Outcomes-Based Pharmaceutical Manufacturer Contracts With Health Plans Getting Traction — John G. Baresky

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…Health plans and pharmaceutical manufacturers are increasingly sharing the risk of treating patients…

…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…

Health plans are increasingly seeking to feature performance guarantees in their contracts with pharmaceutical manufacturers. As drug costs rise, insurers want more bottom-line certainty plan members to have positive outcomes based on the therapeutic efficacy of the prescription medications they are taking. In effect, health plans and pharmaceutical manufacturers are increasingly sharing the risk of treating patients. Reportedly, Aetna, Anthem (and various other BCBS plans), Cigna and United Healthcare are engaged in these arrangements with pharmaceutical manufacturers.

While this seems to be a win-win for everyone, 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

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Hi, my name is John Baresky ( pronounced “ buh — ress — key “) and I have over 25 years of experience in healthcare.

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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