OBJECTIVES: The Israeli National Health Insurance Law stipulates the benefits package which all residents are entitled from their health plans (HMOs). Each year, the government allocates a budget to the HMOs for funding new technologies. The specific budget for each technology is based on estimates provided by the pharmaceutical industry and the HMOs for the number of patients that will benefit from the technology and its cost per patient. HMOs have argued that once a new technology is reimbursed, extensive marketing efforts on the part of the industry expands the demand and thus, the budget allocated is often not sufficient. On the other hand, the pharmaceutical industries claim that, in many cases, HMOs over-estimate the number of patients and are provided with a higher budget than actually consumed. In this study we explore stakeholders' incentives for adopting a financial risk-sharing mechanism on early budget-impact estimates. METHODS: We propose a framework for a mechanism, where HMOs will be partially compensated by the industry if the actual use in medical practice is substantially higher than was projected. The HMOs will partially refund the government for a budget that was not fully used. This budget will be reallocated and used for adopting other technologies. RESULTS: To maintain profits, it is assumed that the industry will provide the government with a more realistic budget impact analysis (BIA). HMOs will be provided with a more accurate budget and be less apprehensive of pharmaceutical promotion. CONCLUSION: Our proposed risk-sharing mechanism on early budget impact analysis is expected to counter balance incentives and disincentives that currently exist in adopting new health technologies in the Israeli healthcare system. Further research is needed to examine the potential impact of such a mechanism on actual use of new technologies and its feasibility in improving the national resource allocation process.