Outcomes-Based Pharmaceutical Manufacturer Contracts With Health Plans Getting Traction — John G. Baresky
…The Network for Excellence in Health Innovation (NEHI) has published a white paper encouraging the use of “value-based” or “outcomes-based” contracting for cancer (oncology) therapies; the idea is pharma companies can negotiate pricing with payers based upon whether or not their products indeed lead to either better clinical or financial outcomes…
Pharmaceutical manufacturers getting access via outcomes contracting
Pharmaceutical manufacturers are relentlessly competing against each other in their market access strategies to contract and promote their therapies from preferred positions in managed care plan, PBM and hospital / health system formularies.
Some health plan, pharmacy benefit and provider organizations are cautiously intrigued with the concept of performance guarantees in their contracts with pharmaceutical manufacturers. As drug costs rise, they want more bottom-line certainty plan members and patients to have cost-effective positive outcomes based on the therapeutic efficacy of the prescription medications they are taking.
Collaborating to share risk to improve outcomes and reduce costs
In effect, health plans and pharmaceutical manufacturers are wagering they can join forces to benefit patients and their bottom lines. Aetna, Anthem (and various other BCBS plans), Cigna and United Healthcare are just some of the managed care plans engaged in these arrangements with pharmaceutical manufacturers.
This seems to be a win-win for everyone. Clinically and commercially, there are several challenging perspectives to consider:
- Pharmaceutical manufacturer contracts already feature complex rebate arrangements with MCOs and PBMs; the addition of outcomes-based pay adds another layer of contract management for both sides to oversee
- A shared perspective on clinical protocols and prescribing must be agreed to; if the product is not used in strict accordance with mutually agreed to guidelines and outcomes are not positive, standards have to be established in advance as to how this impacts the financial arrangements between the plan and the pharmaceutical manufacturer
- Analytics and individual patient management will be applied with the utmost scrutiny as so many variables can play direct and indirect roles in patient outcomes and pharmaceutical therapy; objective interpretation of the parameters will be necessary to determine if the medication performed as it should — with other extenuating circumstances preventing positive patient outcomes
- As experience is gained and comfort levels with these arrangements become more established, a wider scope of therapies and patient types will likely be included in contract agreements; manufacturers and health plans will need to have more staff and data analytic resources to effectively manage them
- Physician decision making and prescribing selections will be more closely monitored to assure the right therapy is aligned with the optimum patient type for the best chances of positive outcomes
- Patient adherence and care management (personally as well as by clinicians) will increasingly weigh in on successes / failures and need to be accounted for somehow in the value-based arrangements of the future
- For pharmaceutical manufacturers, outcomes-based guarantees can offer access and more sales opportunities -disadvantaging competitors who do not engage plans with the arrangement
In many cases, no matter how optimistic and proven forecasts are for these outcomes-based market access arrangements, only experience determines how viable they are to all stakeholders over the long haul.
Outcomes data is the decision-maker for all stakeholders
Successful clinical and cost-effective performance will benefit patients, medical and pharmacy benefit plan stakeholders and pharmaceutical manufacturers. If any of these stakeholders believe they are not achieving their anticipated goals then it is going to be difficult for an outcomes-based contracting arrangement to succeed.
Health plans can still move forward by supporting their members and patients with outcomes-based contracting by engaging other pharmaceutical and biotech enterprises to work with them if things don’t turn out as planned with another drug company.
It’s a market access opportunity that some pharmaceutical companies are eager to enter into to gain strategic customer accounts and potentially lock out competitors that aren’t able to fiscally wager the clinical and cost performance of their therapies.
Thank you for reading this story
Learn more about the healthcare industry; read my articles about its medical and business trends, content marketing and digital strategy, brand and product management, mergers and acquisitions, consumer wellness, managed care and market access strategy.
About me
Hi, my name is John Baresky. Throughout my career, I have been writing about healthcare while developing and sharing important information with physicians, nurses, pharmacists and other clinicians plus consumers, patients, healthcare business professionals, investors and other stakeholders.
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