The simple economics of risk-sharing agreements between the NHS and the pharmaceutical industry

The Janssen-Cilag proposal for a risk-sharing agreement regarding bortezomib received a welcome signal from NICE. The Office of Fair Trading report included risk-sharing agreements as an available tool for the National Health Service. Nonetheless, recent discussions have somewhat neglected the economic fundamentals underlying risk-sharing agreements. We argue here that risk-sharing agreements, although attractive due to the principle of paying by results, also entail risks. Too many patients may be put under treatment even with a low success probability. Prices are likely to be adjusted upward, in anticipation of future risk-sharing agreements between the pharmaceutical company and the third-party payer. An available instrument is a verification cost per patient treated, which allows obtaining the first-best allocation of patients to the new treatment, under the risk sharing agreement. Overall, the welfare effects of risk-sharing agreements are ambiguous, and care must be taken with their use.

“The impact of online ratings on video game sales”

Online third-party reviews have been grown over the last decade and they now play an important role as a tool for helping customers evaluate products and services that in many cases offer more than tangible features. This study intends to quantify the impact online ratings have over video game sales by conducting a linear regression analysis on 300 titles for the previous console generation (PlayStation® 3 and Xbox® 360) using a data from the video game industry to understand the existing influence on this particular market. The findings showed that these variables have a weak linear relationship thus suggesting that quality of a title explains little the commercial success of a video game and instead this should cover a wider range of factors. Afterwards, we compare results to previous ones and discuss the managerial implications for upcoming gaming generations.