs are a long-established practice used to provide budget certainty for publicly funded treatments, but they require the treatment provider to bear the financial risk associated with the financial estimates being exceeded and, in no circumstances, the patient."
Or, it seems, the government.