Value Based Contracts, Pharmaceutical Space

Goals

Provide available information on Value Based Contracts between pharmaceutical manufacturers and payers in the US

Early Findings


Value-based contracts are designed to tie prices to how a drug performs in the “real world,” as opposed to price based on data and evidence collected during the highly controlled clinical trial process.

It’s also noted that a benefit of value-based contracts is that they often expand patient access to new therapies, which both benefit the manufacturer and limit financial risk to payer by guaranteeing a clinical result to benefit the insurer.

Challenges with value-based contracts include data sharing regulatory issues and other regulatory barriers with outcome confidentiality and other patient data issues.

VBRs are increasingly being adopted, with it noted that the medicare payments were between 30-50% VBR in 2018.

However, Medicaid’s requirements, including the best commercial discount price must be met by manufacturers is creating some barriers to adoption of value-based contracts.

Another challenge is that some conditions and treatments don’t have clear biomarkers or assessment metrics, making value and patient outcome harder to measure (for example, pain reduction outcomes are harder to measure in terms of quantitative value).

One example of a successful value based contract is Centerstone and Passport.
58% of all hospitals and payers polled noted they are integrating value-based reimbursement contracts.

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