Value-Based Contracting—Is It the Future of Reimbursement Models?(Part 2 of 2)

To continue our discussion about value-based contracting here are specific examples of value-based contracts:

1. Harvard Pilgrim

   • Brilinta by AstraZeneca indicated for heart attack prevention. Measures of effectiveness used: reduction in hospitalizations for repeat acute coronary events for patients on Brilinta as compared to patients on another oral antiplatelet therapy. (1)

   • Bydureon by AstraZeneca indicated for Type II diabetes. Measures of effectiveness used: HbA1c levels in patients and the ability of patients who adhere to Bydureon to get to a predetermined HbA1c goal.(1)

2. Cigna & Harvard Pilgrim

   • Repatha by Amgen indicated for cholesterol lowering. Measures of effectiveness used: If LDL-C lowered in real world similarly to clinical trial, negotiated rate holds, else discount is increased. (2)

3. Cigna

   • Rebif by EDM Serano indicated for Relapsing remitting multiple sclerosis (MS). Measures of effectiveness used: Hospitalizations and ER visits, adherence.(2)

   • Praluent by Regeneron indicated for hypercholesterolemia. Measures of effectiveness used: If LDL-C lowered in real world similarly to clinical trial, negotiated rate holds, else discount is increased. (2)

4. Express Scripts

   • Iressa by AstraZeneca indicated for Non-small cell lung cancer. Measures of effectiveness used: Rebate adjusted based on real-world hospitalization rate vs. trial data. (2)

How effective have value-based contracts been in helping reduce cost? According to Express Scripts, its value-based program SafeGuardRx has helped participating clients save more than $6 billion in 2020. The program provides value-based packages in different disease states including Oncology, Neurology, Diabetes, Multiple Sclerosis, etc. (3)

Although value-based contracting is gaining popularity among many payers and health plans, there are still regulatory and operational concerns that might deter payers from engaging in value-based contracts. (4)

1. Price Reporting Metrics

Regulations around price reporting to the federal government makes it challenging for manufacturers to calculate and report payment rates or manufacturer rebate under value-based contracts, creating more price uncertainty among biopharmaceutical companies. As the industry evolves, the approach to price reporting needs to become more flexible to encourage innovative reimbursement models.

2. Anti-Kickback Statute

The anti-kickback statute is a law that prohibits any payments to induce patient referrals or the generation of business of any item or service payable by the Federal health care programs such as drugs or medical supplies.(5) As the statute is broadly written, contracts that offer higher discounts or rebates due to better patient outcomes may be precluded by the anti-kickback statute. The regulatory framework may need to be revised to accommodate value-based contracts.

3. Logistical Barriers

What endpoint and outcome measures are used will determine the complexity and sophistication of the value-based contact. Some value-based contacts may require

additional provider follow ups, labs, imaging, and other services.  These additional services may or may not be covered by the health plan.  Thus, value-based contacts need to have key stakeholders under pharmacy and medical benefit at the table for them to be effective.  In addition, endpoints from clinical trials are usually used as a baseline for outcomes-based contracting, however these don’t always reflect how effective a drug performs once it is approved.

Overall, value-based contracting has a lot of potential to become the future of reimbursement models. However, until these major barriers mentioned above are clarified and addressed, we will still see a resistance to the complete adoption of value-based contracts in the marketplace.