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

…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

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

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

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

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.​​

Healthcare is a vast industry. I organize its clinical, business, academic, technical and consumer topics into precise messages and stories that are easily understood and immediately useful. The content I write resonates across audiences with objective accuracy and clarity.

Visit my website and connect with me via LinkedIn and Twitter


Healthcare Medical Pharmaceutical Directory

A healthcare industry resource centering on marketing strategy for pharmaceutical manufacturers, medical device manufacturers, healthcare services, medical software and technology companies.

Pivotal elements include digital marketing, SEO, content development, content marketing, product launch, brand and product management, sales enablement and market access strategy.

Healthcare Medical Pharmaceutical Directory Google Hub


John G. Baresky


John G. Baresky Healthcare Marketing Guy

Authentic, fact-based healthcare content marketing writing for medical, business, academic, patient and consumer audiences https://www.BareSkyMarketing.com/

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store