Increasing Demand for Drug Based Outcomes

Increasing Demand for Drug Based Outcomes – Outcome-based contracts are a relatively new and growing contracting methodology focused on shifting reimbursement from volume to value. The contracts are between a health plan and manufacturer where reimbursement is dependent on pre-defined outcome metrics focused on improving patient responses/health.

Currently, the relationship between the pharmaceutical manufacturer, the payer, and the patient ends at the point of sale.  However, this model is being challenged by the rise of performance-based or outcome-based contracting. 

There are a number of factors driving interest in outcome-based contracting that include:

• Increase of high-priced biopharmaceuticals
• Abundance of robust data
• Formulary decisions 
• Increase in high deductible health care plans

Companies involved in outcomes-based contracts include: Aetna, Cigna, Amgen, EMD Serono, Novartis, and Sanofi, among others. Key elements in the decision to engage in an outcome-based contract include:

• The agreement involves some program of data collection
• The reason for data collection is intended to address an uncertainty
• Program involves a product which has received regulatory approval but is new to the marketplace
• The price/reimbursement and/or revenue are linked either explicitly or implicitly to the outcomes observed in the data collection
• The risk from a performance other than that predicted by the clinical trial results is distributed between manufacturer and payer

There are questions that need to be answered before entering into an outcomes based contract that include design, implementation and use of results. Outcomes based agreements are a key tool for reducing uncertainty in the market and can be expected to increase especially in high cost disease conditions and can work for manufacturers, payers, and patients.

Contracting change is now required but it is interesting that every 3rd party desires to change, but are not really innovative on outcomes based contracting. The market is making progress to-date, but not is not disruptive nor creating value in relation to a product by condition to this point.